

China is giving a steely infrastructural hug to its southeast Asian neighbors, with plans to roll out a massive high-speed rail system to crisscross Laos, Thailand, and Malaysia en route to Singapore. Laos, which currently boasts a humble two miles of functioning railway track, is in for a bit of a shock.

The Lao government, the cuddly Lao People’s Revolutionary Party, met with Li Keqiang last year and welcomed the plan with open arms. As The Telegraph reports, Laos could be potentially transformed or crippled by the deal:

Constructing it will be a mammoth engineering task. It will require 154 bridges and 76 tunnels, as well as 31 train stations, just to get the line the 260 miles from Boten on the Laos-China border to Laos’ capital Vientiane. An estimated 20,000 Chinese workers will be needed to build it, with the completion date set for 2019. […]

Using untapped minerals as collateral, Laos plans to borrow £4.5 billion from Beijing to pay for its section of the railway. Equivalent to almost 90 per cent of Laos’s annual GDP of £5.2 billion, the loan will instantly make Laos the world’s fourth most-indebted nation after Japan, Zimbabwe and Greece.

Many international financial bodies regard the loan as a disaster waiting to happen. The Asian Development Bank has described it simply as “unaffordable”.

Just servicing the yearly interest on the loan will amount to almost 20% of Laos’s annual government spending.

In short, the Chinese government will essentially own Laos after the check clears, but with a national product of about 8.5 billion USD, there are several individual Chinese billionairs who could purchase the country in full anyways. The main railways are aimed for completion by 2019, with expansions planned into Burma/Myanmar, Thailand, and Cambodia in the years to come.

[Image via Flickr]



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