China by train (part 2)

 

It has been almost exactly a decade since I was last in Vientiane. The country feels very different. Downtown (near the river) is empty on a Sunday afternoon, the fountain has lost its charm and its restaurants, and there is clearly an increased impact of China. 

Nowhere is this more apparent than in the new rail infrastructure that links Laos to China. 

The Laos section of the line was constructed at a cost of around $6 billion. The freight and passenger traffic have been growing rapidly since the service opened in 2021. The railway opens up a faster logistics and export route for land-locked Laos to the large Chinese market in the north. More than 20 million passengers have also taken the journey so far. 

The company that owns and operates the line is 70 percent owned by Chinese interests and 30 percent by the Laos state. Laos has also guaranteed the $3.6 billion project debt, at an annual debt service cost of around $150-$200m per annum.

It is likely that freight will provide most of the payback, however given the appearance of more and more Chinese tourists, passenger traffic will provide both a direct revenue line and indirect benefits to the country’s fragile economy.