CGTN Think Tank

In December 2021, the presidents of Laos and China held an important video conference to draw a strategic blueprint for bilateral relations in the new era. On April 21, 2022, at the Boao Forum for Asia Annual Conference, Prime Minister Phankham Viphavanh of Laos stressed that he was proud to join the Belt and Road Initiative (BRI) and would make a positive contribution. Given profound and complex changes in the geographical situation, Laos and China have worked together to advance bilateral cooperation. In particular, the Laos-China railway (LCR) has played a key role in deepening bilateral economic and trade ties and promoting economic recovery along the railway route.

High-level exchanges between the two countries serve as a "booster" for the Laos-China railway

As neighboring countries connected by mountains and rivers, Laos and China have always been upholding the principles of amity, sincerity, mutual benefit, and inclusiveness, keeping expanding practical cooperation and working together for the BRI. The success of the LCR fundamentally lies in the strategic guidance of the high-level leadership of the two countries, especially the top leaders of the two parties and two countries.

In November 2017, Chinese President Xi Jinping published a signed article titled China and Laos: Working Together for a Community of Shared Future with Strategic Significance on mainstream Lao media. He pointed out that as an important part of the Trans-Asian Railway network, the China- Laos railway is of major strategic and practical importance to Laos. The two sides should increase coordination and work for early completion and operation of the project to connect Laos with its neighbors and the world. On April 30, 2019, Laos and China signed an Action Plan on Building a Laos-China Community with a shared future between the Lao People's Revolutionary Party and the Communist Party of China. This document specifically mentioned that economic and trade cooperation on connectivity, production capacity and investment will be carried out with the support of the LCR. Bounnhang Vorachit, then President of Laos, said that his country is willing to work with China to strengthen its political leadership in enhancing relations between the two parties. Senior leaders of the two parties will strengthen mutually beneficial cooperation in various fields and push the Laos-China comprehensive strategic partnership to a higher level. He stressed that Laos will continue to strengthen cooperation in various key projects under the framework of the BRI to promote prosperity and development of the two countries and the region. On April 3, 2020, during a phone conversation with Lao President Bounnhang Vorachit, Chinese President Xi Jinping pointed out, China is willing to maintain the momentum of high-level exchanges with the Lao side. Guided by the Action Plan on building the China-Laos community with a shared future, China will deepen experience sharing in party and state governance with Laos, steadily advance major projects such as the railway and the development of the China-Laos Economic Corridor, enhance people-to-people exchanges and cultural cooperation, and strengthen coordination in international and regional affairs, thus promoting the building of a China-Laos community with a shared future and delivering more benefits to the two peoples, Xi said.

On December 3, 2021, the Lao and Chinese presidents jointly witnessed the opening of the Laos-China railway via video link. Lao President Thongloun Sisoulith said that the LCR is a docking project between the Laos' strategy and the China-proposed Belt and Road Initiative to convert the country from a landlocked Laos to a land-linked hub and an important milestone for Laos' efforts to modernize its infrastructure, which will greatly boost the country's economic and social development. The successful opening of the LCR is a grand celebration for the 60th anniversary of the establishment of Laos-China diplomatic ties. It vividly demonstrates the spirit of “good neighbor, good friend, good comrade and good partner” and the Laos-China community with a shared future. It also greatly signifies the friendly relations between the two parties, two countries and two peoples. It will surely add new dimensions to the relations between the two parties and two countries. Chinese President Xi Jinping noted that the China-Laos Railway is a flagship project of mutually beneficial cooperation between the two countries, emphasizing that both sides shall maintain and operate the railway well, develop and construct well the areas along the route, and create a golden route for the benefit of the two peoples.

Since the opening of the LCR, Lao leaders have fully recognized and highly valued the achievements of the railway. Lao President Thongloun Sisoulith and his government delegation took the Lane Xang electric multiple unit (EMU) train of the Laos-China railway twice on February 7 and 9, 2022. During his inspection at the railway station of Vientiane, Boten and Luang Prabang, Thongloun was briefed on the station's operation, and he also experienced the operator's compartment of the train. Thongloun spoke highly of his experience on board the Lane Xang EMU as a comfortable and safe trip and gave important instructions on the future development of the LCR. “Hope 7 million people in Lao can all experience the train travel and truly get to know the significance of joint implementation of the Belt and Road Initiative,” said Thongloun, adding that Laos-China Railway Co., Ltd. must operate and manage the railway well, and try its best to transport more passengers and goods. On October 31, 2022, Thongloun, while congratulating China on the great success of the 20th CPC National Congress, once again stressed that he is “looking forward to greater development of mutually beneficial cooperation between the two countries”.

Railway of Connectivity

The Laos-China railway runs through numerous mountains and rivers with complex geological structures. It starts from Yuxi city in southwest China's Yunnan Province, passes through Pu’er, Xishuangbanna to the Laos-China border port of Mohan, the town of Luang Prabang, a famous tourist site in Laos, and ends at Vientiane, the capital of Laos. Along the route, the Chinese section is the Yuxi-Mohan rail, while the Boten-Vientiane rail in Laos is the first overseas railway project mainly invested by China, jointly operated by Laos and China, and networked into China's domestic rail system since the launch of the Belt and Road Initiative.

Crossing rugged mountains and lofty hills, the Laos-China railway has freed Laos from its topographical restriction that is landlocked and mountainous, opening up a new corridor to boost economic development, strengthening Laos-China cooperation and promoting regional connectivity. Therefore, the LCR has important and profound strategic significance:

First, from an institutional perspective, Laos and China are naturally connected. Both countries follow the path of socialism, and the leaders of the two countries enjoy a deep friendship. As neighbors connected by mountains and rivers, Laos and China share a kinship that is not comparable to any other country, which is the most important institutional guarantee and strategic premise for economic and industrial cooperation between the two countries.

Second, from a strategic perspective, Laos enjoys distinct geographical advantages. As an important part of the middle passage of the Trans-Asia railway network, Laos serves as a core link in the railway network, connecting Vietnam, Thailand, Myanmar and China, with significant geographical advantages. The LCR not only enhances the connectivity between Laos and China, but also connects the active economies of Southeast Asia with the developed economies of Europe. At present, Laos has become the key hub in building connectivity between ASEAN and China. The US, Europe and many countries in Southeast Asia pay close attention to the cooperation between Laos and China and the benefits of the railway.

Third, from a development perspective, the LCR will boost economic recovery of Laos. Black swans like the COVID-19 pandemic and geopolitical risks, followed by high inflation and energy crises, have exacted a significant toll on the global economy, with developing countries most affected. As an inland country in Southeast Asia, Laos has a stronger need and urgent desire for development. The Laos-China railway can serve as a new starting point for Laos' development. Infrastructure development such as road connectivity can become the new growth driver to unlock the development potential for Laos. That said, the LCR will become a new benchmark for high-quality Belt and Road cooperation and help to create an enabling environment for regional development and implement the UN 2030 Agenda for Sustainable Development.

Railway of Prosperity

Railways can be turned into money and gold. The Laos-China railway has brought new development opportunities to unlock that potential. With the LCR as the starting point, many business models and brand strategies can be further developed to benefit countries along the route, the region and even the world.

First, build Laos-China economic industrial belt through “the Laos-China Railway Plus” development model. The LCR has greatly improved the railway infrastructure construction in Laos, bringing precious development opportunities to the regions along the route. Countries/regions along the railway route can fully leverage the “Railway Plus” model such as “Laos-China Railway plus Tourism”, “Laos-China Railway plus Agriculture”, “Laos-China railway plus Trade” and “Laos-China Railway plus Industry” to accelerate economic recovery in the post-pandemic era. Through the green channel and fast-track lane brought by the LCR, Laos can sell its handy and useful featured products to China, the region, and even the international market, thus enhancing its strategic position of economy and trade. In the future, the economic growth of Laos is expected to become a benchmark for ASEAN’s development and even global growth, setting a good example for promoting ASEAN-China dialogue and cooperation.

Second, build an economic network connecting the south and the north with the LCR as the main axis. The LCR is not only the middle passage and the backbone of the Trans-Asia railway network, but also blazes a new path to the economic development of countries in Southeast Asia. The completion and opening of the LCR will fundamentally transform Laos from a land-locked to a land-linked economy, thus permanently changing the status quo and pattern of the regional economic landscape. Backed by China, the world's largest consumer market, Laos will be able to compete with Thailand as a regional development hub. It is evident that the LCR can fundamentally enhance the economic strength and regional status of Laos.

Third, link the Eurasian market through the north and the south with the Laos-China railway as the core. The LCR connects Laos and China from the north to the south, linking ASEAN closely. From Kunming to the north, this railway links the China-Europe freight trains to the European Union, connecting ASEAN and the European Union as the hub, and further promoting the connectivity of Europe and Asia. The LCR, together with the New International Land-Sea Trade Corridor, strengthens the development of economic corridors such as the New Eurasian Land Bridge. This railway will also lead to the extension of the China-Thailand railway and the Malaysia-Singapore railway, energizing ASEAN-China economic cooperation and development. The robust connectivity between ASEAN and the EU will help to create a mega-Eurasian market, advance Eurasian economic integration, strengthen the resilience of regional industrial and supply chains, and accelerate regional and global economic recovery.

Fourth, boost economic development through hydropower projects as the driver and Laos-China railway as the hub. Most part of the Mekong River flows through Laos, where more than 60 percent of hydropower reserves are located. With more than 20 rivers over 200 kilometers and more than 60 hydropower stations that are rich in water energy, Laos is known as the “battery of Southeast Asia”. Therefore, the LCR can further support Laos in developing abundant water energy and hydropower, which in turn is conducive to the planning and development of the power grid network and optimization of energy structure in Laos. On this basis, industrial parks can be built with the LCR as the main axis, the railway economy and hub economy can be further developed, and industrial models such as Laos-China and China-ASEAN “Railway + Tourism”, “Railway + Power Grid” and “Railway + Cultural and People-to-People exchanges” can be strengthened, thus promoting high-quality development of regional cooperation.

Fifth, strengthen the top-level planning to drive Laos-China economic cooperation with the support of the Laos-China railway. Laos' strength in agriculture and forestry can be effectively reinforced by China's strength in its large consumer market. The LCR will open fast-track lanes and green channels for Laos. Trains can be used as a "powerful tool" for Laos to transport time-sensitive agricultural products, which greatly increases the export of rice, fruit, coffee and other agricultural products. Existing resources can be fully vitalized to achieve rapid development, while the industrial development of textiles, automobiles and others are being planned at the same time. Against the backdrop of vulnerable global economic prospects and supply chain disruptions, Laos can also import a large number of daily necessities from China to lower its overall price level, so that the LCR can bring tangible benefits to its people, forging closer bonds of heart and mind between people on both sides. In the future, the two countries can work together to improve Laos' overall economic plan based on the development of the LCR. It is expected that the procedure of industrialization, informatization, urbanization, networking and intellectualization of Laos to be expedited and Laos’ economic development will eventually surpass others.

Sixth, the Laos-China railway will serve as a link to promote bilateral people-to-people exchange and cultural and tourism cooperation. Along with the opening of the LCR, more companies are expected to increase investment in key areas along the route, creating more job opportunities for the Lao people. Meanwhile, the launch of the LCR will strengthen people-to-people and cultural exchanges, the exchanges between the youth in particular. The four cities along the LCR route, namely Kunming, Yuxi, Pu’er and Xishuangbanna, signed the Agreement on Cultural and Tourism Cooperation on December 4, 2021, which is expected to form a synergy of cultural and tourism development, so as to promote Laos-China cultural and tourism cooperation, thus bringing Laos-China border tourism to a new development phase.

Railway of Development

Since December 3, 2021, the Laos-China railway has been in full operation for nearly one year. During this period, the LCR has made groundbreaking achievements, playing a remarkable leading and driving role in the people-to-people exchange, trade in goods and the development of economic zones along the route, elevating cooperation in regional connectivity to a new height. This year, the LCR has shown strong growth momentum:

First, transportation costs have been reduced and the frequency of bilateral cargo transport has increased. Using the railway is expected to cut the cost of transport through Laos by 30 to 40 percent compared to traveling by road, providing a better transport option for cross-border trade activities. According to statistics, the average monthly growth rate of goods shipped by the Lao section of the LCR was 17.09 percent. On July 1, 2022, a freight transit yard of the LCR's Vientiane South Station was officially put

into operation, shortening the transit time from Kunming in China to Laem Chabang Port in Thailand by about one day and reducing the transportation cost by over 20 percent. It is expected that more than 300,000 tons of agricultural and sideline products, rubber and other cross-border goods from Thailand can be shipped along the LCR every year.

Second, the scale of cross-border freight transport has been expanded with more diversified goods being transported. According to China customs statistics, since the opening of the LCR 11 months ago, a total of 1.678 million tons of imported and exported goods have been checked and released, a total of 9.86 million tons of goods have been shipped,

and the total value of freight has reached 12.18 billion yuan. Among them, in September and October 2022, the all-time high for cargo shipped in a single month was broken twice with the quantity of 1.25 million tons and 1.35 million tons respectively. The types of goods being transported have expanded from around 100 categories such as fertilizer, rubber and daily necessities to nearly 2,000 categories including electronics, photovoltaics, communication technology and flowers.

Third, the freight business has been further developed with all freight stations up and running. As of November 2022, 25 provinces, autonomous regions and municipalities in China have operated cross-border freight trains on the LCR and international freight trains on the Lancang-Mekong Express Line on a regular basis, covering several countries/regions including China, Laos, Thailand, Myanmar, Malaysia, Cambodia and Singapore. On November 1, 2022, With Muang Xay Station in Northern Laos starting

freight service, all seven freight stations along the Lao section of the LCR have been put into operation. So far, the LCR has established a seamless connection with the new western land-sea corridor and the China-Europe freight train services.

Fourth, the Laos-China railway promotes people-to-people exchange and strengthens people-to-people bonds. To meet people's travel needs in Xishuangbanna, Pu’er and other places along the China section of the LCR, China Railway Kunming Group has implemented the “One Day One Diagram” policy to increase the number of EMU trains on a

dynamic basis. According to the data of China National Railway Group in May 2022, six bullet trains and two passenger trains were operated daily on the Lao section of the LCR, while 36 passenger trains were operated on a daily average in China, with the highest peak reaching 65 trains. By October 3, 2022, the passenger volume of the LCR had

reached 7.39 million. On this basis, the Lao government is conducting feasibility studies on four tourism projects planned for Vang Vieng District in Vientiane Province to further boost economic development along the LCR route.

Railway of Benchmark

Since the construction of the LCR, it has been highly anticipated and fully acknowledged by people from all walks of life in Laos. Lao Minister of Public Works and Transport Department Viengsavath Siphandone once said that the full operation of the Laos-China railway marks the beginning of an age of railway transportation in Laos, which is also a declaration that Laos has stepped into a new era of railway transportation. Sommad Pholsena, Vice President of the National Assembly of the Lao People's Democratic Republic, said that the opening of the LCR is historic, providing new opportunities for the development of various industries in Laos to drive the Lao economy to a higher level. “The Laos-China railway is a railway of cooperation, a railway of industrial development, and a railway of the century that will bring about a lot of added values,” he said. Daovone Phachanthavong, executive vice president of the Lao National Chamber of Commerce and Industry (LNCCI), said that the Laos-China railway is “a long-awaited development road for the Lao people”. Valy Vetsaphong, vice president of LNCCI, believes that this railway will enable Laos to convert from its geographical disadvantage to a “regional land-linked hub”.

In addition, the LCR has offered references for other ASEAN countries to carry out cooperation with China. High-level government authorities of many ASEAN countries pay close attention to the achievements of the LCR. Thai Prime Minister Prayuth Chan-ocha said on December 1, 2021, that the full operation of the LCR will help promote Thailand's border and cross-border trade and bolster regional economic and trade cooperation. Officials from several Thai ministries visited Laos at the end of August 2022 to discuss the extension of the LCR to Thailand. The Thai Ministry of Transport believes that the extension of the LCR will help improve transport capacity and boost tourism in the ASEAN region. Dr. Sok Sokrethya, deputy minister of Tourism of Cambodia, once said that the full operation of the LCR will help strengthen trade and investment ties between Cambodia and neighboring countries, accelerate inter-regional tourism and people-to-people exchange, and promote the common development of neighboring countries. A promotion event for development cooperation along the Laos-China Railway was held at the fifth CIIE. Up to ten billion RMB worth of investment and procurement deals were signed on-site by several ASEAN countries. The LCR has become an epitome of high-quality BRI cooperation between China and ASEAN countries.

In general, the Laos-China railway has provided a “new benchmark” and “new opportunity” for cooperation between Laos and China and with neighboring countries, and the Laos-China cooperation has provided a “new paradigm” and a “new vision” for cooperation between Laos and other ASEAN countries. The multi-tiered development potential nurtured by the LCR will surely be transformed into a “new driving force” for regional economic recovery in the post-pandemic era, and Laos will gradually play a “leading role” in driving regional economic development.

Looking ahead, the LCR will empower cross-border logistics cooperation in the regions along the route. Relying on multi-modal transport means such as the international freight transport network and the New Western Land-Sea Corridor, the LCR will help strengthen the connectivity of infrastructure in ASEAN countries, improve the infrastructure of border ports and road construction, and promote the linkage of integrated comprehensive transport system of land, rail, air and water among ASEAN countries, thus enabling smooth transportation for connectivity. In this context, Laos can work with ASEAN countries to explore new areas of cooperation to promote production capacity and investment cooperation, enhance the resilience of regional industrial and supply chains, and explore development paths suited to each country's national conditions.

The Laos-China railway will also provide a new model for green development in the regions along the route. Abiding by the principle of “low consumption of resources and less environmental pollution”, the LCR is committed to using green technology and striking a balance between economic benefits and ecological conservation. For example, the green railway standards of the LCR are gradually adopted globally. At present, Laos and China are deepening their cooperation on “green practices” with the joint construction of the Saysettha low-carbon demonstration zone in Vientiane as the starting point to provide a new cooperation model of green development for regions along the route, creating a new concept of "green cooperation" and setting up a routine “green channel for import and export products”. As a result, with the support of the LCR, neighboring countries can strengthen cross-border cooperation in ecological conservation, promote the establishment of a regional communication platform for environmental policies, and improve the level of green and sustainable development of the region.

Laos and China have developed new modes of international rail transport such as Lancang-Mekong Express plus transnational e-commerce and the Laos-China Railway plus China-Europe freight train services, which has extended the Laos-China Railway’s reach, and enhanced its cross-border cargo transport capacity. Meanwhile, the role of the LCR as the economic corridor has become more prominent, thus promoting the ASEAN-China transport corridor with greater capacity, higher effectiveness, better timeliness, lower cost and wider coverage. It is foreseeable that the Laos-China railway will not only promote the mutually beneficial cooperation between Laos and China, but also boost regional economic development and inject new momentum into global economic recovery.