A $6 Billion China-Built Railway Is on the Move With a Vast New Network Down the Track

BOTEN, Laos—A few years ago, this small town on the border with China was a few dusty lanes surrounded by tropical forests. Now, a nearly $6 billion Chinese-built railroad cuts through it—and a city is rising.

Dozens of half-constructed office towers and warehouses rise into the skyline. A Chinese developer, Yunnan Haicheng Industrial Group, is pitching the six-square-mile special economic zone where they stand as the gateway between China and Southeast Asia, a place where labor is cheap and exporting is easy, thanks to the new train.

Jackhammers clamor until nightfall, when they give way to the sounds of Chinese pop music blaring from open-air restaurants where transiting businessmen unwind over beer and spicy peanuts.

“There’s a Chinese saying that when the whistle blows, it’s worth 10,000 taels of gold,” said He Ming Jia, a senior executive at Yunnan Haicheng. “Chinese investment follows the train.”

Globally, China’s now decade-old Belt and Road Initiative, or BRI, has been in retreat, with a number of projects stalled or mired in controversy—at times over allegations of incurring unsustainable debts for developing countries. But in this part of Southeast Asia, it is alive and kicking.

Beijing is casting the 262-mile rail line, which launched in late 2021, as a showcase of how its grand vision for regionwide rail connectivity can be transformative for the local economy. The plan imagines a China-backed network stretching through Southeast Asia’s agricultural and industrial heartlands—drawing its neighbors into a tighter embrace and binding their economies to its own for decades to come.

“To China, this is a key mega project. Completion of this railway will demonstrate that BRI remains on track,” said Yu Hong, a senior research fellow at the East Asian Institute of the National University of Singapore. “This is very much the message that China wants to convey to the world.” 

The Laos-China Railway is the first leg of Beijing’s plan. It runs between the Chinese commercial hub of Kunming and Vientiane, the Lao capital near the border with Thailand. Beijing aims to extend it further south, linking to the Thai and Malaysian capitals, Bangkok and Kuala Lumpur. 

China also plans to upgrade a railroad that runs east through Cambodia—and build another running west from Kunming to the coast of Myanmar. 

Momentum in Laos, China hopes, will kick-start progress elsewhere. Construction is under way in Thailand and Malaysia, but has faced local skepticism and delays. 

Thai transportation officials have said a section from Bangkok to the Lao border will be complete by 2028. Negotiations on upgrading an existing rail link between Bangkok and Kuala Lumpur are continuing. A China-built railroad connecting Malaysia’s coasts is expected to be completed by the end of 2026, after years in limbo.  

The World Bank has said the Laos-China Railway could raise the Southeast Asian country’s aggregate income by up to 21% over the long term, if it is managed well. But economists are still at odds over its financial rationale. 

Laos was already struggling to pay back lenders when it borrowed $1.54 billion from China’s Export-Import Bank to fund its share. And it is unlikely to make much revenue from the train itself, owning only a 30% stake while three Chinese companies own the rest. According to the World Bank, the country’s total debt has reached “critical levels,” around $14.5 billion in 2021, with China accounting for about half of its external debt.

“A lot of other investment is needed in order to really make this work,” said Mariza Cooray, a senior economist at the Indo-Pacific Development Centre at the Lowy Institute, an Australia-based think tank. Complementary infrastructure such as roads and more capacity to capture tourism revenue will require even more borrowing, she said, adding: “They’re really in a kind of debt spiral.”

The country’s “growing and unsustainable debt burden” is limiting its ability to invest in vital health and education services, said Ben Bland, the Asia-Pacific program director for Chatham House, a U.K.-based think tank.

“These are real and pressing short-term pressures, while the returns from the rail project will only be clear in the long term,” Bland said.

But in Laos, Beijing has faced very little resistance. That is in part because Laos, like China, is ruled by an authoritarian communist regime that can act quickly without much scrutiny—and also because its development needs are enormous and China was the only game in town. The country of 7.4 million—with a small workforce and few natural resources—has been of little interest to investors from the West and Japan, which don’t share China’s strategic imperative here. 

It helps China’s case that the train is popular in Laos. Dangerous 12-hour bus rides through mountain roads can now be made in less than four hours by rail, for about the same price. Students and migrant workers can easily visit their families. One couple said they were taking their baby to a hospital in the capital to see a pediatric specialist that their rural province doesn’t have. 

More than 2,000 products are now approved for export via the cargo route, the Laos-China Railway Company said. Fruits such as watermelon and durian, cassava flour, rubber and iron are among the products making their way to China. Mechanical equipment, chemical fertilizers, appliances and solar panels are pouring into Laos.

When the train launched, Chinese leader Xi Jinping and Lao President Thongloun Sisoulith said the project would bring prosperity to both sides. Just as North America’s first transcontinental railroad created boomtowns across the countryside, Xi promised a “golden route” from which development would spring. Stations were built a few miles outside of towns to make room for urban expansion, with warehouses erected alongside to process cargo.

Chinese firms are snapping up nearby properties to set up farms and factories. About a 30-minute drive from Muang Xai, a town with one of the train’s major stations, the hills are covered with crops bound for the border. Chinese firms have been harvesting on the surrounding land for decades, leasing large plantations to grow bananas, rubber trees, soybeans and cassava—and now they are expanding further.

At a mulberry farm, women harvest leaves to feed silkworms that are spinning fibers to be woven into fine Chinese fabrics. A new processing plant opened last year for adlay, a grain used in soupy desserts and traditional Chinese medicine.

Locals have traditionally been subsistence farmers, growing just enough rice and vegetables to feed their families. Saiy Soulivong, 32, said he used to struggle to find shifts on construction sites to earn extra cash. Now he works as a day laborer at a new cluster of warehouses that companies can rent near a train station.

“We have more options,” he said.

Laos is no stranger to the influence of foreign powers. Its cities are famous for colonial architecture incorporating French elements. The U.S. scarred its countryside during the Vietnam War, dropping more than two million tons of bombs on communist hide-outs. Unexploded ordnance maimed villagers and slowed development for decades, but Lao society is still largely receptive to American engagement. 

Since cross-border passenger trains launched in April, arrivals from China have surged. On a recent morning in Luang Prabang, a Unesco World Heritage site popular for its ornate temples and natural attractions such as waterfalls, tourists dropped crisp Chinese bank notes as alms for Buddhist monks at a ceremony. Further north, in Boten, the currency is as common as the local Lao kip and signs are printed in both Lao and Mandarin.   

“It’s becoming more like China than like Laos, but it’s good because they build things,” said Noy Keomanychan, a 43-year-old food vendor who commutes from a nearby village to sell grilled meat and squirrel soup to Lao laborers.

“That’s how it is,” she said, “the Lao people are poor, and the Chinese are rich.”

Write to Feliz Solomon at [email protected]