Analysis: Twists and Turns Abound for Chinese-Built Railways in Southeast Asia

China is collaborating with Thailand and Vietnam on significant railway projects to enhance trade and economic ties in Asia. This initiative is a part of a larger megaproject, including the Trans-Asian Railway (TAR) Network aimed at linking Asia and Europe via integrated rail connections [para. 1][para. 6].

Recently, Vietnam’s parliament approved a railway project to connect northern Vietnam with China’s Yunnan province. Construction on this $8 billion project is set to commence by the end of the year, expediting the previous target set for 2027 as directed by Vietnam’s Prime Minister Phạm Minh Chính [para. 2][para. 3]. Simultaneously, Thailand and China agreed to accelerate the 609-kilometer railway connecting the two countries through Laos, with the second phase set to start soon after. Both countries emphasized the importance of improved connectivity for regional economic integration [para. 4][para. 5].

The TAR Network, a United Nations-led project, was delayed due to financial constraints but gained momentum in 2016 with the start of a railway connecting China and Laos. China funded 70% of this $6 billion project. Industry insiders claim that the TAR will significantly enhance the transport capacity in Southeast Asia while bolstering multilateral trade and reducing geopolitical risks for participating countries [para. 6][para. 7][para. 8].

Despite these economic opportunities, concerns exist about the project's social and environmental impact. Reports suggest the railways have polluted drinking water sources, destroyed farmland, and harmed local biodiversity. Additionally, there are apprehensions about the displacement of local labor by Chinese workers and an influx of cheaper Chinese products [para. 9]. China remains a key contributor to these projects, providing financial and technical support and promoting cooperation through ASEAN networks [para. 10].

The China-Thailand railway has faced several delays since its inception in 2006 due to political instability and disagreements on costs and rights. The project restarted in 2014, and ground was broken in 2017. However, the completion timeline has shifted to 2028 owing to structural design changes and ongoing negotiations. The $15.5 billion project is entirely funded by Thailand but utilizes Chinese technology. Despite recent hiccups, including disagreements concerning its proximity to the Ayutthaya Historical Park, Thailand plans to proceed with construction [para. 11][para. 12][para. 13][para. 14][para. 15].

Conversely, the China-Vietnam railway project is advancing more rapidly. A significant factor in its swifter progress is the streamlined role of Chinese companies, limited to engineering and construction. The 391-kilometer railway, connecting Haiphong to Lao Cai and further to Yunnan, will predominantly rely on Vietnamese funding mechanisms, complemented by foreign loans. Vietnam plans to align the new railway’s specifications with China’s standard gauge to boost bilateral passenger and freight transport [para. 20][para. 21][para. 22]. Prime Minister Chính’s commitment underlines Vietnam’s focus on enhancing its rail infrastructure [para. 19].

The China-Laos railway serves as a model for Southeast Asian connectivity. Opened in late 2021, it has substantially reduced travel time between Kunming and Vientiane. In 2023, it integrated with the China-Europe railway network, enhancing trading capacities from Laos to Europe. Recorded figures suggest a 15.2% increase in passenger traffic and a 10.6% increase in cargo transport in 2024, illustrating the project’s success [para. 26][para. 27]. Transport costs cutting across routes into Thailand and costs within Laos underline the economic advantages generated by the project [para. 28][para. 29]. These developments position China as a pivotal player in transforming Asian infrastructure [para. 10].