- [Narrator] Built between
the mountains and forests in Laos, rest a key component to one of China's biggest endeavors. (trains swooshing) A $6 billion high-speed
Railway stretching from Boten to Vientiane. In just a few years, the
Chinese built railroad has transformed what was
once a few dusty lanes surrounded by tropical forest into what developers hope will become a major trade and transport hub. - Being able to travel across
the country so quickly, it's unprecedented. - [Narrator] But with this
Railway comes big questions - To many critics, this
project would be a symbol of irresponsible Chinese lending. - [Narrator] And it's just one part of China's Belt and
Road initiative or BRI. A trillion dollar mega project aimed at building a global
infrastructure network. The Railway currently connects China to the capital city in Laos,
but that's just the start. - The ultimate idea is this will be part of a broader network to
better connecting Laos, not just to China, but to Thailand and throughout to the
rest of Southeast Asia. - [Narrator] Its impact on the country is already showing here,
right near its first stop in a six square mile
special economic zone. One year before the railway launched, you can see residential
high rises in the south and mixed use towers in the north pop up, along with a headquarters office for the Yunnan Haicheng Industrial Group, the Chinese developer behind the zone. Most of this is due to
China's economic investment. (workers speaking in foreign language) - There's a few different motivations for China and the Chinese government. They're looking for new markets, new opportunities for Chinese companies and new places to export
their excess capacity in things like railway,
ports, hard infrastructure. Of course, it's to a great extent about the geopolitical game trying to increase China's
influence in the world. - [Narrator] If the
larger network across Asia develops as imagined, experts
say China will be able to bind these economies to
its own for decades to come and since opening almost two years ago, the line from China to Laos has carried more than
20 million passengers and more than 25 million tons of cargo. For Laos, the railway is essential for fulfilling its ambition of growing into a robust export market. - Lao really wanted to go from, you know being landlocked to land linked. - [Narrator] The World Bank
says the Laos-China Railway could raise the Southeast Asian
country's aggregate income by up to 21% over the
long term if managed well. (horn blaring) More than 2000 products
are now approved for export via the new cargo route. Products like watermelon, cassava flour and rubber are heading to China. While mechanical equipment
and chemical fertilizers pour into Laos, but weather Laos can reap the financial returns
it imagined is still unknown because in order to make
this railway happen, Laos had to take on significant debt. (train swooshing) According to World Bank records, more than half of the $6
billion high-speed rail line was funded by loans from the
Export Import Bank of China, a Chinese state-owned lender,
and to pay for its share, Laos borrowed about $1.5
billion, but in 2016 the country already had
high levels of debt. - They borrowed at a time where their debt was
actually unsustainable. Their revenue kind of
stayed at the same levels, but their debt became unprecedented. You can see kind of a huge spike in borrowing from about 2013. - [Narrator] Laos debt has since grown. In 2021, the country's
external debt stocks amounted to about 90% of its GDP and now with surging inflation and no clear bailout agreement set, the country is heading
into an economic crisis. - People are worried
about their employment, the fact that they
can't buy goods anymore. There's a general feeling that
there's a real crisis abound. People are sort of looking for a way out. - [Narrator] Some Lao people are concerned about displacement and land loss, along with the environmental
impact of the railway. Although China's Ministry
of Foreign Affairs says that around $260
million of construction funds were used for environmental protection, the World Bank estimates that
BRI transport infrastructure could increase carbon dioxide emissions by 7% in the country. Other critics of the project
view this type of lending as dangerous for developing countries. - A narrative that the US government and some allied governments
have been trying to push, that China is trying to use debt traps to kind of undermine the
sovereignty of third countries like Laos and and many others. - [Narrator] China's
Ministry of Foreign Affairs has called these claims lies, adding that the Laos government
has publicly refuted this. - But I don't think that's necessarily how a lot of developing
countries would see things. I think they see these things as, you know opportunities that
come with strings attached. - [Narrator] Because
of its size, location, and economic situation, Laos
didn't have a huge queue of foreign investors waiting to come in and build large infrastructure
projects like the railway. China offered Laos a unique opportunity. Loans with generally higher interest rates than Western countries,
but with less scrutiny. - Was much easier to unlock the financing, to continue to get the financing and that's partly because
of some of the protocols and the lack of conditions that China has. - [Narrator] The fear
among Western countries is that Laos economic situation will mirror that of Sri Lanka, where the country's sovereign debt crisis in part stimulated by Chinese lending has crippled its economy and sparked months of political
turmoil and public unrest, but Laos and Sri Lanka differ
in their relation to China. - It's uncontested that Laos and China have a special relationship where China is much more generous than they are to potentially anyone else in the BRI. - [Narrator] Laos and China are both ruled by an authoritarian communist regime, which experts say contributes
to their diplomatic ties. - They're neighbors, but
they're lucky in that, unlike many of China's
other neighboring states, there's no ongoing territorial dispute between China and Laos. - [Narrator] And as
recipients of Chinese aid, Laos along with Cambodia
have often sided with Beijing on maritime disputes
in the South China Sea, that they aren't a party to. The diplomatic ties between Laos and China date back over 60 years. Laos has often backed China's positions in international forums,
such as gatherings of a regional block called ASEAN, the Association of
Southeast Asian Nations. Over that same period, the US and Laos have developed a complicated
relationship because. - Laos was extensively
bombed by the United States during the Vietnam War or what the Vietnamese
would call the American War. - [Narrator] In 2016,
president Barack Obama was the first US president
to visit the country. He offered reconciliation and $90 million to help clean up unexploded cluster bombs, but decades after the war ended, unexploded ordinance is
still injuring villagers and slowing development. (bomb explodes) A spokesperson for the State
Department said that in total the US has given Laos $355 million since the effort to survey
and clear unexploded ordinance began in 1995. Experts say that if western countries want to avert deeper China relations in developing countries like Laos, they need both a stronger
relationship and approach. - If the US is trying to
kinda win more influence in Southeast Asia or other
parts of the developing world, they need a counter offer, rather than just criticizing
Chinese projects. - [Narrator] Some analysts
say Lao's diplomatic ties are why the country hasn't
sought Western solutions to its debt issue, like the United Nations
International Monetary Fund based in Washington DC. - Even in this time of
severe debt distress, Laos is still much more keen
to try to work out their debt with China directly. - [Narrator] To China,
this 262 mile rail line showcases its vision of success as a partner on massive
infrastructure projects. A point it's eager to make Since the BRI has been in retreat in recent years with a number of projects stalled or entangled in controversy. - If you wanna get the benefits
from a big project like this you need to have a lot
of ancillary facilities and connections to make the
new rail network worthwhile and it's not clear that there's been a fully thought through plan - [Narrator] And as it stands today, economists are still at odds
over its financial rationale. - There has been a lot
of industrialization that has been stimulated
by the Chinese lending, but it's not really been concerted. The big push hasn't yet happened for Laos. It's gone from a country
that had enormous potential, to a country that's now really at the bottom of its trajectory
in terms of development. (bright music)
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