In a recent interview, Prof. Naubahar Sharif, head of the Division of Public Policy at the Hong Kong University of Science and Technology, provided valuable insights into China’s strategic investments in Laos and their implications for Southeast Asia. He discussed how these developments reflect a broader trend of economic influence and connectivity in the region.
Strategic Importance of Laos as a Trade Hub
In a significant move to enhance its economic influence in Southeast Asia, Premier Li Qiang visited Laos earlier this month, highlighting the nation’s strategic importance in China’s regional plans. Laos, with its unique geographical position, is increasingly viewed as a crucial transport hub for facilitating trade between China and its Southeast Asian neighbors.
Prof. Sharif emphasized that Laos is key to China’s ambitions to expand its economic reach. “Laos is seen as a transport hub for China to export Chinese products to the other countries in the subregion and import products from those countries to China,” he stated. This sentiment reflects the growing recognition of Laos not only as a recipient of Chinese investment but also as a vital link in a larger supply chain.
Infrastructure Development and Economic Integration
The completion of the US$5.9 billion railway in 2021, stretching 400 kilometers from Vientiane to China, marks a significant development in this strategy. As Sharif noted, future enhancements—including new roads, airports, and dry ports—are planned to further integrate Laos into China’s economic framework and bolster trade routes throughout the region. These infrastructure projects are expected to facilitate smoother logistical operations, enabling Chinese businesses to tap into Southeast Asia’s diverse markets more effectively.
The implications of this connectivity extend beyond mere trade; they represent a strategic maneuver for China, especially for its landlocked western regions, which are eager for access to international markets. Sharif pointed out that Laos’s role as a transit point will not only enhance China’s economic footprint but also create new opportunities for local development.
Opportunities for Local Development and Regional Cooperation
China’s growing engagement with Laos is underscored by recent agreements aimed at improving a “connectivity development corridor” linking both nations and Thailand. This collaboration is set to synchronize the China-Laos Railway with Thailand’s rail system, further solidifying Laos's position as a critical transit hub.
As economic ties deepen, Laos stands to benefit from increased investment and infrastructure development. This partnership is seen as a pathway to job creation and economic growth for the Laotian people, who view China as a vital ally in their development journey.
In summary, the relationship between China and Laos exemplifies a strategic alignment that could reshape trade dynamics in Southeast Asia, with significant implications for regional development and economic cooperation. With ongoing investments and infrastructure advancements, Laos is poised to emerge as a key player in the region’s economic landscape, underlining the critical perspectives shared by Prof. Sharif.
Acknowledgements
Other experts, including the following, also contributed their perspectives, enriching the discussion around this important topic:
Supitcha Punya - Assistant Professor of Political Science and Public Administration, Chiang Mai University
Poh Lynn Ng - Economist, Asean+3 Macroeconomic Research Office (Amro)
This interview was published by Ralph Jennings in the South China Morning Post.
