Cars pass through a check point on the China-Laos border in Mohan, Southwest China's Yunnan Province, which is a key port for bilateral trade. Photo: CFP
Although challenges remain, economic and trade cooperation between China and Laos will be further deepened in the coming years, especially in areas pertaining to the One Belt, One Road initiative, experts said Monday as leaders of the two countries met in Beijing.
China and Laos are expected to play a leading role in major projects, including railways and development zones, in a bid to beef up cooperation on production and investment, Premier Li Keqiang said Monday during talks with Lao Prime Minister Thongloun Sisoulith.
Thongloun is on a four-day official visit to China which extends through to Thursday.
Referring to China as "a sincere friend and brother of Laos," Thongloun hailed the sound development of Laos-China relations, according to the Xinhua News Agency.
The economic and trade ties between China and Laos remains sound and the two countries will further enhance cooperation in many industries including infrastructure, agriculture, finance, mining and tourism in the coming years, experts noted.
Infrastructure has the largest scope for bilateral cooperation as China has helped Laos construct bridges and roads in previous years, said Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations (CICIR).
Chen told the Global Times on Wednesday that the "telecommunication and medical care sectors will capture more attention from both countries in the future."
The Lao Prime Minister said the Laos-China railway is of great importance to the country and that they will spare no effort in promoting it, the Xinhua report said.
As a vital project of the Belt and Road initiative, the China-Laos railway has a length of 417 kilometers and links the Mohan-Boten border with the capital, Vientiane.
Started in December 2015, construction for the project was scheduled to take five years with an investment worth 37.4 billion yuan ($5.4 billion). But construction has stalled due to factors such as capital and payment methods, media reports said.
"The construction of a China-Laos railway will strengthen bilateral trade and help achieve infrastructure interconnection between the two countries," Bai Ming, research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.
China is Laos' largest trading partner. Trade between the two countries amounted to $2.78 billion in 2015. China's direct investment in Laos reached $1.36 billion during the same period, up 36.2 percent on a yearly basis, according to data released by the Ministry of Commerce.
The China-Laos railway is a vital part of a trans-Asia railway network that will also link with Thailand in the future, which is also conducive to China's relationship with the Association of Southeast Asian Nations (ASEAN), noted Bai.
Chinese Vice Foreign Minister Liu Zhenmin said after the talks that the Chinese government is committed to forging ahead with the railway project, according to Xinhua.
Experts said that Laos will join forces with China to promote the growth of a China-ASEAN free trade area as well as the Regional Comprehensive Economic Partnership.
Opportunities and challenges
Given its underdeveloped economic growth and geographical limitation, Laos is stepping up efforts to connect with neighboring countries and regions to promote its development, experts said.
"Although limited by its geographical position, the inland country could make better use of the Belt and Road initiative to extend its expanse in other farther countries and regions," noted Chen, the research fellow from CICIR.
It is quite vital for the country to integrate its development plan with the advance of the initiative, Chen said.
The Lao market has large development potential because investment costs in the country are relatively low, Bai said, noting that "the growth potential of Laos will largely appear after the improvement of its transportation."
But experts warned that challenges still remain and that Chinese enterprises need to pay attention to the investment demand of the local market.
Large Chinese firms are expected to invest in infrastructure, such as water conservancy facilities, while small enterprises might expand in areas like logistics, according to Chen.
Chinese companies investing in Laos should understand that they may not get paid on time as local firms' payment capacity is weak, Chen said.