On the rails

Piti Srisangnam from Thailand's Chulalongkorn University told media that the China-Laos Railway is far more profitable than to be categorized as a "debt trap", given that freight volume — the railway's main revenue source — in 2023 doubled the break-even point, or the point at which total cost and total revenue are equal, of 2 million tons a year.

"This project is the opposite of the debt trap status. It is an important source of foreign currency flowing into Laos," said Piti, who has been teaching international economics and ASEAN studies at the Chulalongkorn university since 2002.

"To understand this (debt trap) narrative, we must first understand what a debt trap means."

The lecturer explained that "debt trap" criteria are met when a country, the creditor, is well aware that a project is not profitable, but gives away a loan anyway in order to lure another country, the borrower, into a debt trap with the purpose of damaging the borrower's economy.

But the rail project cannot be considered as such because China is not just the creditor but also a borrower and owner of the project via the joint company for up to 70 percent, which means Laos is responsible for 30 percent, amounting to just $1.4 billion to $1.6 billion of the project, Piti said.

China is not unwise enough "to invest in a project that will certainly go bankrupt", said Piti, who is also executive director of the ASEAN Foundation, adding that ensuring profitability is a win-win approach.

Many observers shared this view, justifying that if this major BRI project is a "debt trap" and does not prove successful in Laos, then the global infrastructure drive is unlikely to gain support elsewhere.