When it was unveiled in 2013, a major component of China’s Belt and Road Initiative (BRI) was to use Chinese companies, capital, and technology to build the next generation of railway infrastructure in Southeast Asia. Soon after the BRI was announced, a flurry of deals was signed. In 2015, China and Laos inked a deal on a 420-kilometre railway between the capital of Vientiane and the border town of Boten that would establish a direct rail link with the Chinese province of Yunnan.
Also in 2015, Indonesia picked China over Japan to build its first high-speed rail system, a 143-kilometer line connecting the cities of Bandung and Jakarta. A year later, China and Malaysia agreed on basic terms for the East Coast Rail Link, a 660-kilometer line starting at Port Klang, then running up the east coast of Peninsular Malaysia and ending in Kota Bharu near the border with Thailand. That same year, China and Thailand reached an agreement on their own railway deal, the first phase of which involves building 253 kilometers of track between Bangkok and Nakhon Ratchasima, the largest city in northeastern Thailand.
When these deals were first signed, they reflected an ambitious vision for the region, one where China would occupy a central role as supplier of key technologies, skills, and financing for critical national infrastructure. At the time, it was not clear how realistic all of this was. Nearly a decade later, that vision is coming into sharper focus.
The Vientiane-Boten line was opened in 2021, and the Jakarta-Bandung line in 2023. Malaysia’s East Coast Rail Link is about 80 percent complete, and should be operational by 2027. In Thailand, the line connecting Bangkok to Nakhon Ratchasima is almost 40 percent complete. A second phase, which includes an additional 335 kilometers of track from Nakhon Ratchasima to the border town of Nong Khai, was approved by the government earlier this year.
It has not all gone smoothly. These projects have been plagued by delays and cost overruns. They have become intensely politicized and touched off debates about whether the economic value created is worth the debts being incurred. For a while, it seemed like the Malaysian and Thai projects might be shelved indefinitely.
Executives linked to China Railway Co. have recently been implicated in a major corruption scandal in Thailand following the collapse of an under-construction building during last month’s earthquake. And if Indonesia’s high-speed rail line is never extended beyond Bandung, it will probably go down as a costly example of wasteful techno-hubris. So, Chinese investment in Southeast Asian rail infrastructure clearly carries an array of risks.
But there is upside as well. Malaysia’s East Coast Rail Link is now nearing completion, and even the Thai project is ambling forward. If the line indeed reaches Nong Khai by 2030 as planned (or more likely a few years later), it will form a major rail artery connecting Southern China directly to Bangkok by way of Vientiane. Taken together, these projects represent around $40 billion invested in building over 1,800 kilometers of critical transport infrastructure in a strategically important and fast-growing part of the world.
And it doesn’t seem like this is the end of China’s railway outreach in Southeast Asia, either. Vietnam recently approved an $8 billion plan to build a new railway linking northern Vietnam to China. Details remain vague, but it seems like they will be seeking Chinese financing for the project. I also think there is a good chance Indonesia will extend the high-speed rail line from Bandung down the length of Java to Surabaya at some point, although it’s impossible to say exactly when that might happen.
These projects are creating new export markets for Chinese skills, technology, and goods. They are integrating major economies throughout Southeast Asia into Chinese value chains and production networks for the long term. Many of these projects have been structured as joint ventures, with at least the potential for skills or technology transfer to local firms. They are also providing relatively advanced modern infrastructure, something countries in the region want and need.
It is difficult not to draw comparisons here between China and the United States. The major economies of Southeast Asia have steadfastly refused to be drawn into any wider U.S.-China rivalry. They have made it pretty clear they are open to dealing with any foreign partner that gives them what they want, such as investment, technology and upskilling.
China is often willing to at least partially meet these demands. On the other hand, what has the U.S. offered? Tariffs, strong-arm tactics, and instability. Even before Trump was re-elected, American investment often came with unpalatable strings attached (see the Just Energy Transition Partnerships in Indonesia and Vietnam) or in the form of private equity, mainly looking to squeeze out profits.
China’s approach carries obvious drawbacks and risks, but it also speaks to the developmental mandate that motivates many countries in the region. Not only has the United States been unable to offer an alternative vision; it doesn’t seem to understand and does not even appear interested in finding out what countries in Southeast Asia actually want in the first place.