The Price of Growth: China’s Investment in Laos

Laos, a country nestled in Southeast Asia, has seen a surge in infrastructure development courtesy of Chinese loans under the Belt and Road Initiative. With a focus on energy projects and high-speed rail lines, China aims to supercharge Laos’ economy for sustained growth.

However, despite the massive investments in hydroelectric dams and other energy ventures, Laos has yet to reap the economic rewards it envisioned. Economic indicators now paint a grim picture, revealing a debt burden exceeding $13.8 billion, representing over 100% of the nation’s GDP.

Notably, half of Laos’ foreign debt is owed to China, prompting concerns of overreliance and debt-trap scenarios. Analysts like Zachary Abuza warn of Laos’ precarious financial situation, exacerbated by unproductive projects leading to currency devaluation and soaring inflation.

The Impact on Ordinary Laotians

As economic woes mount post-COVID, Laotians are feeling the squeeze with rising costs, sluggish growth, and essential services lacking. Many have turned to subsistence livelihoods as businesses shutter, while the wider population remains largely unaware of the debt implications tied to China.

In this delicate balancing act between growth ambitions and debt sustainability, Laos grapples with navigating its economic future in the shadow of Chinese investments.

Article by: Wesley Rahn