Pan-Asia Rail Network: Challenges of the Southern Belt and Road Route

Construction of the Pan-Asia Railway Network within China has been going smoothly, but construction of sections outside China, especially foreign sections on the eastern and western lines, will not see substantial improvements in the short term.
by Ma Bin
November 3, 2015: Kunming South Railway Station under construction in Kunming, capital of Yunnan Province. Four major rail links, including the LanzhouChengdu-Kunming Line, the Shanghai-Kunming Line, and lines running to coastal areas of southern China and to southwestern China, as well as the PanAsia Rail Network, converge at the station. CFP

Railway construction is a priority to enhance connectivity during the implementation of the Belt and Road Initiative. Major railways connecting China and other countries along the Belt - and Road include both northern and southern routes. The northern route, which starts from Xinjiang Uygur Autonomous Region and northeastern Chinese provinces, connects China to Eurasian countries such as Russia and Central Asian countries. The southern route connects China to Southeast Asian countries via southwestern Chinese provinces. The two routes are important underpinnings for constructing overland international economic cooperation corridors of the Belt and Road Initiative. Such infrastructure would facilitate a greater flow of personnel, commodities, and cultural exchanges between China and other countries along the Belt and Road. However, compared with the rapidly-progressing northern route as seen in lines such as China Railway Express to Europe, the southern route, represented by the Pan-Asia Railway Network, lags behind in construction.

With a total length of 15,000 kilometers, the Pan-Asia Railway Network consists of three lines: the China-Vietnam-Cambodia-Thailand-Malaysia-Singapore eastern line, the China-Laos-Thailand-Malaysia-Singapore central line, and the China-Myanmar-Thailand-Malaysia-Singapore western line. Construction of the Pan-Asia Railway Network within China has been going smoothly, but construction of sections outside China, especially foreign sections on the eastern and western lines, will not see substantial improvements in the short term. Only the central line has witnessed some progress over the past two years: Construction of the China-Laos Railway started in December 2016, and is expected to be completed by 2020. The first phase of construction of the China-Thailand Railway is expected to begin in 2017. Generally, various factors have resulted in slow construction of the southern railway corridor. Unsettled political situations in some countries and ballooning costs and cuts in funding, as well as outside influence and intervention from regional and global powers, can all be partially blamed for the situation. The following are the four key factors hindering the construction of the railway network.

November 3, 2015: Kunming South Railway Station under construction in Kunming, capital of Yunnan Province. Kunming South Railway Station, a very important transportation hub in the making, will become the largest fully-functioning international transit junction in southwestern China once it is completed. CFP

The first factor is a turbulent political situation in several countries. Construction of the Pan-Asia Railway Network not only requires abundant resource input from related parties but also a comparatively stable social environment. However, in the past few years, construction of several key stations on the Pan-Asia Railway Network, including stops in Myanmar, Thailand, and Cambodia, has been delayed by social unrest characterized by either internal armed conflict or social instability triggered by elections. For such reasons, construction of the Pan-Asia Railway Network in these countries has been placed on the backburner. Some agreements and contracts on the construction of the Pan-Asia Railway Network signed by China and related countries have become void and some were not completed by a certain deadline, causing some projects to be suspended indefinitely. Instability would slow the construction process anyway. Since domestic chaos has already jeopardized the safety of the employees and property of the enterprises building and operating the railway network in these countries, respective governments must intervene. However, any simple fix, such as suspending projects until the situation gets better or wasting the entire budget on security, would still hamper construction of the railway network. Policy uncertainty and increased costs brought by instability in some countries along the railway network, as well as changes in some bilateral relationships, have impeded the construction processes of various lines in the railway network.

The second key factor is pressure from cost-benefit analyses. The general precondition for countries to participate in the construction of the Pan-Asia Railway Network is the promise of benefits outweighing costs. Certainly, every Southeast Asian country would welcome a “free ride” on a railway connecting them directly to China to share the fruits of China’s economic development. In fact, such an idea is directly in line with the sharing concept advocated by the Belt and Road Initiative, and is meant to serve as the fundamental motivation to seek rail connectivity with China. For China, the Pan-Asia Railway Network can provide new passageways between China and Southeast Asian countries, which would not only facilitate greater bilateral trade and strengthen bonds, but also consolidate the cooperation framework of the Belt and Road Initiative. However, various parties have produced differing assessments and calculations on construction costs and benefits. While one project or plan is deemed economically reasonable in the eyes of one party, it may not appear so to another. If various parties cannot reach consensus on cost sharing and revenue distribution, it will be difficult for the Pan-Asia Railway Network to become a reality.

The Nong Khai-Nakhon Ratchasima line, the northern section of the China-Thailand Railway, represents a key example of this problem. Economic considerations remain the major cause of Thailand’s inertia in constructing the section. Since areas along the line feature comparatively backward economic development and small populations, they don’t foresee sufficient volume of passengers or goods to keep trains operating regularly on this route. If most trains are moving passengers and freight from China, the line would only have a limited effect in driving local economic development. And passage via local roads and airways is quite affordable, so cost pressure on introducing a railway has been mounting. For China, the China-Thailand Railway would represent a landmark project and a big step in China’s high-speed rail going abroad. China places high value on such a line as a model for building the Belt and Road, but it still must strike a balance between strategic gains and economic costs.

December 15, 2016: A train passes the Dalihuaying Extra-large Bridge. The bridge is located along the Kunming-Yuxi section of the China-Vietnam and China-Laos international railways. by Zhang Xiangtao/Xinhua

Thirdly, political worries choke momentum. Railway connectivity, like other forms of economic cooperation, will generate an additive effect in the political realm. Sound operation of the Pan-Asia Railway Network will become a positive factor in consolidating and upgrading bilateral relations between China and the respective countries in the network. Although railway connectivity under the Belt and Road Initiative framework aims to promote economic cooperation between involved countries, some have expressed concern about the accompanying political effects. Countries along the Pan-Asia Railway Network are more sensitive towards changes in relative gains. The postponement of the construction can also be attributed to financing and management problems.

Finally, the impact of fierce geopolitical competition cannot be ignored. The Pan-Asia Railway Network will promote ties between China and Southeast Asian countries elevate China’s status and enhance its influence in Southeast Asia. During the geo-economic structure remodeling process, countries with major influence in Southeast Asia have been watching closely and have even expressed opposition to railway network construction. In recent years, Japan has increased its investment in the railway infrastructure of Southeast Asia. India has proposed and promoted the Look East Policy. These moves have influenced the expectations of some Southeast Asian countries on the southern railway route along the Belt and Road. Some have consequently become more reluctant to participate and amended their cooperation conditions, impeding the construction process of the Pan-Asia Railway Network.

All these factors—unstable political situations, cost pressures, political maneuvering and geopolitical competition—have been hindering construction of the southern railway route along the Belt and Road. In the future, specific challenges may change along with developments to the situation, and some now minor factors could become more influential.

The author is an assistant researcher at the Center for Russian and Central Asian Studies and the Center for Shanghai Cooperation Organization (SCO) Studies, under the Institute of International Studies at Fudan University in Shanghai.