Pha That Luang, the gold-covered Buddhist stupa in the center of Vientiane, Laos, established in the 3rd century, is a national symbol.
“Laos has debt that totals 120% of GDP. Most of that is to China. China kind of owns Laos,” a friend wrote, sending to me this Washington Post article, entitled, “China’s promise of prosperity brought Laos debt — and distress.”
The Post explains:
China funded much of the glistening new infrastructure that has transformed this landlocked country of 7.5 million people. The building boom showcases the kind of modernity China says it can offer the world . . .
But Laos is also an economy in distress. Inflation rose to more than 41 percent at its peak this spring. The Laotian kip has depreciated more than 43 percent against the U.S. dollar. In a country where virtually everything is imported, the statistics translate into sacrifice: farmers who can no longer afford fertilizer, children who have dropped out of school to work and families cutting back on health care.
The China-led strategy was meant to protect Laos from these shocks — instead, it led to them. Laos is struggling to repay the billions it borrowed from China to fund the hydroelectric dams, trains and highways, which have drained the country of foreign reserves.
The story contains a graphic noting that “44 countries owe more than 10% of their GDP to the Chinese government.”
What does this mean for Laos? And other countries?
Laos has had to make compromises, including on its own sovereignty, to appease Beijing and seek some financial forbearance, allowing Chinese security agents and police to operate in the country as Beijing extends its repression beyond its borders, according to human rights groups and Lao activists. The Laotian electrical grid is now partly controlled by China, in what analysts believe is a trade-off in lieu of debt repayments. A Chinese company provides security for the new train line.
Citizens of Laos are taking risks to speak out:
Lao people have begun to express unprecedented discontent online, targeted at China and their own government, rare in a one-party socialist state where critics are harassed and even disappeared. . . .
“Laos is so indebted to China that [the Chinese] can come over here [and] take our land,” said Nin, a 23-year-old vegetable and condiments seller at a local market in Vientiane, who like other Lao spoke on the condition of anonymity or only with their first name for fear of retribution. Chinese companies, she said, can use Lao workers however they please.
Surveys show a remarkable shift in sentiment away from China to other Asian and Western nations — most surprisingly to the United States, which rained some 270 million cluster bombs down on Laos during a covert campaign in tandem with the Vietnam War in the 1960s and 1970s.
An ISEAS-Yusof Ishak Institute poll shows that Laotians today would prefer “their region align with” the US as opposed to China. Yet, in recent years that same polling showed Lao people favoring China over the US by an 80-20 margin.
Something is going on.
