As Premier Li Keqiang began his first official visit to Laos, Beijing is boosting its political ties with the impoverished nation, consolidating its role as China’s backer in Southeast Asia.
Li, who is in Vientiane also for a regional summit, came as China’s relationship with Southeast Asia is in question, mainly because of Beijing’s increasing assertiveness in the South China Sea.
US President Barack Obama is also in Laos for the regional summit. On Tuesday he spoke of the devastating US bombing of Laos during the Vietnam war in the 1960s and 70s, and offered US$90 million over three years for the removal of cluster bombs and other unexploded ordnance.
Observers said Li was expected to push forward economic and infrastructure projects in Laos, pushing forward China’s One Belt, One Road initiative.
Du Jifeng, a Southeast Asian affairs specialist at the Chinese Academy of Social Sciences, said as economic ties advanced, the two countries still had room for stepping up political cooperation.
There was “competition between China and the US” for influence over Laos, Du said. “But it is not a zero-sum game.”
The relationship between Laos and China hit its low point in the 1970s over China’s limited invasion of Vietnam after it moved to unseat the Khmer Rouge in Cambodia, and over Chinese backing of Hmong resistance.
But relations improved in the 1990s, and with China’s rising economic might, it became Laos’ biggest investor in 2013. Trade between the two nations reached US$2.78 billion last year.
Most of China’s investments go into the energy and mining sectors, including the construction of the Nam Ngiep 1 hydropower project at a cost of more than US$868 million.
One of the major projects planned is a rail link between Kunming in Yunnan and Vientiane and Thailand.
Last December, a ground-breaking ceremony attended by Laotian and Chinese officials was held in Vientiane, which was seen as a symbolic start of construction on the 427km railway. It is expected to be completed in four to five years.
China is also building the Luang Marsh Special Economic Zone near Vientiane, costing US$1.6 billion. The 365-hectare zone will host a large residential area, public parks, hotels, malls and entertainment venues.
As the chairman of the Association of Southeast Asian Nations this year, Laos is of crucial importance to China.
A good relationship with Vientiane can help keep the Asean bloc from criticising China over the South China Sea.
In July, Laos had already extended its support to China by refusing to accept an international tribunal’s ruling on the maritime disputes, Xinhua reported earlier.
Song Qingrun, an analyst from the China Institutes of Contemporary International Relations, said Li would promote crisis management mechanisms in the South China Sea during his visit, as well as economic cooperation.
“As Asean and China have agreed on a code for unplanned encounters in the South China Sea, this tense area is expected to become gradually calmer.”
But there is still resistance inside Laos over China. As Chinese investment mainly goes into energy and mining, critics worry that the pattern is unsustainable and may undermine the country’s long-term development.