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    On the China-Laos Border, a Cautionary Tale of Hot Money and Wild Dreams

    Chinese investors have poured money into the small Lao town of Boten, believing a new railway would bring massive growth. But the hoped-for boom has yet to arrive.

    Editor’s Note: This is the final article in a three-part series exploring the impact of the Laos-China Railway, a major project under China’s Belt and Road Initiative that connects cities across Laos and southwest China. Read Part 1 and Part 2.

    BOTEN, Laos — The center of Boten has an eerie feel to it. Everything in this border city in northern Laos looks huge: High-rise offices tower over wide, straight highways; vast hotels sit next to expansive duty-free stores. But all of these buildings sit in near total silence.

    During the day, there is barely a car visible on the streets. Pedestrians casually wander across the highway; some even stop in the middle of the road for a chat. The only signs of life come after dark, when the karaoke bars and nightclubs open, and the crooning of middle-aged Chinese men fills the air.

    After a week traveling across Laos, Sixth Tone has witnessed many examples of Chinese investment driving real economic progress. But Boten represents a cautionary tale: an example of how things can go wrong.

    Until recently, Boten was little more than a scrappy border town. Sitting just across the border from China, it became famous as a playground for Chinese gamblers in the 2000s — a place where anything goes. Casinos and prostitution became major industries, and the city acquired a reputation for violence and lawlessness. 

    Local residents still discuss the shocking incidents that were part of life in the city during that period: debtors tortured, families robbed and murdered. In 2011, the authorities decided to crack down, shutting down all the casinos, and for several years after that Boten effectively became a ghost town.

    But the city’s fortunes transformed again in 2015, when China and Laos confirmed an agreement to move forward with the construction of a new railway connecting the two countries. The $5.5 billion project — signed as part of China’s Belt and Road Initiative — received massive levels of publicity, with officials stating the 1,000-kilometer line was designed to be just the first phase of an ambitious “pan-Asian railway network” connecting China with Southeast Asia.

    Boten — the first Lao city Chinese passengers would reach via the new rail line — suddenly became an attractive proposition for investors. The following year, the Chinese real estate company Yunnan Haicheng Industrial Group launched an ambitious project to develop the city into an international hub in the mold of Hong Kong and Singapore, branding Boten as the “first stop of China’s Belt and Road Initiative in Southeast Asia.”

    An entire new city center emerged, with hills flattened and replaced with rows of high-rises. Meanwhile, a slew of policy incentives were agreed to attract Chinese businesses. Boten and Mohan — the Chinese city just across the border — formed an “economic cooperation zone,” which the two sides plan to develop into a free trade zone. 

    Boten became the only city in Laos to grant foreign investors the freedom to maintain 100% ownership of their businesses. The Chinese yuan is used all over the city in addition to the kip, Laos’ local currency. Eventually, there are even plans to allow Chinese citizens to enter Boten’s special economic zone using only their Chinese ID cards. Haichang Group was granted the right to manage the SEZ and approve any new investment projects.

    Yet, over a year after the Laos-China Railway finished construction, Boten still feels like a village embedded inside an oversized urban landscape. During the day, the liveliest place in the city is a crossroads with a dozen stalls selling fruits and vegetables, along with a few restaurants. One Chinese resident who has lived in Boten for years tells Sixth Tone that a lot of businesses are struggling to make money. “It’s like a dead city,” he says.

    Haichang Group, however, insists that things will turn around. On the first floor of the company’s extravagant downtown sales office, a large LED screen mounted to one wall displays a map showing Haichang’s lavish development plan for the city. A salesperson in uniform guides Sixth Tone through the plan, using a laser pointer to highlight different areas of the plan.

    “This is the commercial and financial district,” he says, speaking in a rapid monotone, as if he’d given the same presentation hundreds of times. “This is our education district … And here is the biggest district, the cultural and tourism district, where we will build up ancient city attractions from the bare land.”

    According to the salesperson, the most “accomplished” area of Boten is currently the commercial and financial district, which is the only area where new buildings have been constructed. Moving over to the other side of the hall, he introduces a display highlighting the advantages of Boten and listing major events held in the city in recent years.

    “Boten is connecting the 1.4 billion people of China and the 600 million people in Southeast Asia. It’s the distribution and transfer center for flows of all these people, goods, capital, and information,” he says. “Laos sees it as its northern gate and its economic center. It’s like what Shanghai means to China.”

    Before the pandemic, the company appeared to be having some success with this sales pitch. Jessica DiCarlo, an assistant professor at the University of Utah who has studied the Laos-China Railway and Boten for years, says that in 2019 the Haichang sales center was receiving dozens of visitors every day.

    To many Chinese, the project seemed to make sense based on their previous experience investing in China. The apartments were cheap by Chinese standards, and the Laos-China Railway was due to open soon, so many buyers assumed that real estate prices here were sure to rise.

    But when COVID-19 hit, things suddenly ground to a halt. Construction was paused on projects across Boten, as many Chinese workers left and returned home. Both Laos and China imposed tight border restrictions that lasted for years — Chinese controls were finally rolled back in early 2023.

    These days, the Haichang sales center appears to receive far fewer inquiries. When asked about the company’s recent sales record, the salesperson sneers: “Of course we have sold a lot. People from every country can come and purchase apartments here.” Local residents, however, tell a different story. Several tell Sixth Tone that Haichang’s freight yard is currently the company’s only property in Boten that appears to be doing well.

    Indeed, logistics appears to be one of the few industries that is thriving in the city. Apart from restaurants, hotels, and grocery stores, customs clearance agencies are among the most common businesses on the streets here. Near the border, hundreds of trucks can be seen waiting in line to pass through customs.

    “The logistics was a reason to support Boten as a project,” says DiCarlo. “In planning documents, they keep saying this place is really connected, and so it will become a logistics hub.”

    The new railway is expected to drive a significant increase in trade between Laos and China, as the cost of shipping goods from Kunming to Vientiane will reportedly fall by 50%. However, it’s unclear to what extent this will benefit Boten. DiCarlo says the city’s planners may have been overly optimistic on this front.

    “A lot of the concerns in Laos are about: Is the trade actually going to stop in Laos, or will it just pass through Boten and go straight to China?” she says. “For Lao cities to benefit from the logistics system, one thing is setting up the systems to be able to collect duties and taxes. I don’t think it’s happening very well now in Boten.”

    For Boten — and for Haichang — the hope is that Chinese workers and investors will return now that the borders have reopened. There are tentative signs of a revival. Quite a few newcomers have arrived in the city in recent months, both Chinese and Lao. However, many of them appear to be drifting around, and say they only plan to stay for a few months.

    “I was just here for fun, but you can’t just hang around with no money, so I started doing business,” one man selling fruit on the street tells Sixth Tone.

    Several new Chinese restaurants have also opened. Red firecracker shards are still visible on some roads from opening night celebrations, and in the evenings the sound of more firecrackers going off punctures the silence. “They think doing business here is easy, but it’s not as easy as they think,” one restaurant owner, who has lived in Boten for over a decade, remarks.

    The biggest event held during Sixth Tone’s visit is a lecture series organized by Boten’s only international school. At the largest hotel in the city, advertisements for the school plaster the walls and elevators, with slogans declaring the school as “the Huawei of the education industry” — a reference to a leading Chinese technology company — and that it can “cultivate a normal person into a genius.”

    The largest group of arrivals appears to be truck drivers. In a freight yard on the city’s outskirts, a group of truckers rest in the shade under their rigs. Some play cards together, while others make tea and cook using small gas stoves.

    Zhang Zhongyong, known among the drivers as Brother Zhang, is the unofficial leader of the group. A native of northwest China’s Shaanxi province, he has been driving between Laos and China since 2015, and continued doing so even through the height of the pandemic.

    During the pandemic, Chinese drivers in Boten actually made a good living, Zhang says. With trucks banned from crossing the border, the small group of drivers who had stayed in Laos were in high demand. They would shuttle goods from all over Laos to the customs checkpoint in Boten, where they’d be processed and then picked up by drivers on the Chinese side. The drivers would spend the long periods waiting at customs living inside their trucks, or occasionally staying in nearby hotels.

    Even the opening of the railway to freight traffic in late 2021 didn’t affect the drivers’ income too much, Zhang says. The freight trains took over the transportation of some basic commodities, such as steel, minerals, and corn. But companies still use trucks for time-sensitive orders, or shipments that are too small to fill a container. According to Zhang, truckers are getting plenty of business from e-commerce platforms like Taobao, which are becoming increasingly popular in Laos.

    But things have gotten tougher for drivers in Boten this year, Zhang says. There has been a huge influx of new drivers from China, who have decided to try their luck in Laos after being impacted by the economic downturn at home. With competition for orders increasing, logistics companies have taken the opportunity to slash their delivery fees.

    “Many people who can’t earn much money in China have come to Laos this year — the competition has become so fierce,” Zhang says. “Earlier this year, the price for sending a truck of bananas was around 13,000 yuan ($1,800). Guess how much it is now: It’s 5,000 yuan!”

    But Zhang plans to stick it out in Boten. He employs two local drivers here, and has sons in primary school and college. Plus, after years in Laos, he has gotten used to the slower pace of life here. He can no longer “compete” with Chinese drivers, who rush to take orders and drive tirelessly for days and nights without a break, he laughs.

    And, despite all the problems the city has faced since the pandemic, Zhang is still holding out hope that Boten can become a success. It’s got Laos’ relaxed lifestyle, but is also convenient for Chinese expats due to its proximity to the border. It’s even possible to order from Chinese e-commerce platforms here. Surely, it’s just a matter of time before things pick up, he says.

    “Although there aren’t many people here now, the city is the first stop for Chinese people entering Laos,” says Zhang. “It will eventually develop, and the real estate market will boom.”

    Editor: Dominic Morgan.

    (Header image: Workers walk through a freight yard in Boten, Laos, July 2023. Wu Huiyuan/Sixth Tone)