Connecting Asia: India Talks, China Builds
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The cost of the 400 km railway line estimated at $7 billion will be borne by Laos. Chinese banks will lend the money. Laos is said to be pledging its national mineral wealth as collateral.
Experts with the international development agencies have strongly criticized the deal as imposing massive future financial burden on Laos. The ruling communists in Vientiane appear to have taken a political decision in favour of the project.
While international development experts and a few voices in Laos and Cambodia fear that the two countries are being subject to China's 'neo-colonialism', there is no denying the dramatic expansion of Beijing's influence in a critical region of South East Asia.
The scale of financing and scope of the projects that China can deliver has begun to eliminate the traditional dependence of small nations on multilateral lending agencies for large projects.
Japan and the United States, which once had the leadership of development initiatives, have lost much ground to China in recent years. While Washington and Tokyo are scrambling to respond the dramatic rise in Chinese influence in Indo China, Delhi is in the danger of becoming an outlier in the economic development of the region.
While the foreign office in Delhi sees the strategic significance of promoting connectivity, especially the East-West corridors linking the subcontinent to South East Asia, it is not clear if there is real competence in the rest of the government to make this happen. Most of India's plans for connectivity with South East Asia have remained on paper.
If the government is unable to move, much the same can be said about the Indian private sector. While the Indian FDI has grown rapidly in South East Asia, the Indian corporates remain invisible in the strategic sectors of the region.
Cambodia and Laos, along with Vietnam, were once known as "Indo-China". This was where the Indian and Chinese civilizations met. But as Beijing integrates these bordering regions into its own economy and Delhi remains paralysed, 'Indo-China' might soon be a misnomer.