A new report digs into China’s labyrinthine foreign loans

ON THE OUTSKIRTS of Vientiane, the capital of Laos, workers for China Railway No. 2 Engineering Group recently welded the last two 500m lengths of “seamless rail” for the China-Laos Railway, a flagship project of China’s Belt and Road Initiative (BRI). Chinese state media celebrate the railroad, set to open in December, as a feat of modern engineering. It is also a marvel of modern book-keeping, amassing $3.6bn in debt off the government’s balance-sheet but for which the Laotian state may still end up on the hook. That financing and other “hidden debt” to China amounts to a third of the country’s GDP, which could become a problem: Laos already has sovereign debts equivalent to about 60% of GDP on its books, half of it owed to China.