Lao railway contract called a hoax

On the eve of a heralded groundbreaking ceremony for the Lao section of the Pan-Asia Railway (see News, 10 March 2011), scheduled for 25 April, the head of the commercial section of the Chinese embassy in Laos, Zhang Yucheng 张玉成, told Southern Weekend 南方周末 that he has “never heard of it.” Hardly believable, since major Chinese newspapers like China Youth Daily reported on the event.

According to the article, the embassy posted on its website a disclaimer that all work on the railway is done by the Chinese Ministry of Railways’ China-Lao Railway Project Coordination Group, and no contract has been awarded to any private company. A consortium made up of the Kunming Railway Bureau, China Railway Engineering (中国中铁), Sinohydro, and Southern Carriage Group (南车集团)has been organised to establish an investment company called 中铁磨万铁路有限公司 (Chinese Railways Boten-Vientiane Ltd.). A similar company is being organised on the Lao side.

Before the dismissal of China’s previous minister of railways on charges of graft, it had been widely reported that a BOT contract for the Lao section of the Pan-Asia high-speed railway had been awarded to a previously unknown Hunan-based private company called Xiaoxiang.

In a later article, 21st Century Economic Herald, Southern Weekend’s sister publication, confirmed that the Kunming police has launched a fraud investigation into Xiaoxiang’s activities. Police say that the company pretended it had gained the contract in order to defraud subcontractors of advance payments. The China-Lao Railway Coordination Group says that Xiaoxiang approached them with a proposal for a BOT contract but was rejected.

But how can a private company without a licence for foreign contracting activity claim for months that he received a government contract of this size, and have this claim reported in major national media, without being either contradicted or investigated? Why did the Ministry of Railways wait until now with announcing who was supposed to be in charge? Xiaoxiang referred to a Lao government decree — so perhaps it did receive a contract from the Lao side, without Chinese government approval. Also, according to the 21st Century Economic Herald report, two Chinese generals were present at the launching ceremony of the company.

The Southern Weekend article’s tone suggests that exporting high-speed railways remains a priority for the Chinese government. Chinese control of the terms of a future global high-speed network, this newspaper with a liberal reputation said, is like controlling the terms of the law of the sea; it would create new rules of the game for the international economy.

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