Free Trade Zones

China-Laos Railway to Reduce Transportation Costs and Boost E-commerce

Vientiane station in Vientiane, Laos, October 16, 2021. / CFP

Vientiane station in Vientiane, Laos, October 16, 2021. / CFP

The launch of the China-Laos Railway of over 1,000 kilometers will facilitate land transit trade, help reduce transportation costs and boost cross-border e-commerce.

The railway departs from Kunming in southwest China to the north, passes south through Yuxi and Pu’er, both in China, and ends in Vientiane, the capital of Laos.

Transit trade will remain the largest share of rail freight traffic. Total rail transit trade between China and the Association of Southeast Asian Nations (ASEAN) is believed to account for more than half of the region’s rail traffic and reach 3.9 million tonnes of freight from by 2030, according to a World Bank report.

Based on current trends in land transport, it is estimated that transit trade through Laos will increase from 2 million tonnes in 2016 to 3.4 million tonnes in 2030, and bilateral overland trade between China and the Laos is expected to drop 1.2 million tonnes. in 2016 to 1.7 million tonnes in 2030, according to the report.

Reduce transport costs

Travel time along the rail line is estimated at 10 hours, well below the current travel time of around 30 hours, reducing transport costs between Vientiane and Kunming by more than 30%, according to the Commission d administration and supervision of state-owned assets of China.

Yuxi, in Yunnan province (southwest China), is expected to take advantage of its location to become an international logistics hub for South Asia and Southeast Asia.

Yuxi International Logistics Port, established under the East and Central Routes Road Map of the Pan-Asian Railway, will further strengthen Yuxi’s pipeline capacity to facilitate cross-border logistics and industrial cooperation.

In the port, some logistics and related zones and parks have been deployed, including an industrial city integration zone, a commercial logistics zone, a small and medium-sized business incubator, a complete automotive business park and an industrial park of grain logistics.

As Vientiane, the capital of Laos, is already a gateway to both Thailand and the southern part of Laos, the capital’s train station will be a versatile connectivity hub. Laos can benefit from increased regional transit trade by promoting the road link between the capital and the port of Laem Chabang in Thailand.

Railway performers aboard a train on the China-Laos Railway at Kunming Station before the launch of the railway, in Kunming, southwest China’s Yunnan Province, Dec.3, 2021. / CFP

Railway performers aboard a train on the China-Laos Railway at Kunming Station before the launch of the railway, in Kunming, southwest China’s Yunnan Province, Dec.3, 2021. / CFP

Commerce and e-commerce

The volume of bilateral trade between China and Laos will continue to grow due to the convenience provided by rail. In the first half of this year, the bilateral trade volume between the two countries reached $ 2.3 billion, up 48.1 percent year-on-year, according to data from China’s Ministry of Commerce.

In 2015, China and Laos built the China-Laos Mohan-Boten Economic Cooperation Zone, the second cross-border economic cooperation zone established by China and neighboring countries. The zone aims to facilitate trade, investment and personnel communications and accelerate the development of the border area of ​​the two countries.

The new railway has also triggered new opportunities for cross-border e-commerce cooperation, coupled with a favorable e-commerce environment resulting from COVID-19.

Yunnan, which borders Laos, Myanmar, and Vietnam, has seen rapid growth in cross-border e-commerce since the capital Kunming was designated a nationwide comprehensive test area for cross-border e-commerce.

In 2020, the import and export volume of cross-border e-commerce in Yunnan reached 1.35 billion yuan ($ 212 million), 13.13 times that of 2019, according to Kunming Customs.

In May this year, the Kunming Region Pilot Free Trade Zone of China (Yunnan) signed a “Joint Innovation Cooperation Agreement” with the Mohan-Boten Zone to cooperate in eight areas, including cross-border business affairs, production capacity and electronic commerce. .

In July, the subsidiary of China Post Yunnan transported e-commerce goods sold in Thailand to the port of Mohan for customs clearance by land transit. It was the first time that cross-border e-commerce goods successfully cleared Mohan Port.

In August, China-Laos-Myanmar-Vietnam cross-border e-commerce training started in Kunming, aimed at cultivating specialist talents in cross-border e-commerce for the four countries.