Thai-Sino railway project: Neither side can afford a derailment

That question inevitably came up during a cordial chat with Chinese Ambassador Ning Fukui on the evening of the latest round of bilateral talks in the Chinese capital.

The envoy had anticipated the enquiry. 

“I knew you were going to ask about the railway project, so I made a call to Beijing. The conference was still on when I called and the results should be known soon enough – maybe even tomorrow.”

The sense of urgency was plain. Whatever the degree of divergence in views on both sides, the rail project was too politically significant to be allowed to be seen as aborted – despite the obvious breakdown in negotiations when Prime Minister Prayut Chan-o-cha met with Chinese counterpart Li Keqiang in Hainan in March then announced Thailand would go it alone in building the Bangkok-Korat link with its own budget.

Ambassador Ning admitted that the Chinese side was blindsided by that decision. But Thai side’s “surprise” move would not prevent the big plan from proceeding, he confirmed.

The latest round of talks refocused efforts on pushing the project forward, with the Thai side pledging to provide all the investment and China revising downward the costs of engineering work and the electrical train system.

The announcement that the cost revision will be completed  “within one week” suggests both sides have agreed things must be speeded up if any real progress is to be achieved.

After so much negative publicity for the project, Bangkok and Beijing now realise that without concrete advances, the scheme could well be seen as nothing more than a symbolic gesture gone awry.

A compromise of sorts has obviously been struck. Transport Minister Arkhom Termpittayapaisith said Beijing had been informed that the Thai government was ready to consider a loan offer, if the conditions were right. It was also reported that Chinese officials had revealed that the interest rate on any loan could be reduced from 2.5 to 2 per cent.

The Chinese ambassador was anxious to point out several major “facts” in a bid deflate any attempt to paint the joint rail project as hopelessly entangled:

1. There is no truth whatsoever in news reports that Beijing had demanded a clause to allow the Chinese side to make commercial use of land on both sides of the tracks. Earlier reports had suggested the Chinese-Lao rail project had bogged down over this particular precondition. Asked about details of the Lao project, the ambassador said he wasn’t party to that information.

2. It is not true that the Chinese government backed out of an agreement to buy one million tonnes of Thai rice for two years consecutively – despite reports in the Thai press to that effect. The envoy confirmed that the deal was still on – and the fact that Beijing continues to buy Thai rice, rubber and tapioca in relatively substantial quantities underlines the fact that China is keen to extend help to Thailand in whatever way possible. “China definitely never takes advantage of Thailand in any negotiations,” Ambassador Ning declared.

3. All conditions, including the loan interest rate, could be negotiated and any final agreement would have to meet the “win-win” standards agreed upon by both sides.

The rail project is, in more ways than one, important to both Thailand and China. For one thing, the Thailand section represents a vital link in China’s ambitious “One Belt, One Road” initiative. For another, Thailand seems to have undertaken the project not just with economic benefits in mind but, perhaps even more importantly, with political and security considerations high on its list of priorities.

In other words, the Thai-Sino rail project might have hit some snags, but neither side can afford for it to derail. After all, the stations and signposts have already been erected, even before the first engineer gets down to work.