COVID-19 Pushes Laos Further into China’s Economic Orbit

cc Flickr Christian Haugen, modified,

In early September, it emerged that China Southern Power Grid (CSPG), a state-run firm, had signed a deal with state-controlled counterpart Electricite du Laos (EDL) to take a majority stake in Laos’ electricity grid. The deal is the latest indication of Beijing’s rising economic influence in its debt-ridden southern neighbor, which is struggling under financial pressures linked to the COVID-19 pandemic and large infrastructure projects.

Last month, Fitch Ratings downgraded Laos’ rating from B- to CCC, meaning it faces ‘substantial credit risk’ and a ‘real possibility’ of sovereign default, which would make Laos the first Southeast Asian country since Myanmar in 2002 to fail to meet its debt obligations. Laos, which joins only Angola, the Republic of Congo, Gabon and Zambia in Fitch’s CCC category, may have little option but to turn once again to China for help.


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