Vietnam greenlights $8 billion rail project to strengthen China trade ties

Vietnam approves a massive $8 billion railway linking Haiphong to China, aiming to enhance trade, ease transport bottlenecks, and strengthen economic ties with Beijing

Vietnam’s parliament has given the green light to an ambitious $8 billion railway project linking the northern port city of Haiphong to the Chinese border, a move set to enhance trade between the two communist-led nations.

 

The approval, granted on Wednesday, marks a significant step in Vietnam’s ongoing efforts to modernise its transport infrastructure and strengthen economic ties with Beijing, reported AFP.

 

The 390-kilometer rail line will run through some of Vietnam’s major manufacturing hubs, including Hanoi, before reaching Lao Cai, a border city adjacent to China’s Yunnan province. This corridor is home to leading global manufacturers such as Samsung, Foxconn, and Pegatron, all of which depend on a steady inflow of components from China.

 

 

Parliament overwhelmingly backs project

 

The decision was met with resounding support, with 95 per cent of lawmakers in Vietnam’s National Assembly voting in favour of the project.

 

The railway is expected to ease congestion on Vietnam’s overburdened road network and provide a faster, more efficient transportation route for goods and passengers alike.

 

China is set to play a crucial role in financing the project, contributing through loans. The railway is part of Vietnam’s broader "Two Corridors, One Belt" initiative, aligning with China’s Belt and Road infrastructure programme, which seeks to enhance regional connectivity.

 

China and Vietnam strengthen infrastructure ties

 

On Wednesday, China’s foreign ministry confirmed that both nations are "working to expedite the construction of the connection line" linking Lao Cai to Hekou, its border counterpart in China.

 

Ministry spokesperson Guo Jiakun noted that multiple discussions had been held to advance railway connectivity, though further details were referred to the respective authorities.

 

The move follows a landmark visit to Vietnam by Chinese President Xi Jinping in December 2023, during which both countries pledged to deepen cooperation. The agreement comes at a time when Vietnam is balancing its relations between China and the US, with the latter increasing its influence in the region.

 

Vietnam’s infrastructure push amid growing foreign investment

 

Vietnam’s rapid economic growth has exposed weaknesses in its transport infrastructure, which has struggled to keep pace with demand. While the country has become a top destination for foreign investment, particularly in manufacturing, logistical challenges remain a key concern.

 

International business adviser Dan Martin of Dezan Shira & Associates emphasised the rail link’s potential to streamline supply chains. "China supplies much of the raw material that fuels Vietnam's manufacturing sector, and keeping that pipeline steady is critical," he told AFP.

 

"A modern rail link cuts through inefficiencies, ensuring goods move smoothly whether they’re flowing into Vietnam’s factories or heading to global markets via Haiphong’s port," he added.

 

Construction timeline and speed upgrades

 

Vietnam plans to conduct a feasibility study for the Haiphong-Lao Cai railway this year, with the goal of completing construction by 2030. However, the country has a history of delays and cost overruns on major infrastructure projects.

 

The new railway will replace an aging colonial-era track, where trains currently run at just 50 kilometers per hour (30 mph). The upgraded system will accommodate both passenger and freight trains at speeds of up to 160 kph (99 mph), significantly reducing travel times.

 

Pham Thu Hang, spokesperson for Vietnam’s Ministry of Foreign Affairs, highlighted the broader economic impact of the project, stating last week that it would "promote economic, trade, investment, and tourism cooperation between the two countries as well as in the region."

 

Part of a bigger infrastructure revolution

 

The railway approval comes just three months after Vietnam unveiled a $67 billion high-speed rail project connecting Hanoi and Ho Chi Minh City. Spanning over 1,500 kilometers (930 miles), that line will slash the travel time between the capital and the southern business hub from 30 hours to just five.

 

Meanwhile, another proposed railway linking Hanoi to Lang Son province, near China’s Guangxi region, is still awaiting parliamentary approval. If greenlit, it would further enhance Vietnam’s transport infrastructure and connectivity with China.

 

Vietnam and China signed over 30 agreements during Xi’s visit, including commitments to expand rail links. Despite their economic interdependence, Vietnam maintains a delicate diplomatic balance, sharing US concerns over Beijing’s assertiveness in the contested South China Sea while fostering strong trade relations with China.