Vietnam Approves $8 Billion Rail Link to China

By Jessica Huang

Cover Image Attribute: A file photo of a passenger train operated by Vietnam Railways (Đường sắt Việt Nam)

On Wednesday, February 19, 2025, Vietnam’s National Assembly voted overwhelmingly to approve an $8 billion railway project linking the country’s northern regions to China, marking a significant step in modernizing Vietnam’s infrastructure and deepening economic ties with its northern neighbor. The decision, backed by 455 of 459 parliamentarians in the rubber-stamp legislature, reflects Vietnam’s ambition to enhance connectivity, stimulate economic growth, and integrate further into China’s sprawling Belt and Road Initiative (BRI). The 427-kilometer railway, partially funded by Chinese loans, will connect the Vietnam-China border at Lao Cai-Hekou to Hanoi, Haiphong, and Ha Long City, promising to reshape transportation and trade dynamics in the region.

A Modern Upgrade to an Aging System

The newly approved railway will replace an outdated narrow-gauge line built by French colonial authorities in 1910, which has long been insufficient for Vietnam’s growing economic needs. Stretching from the border city of Lao Cai through the capital Hanoi to Haiphong—the largest seaport in northern Vietnam—and extending to the tourist hub of Ha Long City, the standard-gauge railway will span 427 kilometers. Designed to support speeds of up to 160 kilometers per hour, the line will facilitate both passenger and cargo transport, significantly reducing travel times and improving efficiency.
Nguyen Hong Minh, Vietnam’s Minister of Construction and former Transport Minister, emphasized the project’s urgency during last week’s parliamentary session. “Vietnam’s current railway system is outdated and inadequate for the nation’s demands,” he told lawmakers. “This new line will modernize our infrastructure and support economic development by connecting key cities and regions.” Construction is slated to begin later this year, with completion expected by 2030, according to the Vietnam Railway Authority.
The approval comes on the heels of another major infrastructure milestone: in November 2024, the National Assembly greenlit a $67 billion high-speed railway linking Hanoi to Ho Chi Minh City, set to slash travel time between the two cities from 30 hours to five by 2035. Together, these projects signal Vietnam’s intent to catapult its transportation network into the 21st century, aligning with Communist Party chief To Lam’s vision of a “new era of national rise.”

Economic Benefits and Regional Connectivity

The Lao Cai-Hanoi-Haiphong-Ha Long railway is poised to deliver substantial economic benefits. Haiphong, a vital manufacturing and logistics hub, hosts global giants like Samsung, Foxconn, and Pegatron, many of which rely on a steady flow of components from China. The new rail link will streamline supply chains, replacing slow and costly truck transport prone to border bottlenecks. Dan Martin, an international business adviser at Dezan Shira & Associates, hailed the project as a potential game-changer. “China supplies much of the raw material that fuels Vietnam’s manufacturing sector,” he said. “This railway will keep that pipeline steady, boosting production and reducing lead times.”
For residents like Tran Thanh Canh, a Hanoi-based poet, the project is long overdue. “This should have been done years ago,” he told reporters. “It connects western China to the sea at Haiphong via the shortest route, bringing economic benefits to both countries.” The railway aligns with Vietnam’s “Two Corridors, One Belt” initiative, a strategic framework that dovetails with China’s BRI, aimed at enhancing infrastructure and trade across Asia and beyond.
The approval follows high-level diplomatic engagements, including meetings between Vietnamese General Secretary To Lam and Chinese President Xi Jinping in Beijing in August 2024, and between Vietnamese Prime Minister Pham Minh Chinh and Chinese Premier Li Qiang in Hanoi in October 2024. These talks cemented commitments to accelerate feasibility studies and planning for the railway, alongside other lines like the Dong Dang-Hanoi and Mong Cai-Ha Long-Hai Phong routes, which are still awaiting parliamentary approval.

A Balancing Act in Diplomacy

While the railway promises economic gains, it also underscores Vietnam’s delicate “bamboo diplomacy”—a strategy of maintaining amicable relations with both China and the United States amid geopolitical tensions. The approval comes just over a year after Xi Jinping’s visit to Hanoi in December 2023, where the two nations signed over 30 agreements to deepen ties, partly as a counterweight to growing U.S. influence in the region. More recently, U.S. President Joe Biden’s visit to Hanoi in September 2023 highlighted Vietnam’s role as a key player in the U.S.-China rivalry.
However, the decision to accept Chinese loans has sparked debate. Nguyen Minh Le, a California-based expert on China-Vietnam relations, cautioned against potential risks. “The project has advantages, but the disadvantages are predominant,” he said. “Vietnam must stay vigilant about sovereignty and autonomy, given China’s history of debt-trap diplomacy.” Critics point to Beijing’s narrowing focus on neighboring countries under the BRI, raising concerns about long-term dependency.
China’s Foreign Ministry spokesperson Guo Jiakun framed the railway as a win-win collaboration. “Since last year, China and Vietnam have worked to enhance railway connectivity,” Guo said at a Beijing news conference on Wednesday. “This project will advance our shared goals.” Beijing has pledged to provide loans and technical expertise, though specifics of the financing remain under negotiation.

Challenges and Opportunities Ahead

Vietnam’s transport infrastructure has long been a weak link, with an overburdened road network and an underdeveloped rail system hampering its appeal to foreign investors. As a favored alternative to China for manufacturing, Vietnam has seen surging investment, but poor infrastructure has bottlenecked growth. The new railway aims to address these shortcomings, smoothing supply chain disruptions and reinforcing northern Vietnam’s integration with southern China’s industrial hubs.
Still, hurdles remain. The project’s six-year timeline and $8.3 billion price tag—higher than initial estimates—will test Vietnam’s fiscal capacity, especially with Chinese loans covering only part of the cost. The Ministry of Transport plans to release details on the bidding process and timeline soon, but questions linger about transparency and execution. Additionally, historical mistrust between Vietnam and China, rooted in a 1979 border war and ongoing South China Sea disputes, could complicate public support.

A Step Toward a New Era

For Vietnam, the railway is more than an infrastructure project—it’s a symbol of ambition. With an upwardly revised 2025 GDP growth target of at least 8% (from 6.5-7%), the government is betting on large-scale investments to propel the nation forward. The Lao Cai-Hanoi-Haiphong-Ha Long line complements the Hanoi-Ho Chi Minh City high-speed rail and revived nuclear power plans, approved the same day, signaling a broader push for modernization.
As construction looms, the railway’s success will hinge on Vietnam’s ability to balance economic gains with strategic autonomy. For now, the near-unanimous vote reflects confidence in its potential to transform connectivity and trade. Whether it heralds a new chapter of prosperity or a tighter entanglement with China, only time will tell. For Vietnamese lawmakers and citizens alike, the tracks ahead promise progress—but with eyes wide open to the risks.

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