China, Vietnam mull rail tracks through rare earths heartland

According to senior officials and diplomats, China and Vietnam are collaborating on a potential major improvement of their undeveloped rail connections to strengthen a line that passes the heartland of rare earths in Vietnam and ends at the nation’s main port in the north.

According to officials and diplomats, the discussions are a part of getting ready for Chinese President Xi Jinping’s potential visit to Hanoi in the upcoming weeks. This would further validate Vietnam’s increasingly strategic role in global supply chains as major powers, including the US, compete for influence there.

Following China’s top diplomat Wang Yi’s meeting with Vietnamese leaders in Hanoi on Friday, the two nations decided to strengthen their railway connections and commercial ties, according to a readout posted on the Vietnamese government portal.

In a statement issued last month in response to China’s Commerce Minister Wang Wentao’s unusual visit to Vietnam, Vietnamese Prime Minister Pham Minh Chinh had earlier demanded an improvement of the railway connecting the southern Chinese city of Kunming to the port city of Haiphong.

The significance of increasing infrastructure links with its southern neighbour has been emphasised by Chinese officials.

Although Vietnam already has rail links to China, these connections are outdated and have little capacity on Vietnam’s end. Trains must halt at the border where passengers and cargo are transferred to domestic services because the two systems are currently incompatible.

China is by far the world’s greatest refiner of rare earths, and the expanded railway would travel through the area where Vietnam has its highest resources.

In an attempt to counter China’s hegemony, Vietnam is attempting to develop its own industry, although these efforts have been hampered by apparent internal strife.

According to Vietnamese official media, professionals in the rare earths business from China and Vietnam talked about stepping up their collaboration on mineral processing last week.

China’s contribution to Vietnam’s upgraded railway track is yet unknown, as is Hanoi’s acceptance of Beijing’s substantial financial offer.

The line might be considered a component of China’s premier infrastructure-supporting Belt and Road Initiative (BRI).

The Vietnamese government announced on Friday that the two nations had finished their discussions to encourage linkages between infrastructure projects in Vietnam and the BRI.

In addition to increasing Chinese tourism to northern Vietnam and Vietnam’s exports of agricultural goods to China, a strengthened railway link could further integrate the two nations’ manufacturing sectors, which experts already view as symbiotic because factories in Vietnam primarily assemble parts made in China.

China is Vietnam’s biggest commercial partner and, as of now this year, its top investor (excluding Hong Kong investment), since a number of Chinese businesses have moved parts of their operations south due to trade tensions between Beijing and Washington.

In spite of their growing economic ties, the two communist countries are involved in a protracted naval conflict in the South China Sea and fought a brief war in the late 70s.

(With agency inputs)