Vietnam approves China-backed railway amid growing regional network

Vietnam’s new $8 billion railway strengthens economic ties with China.

Chinese Ambassador to Laos Jiang Zaidong (left) and Lao Minister of Public Works and Transport Viengsavath Siphandone attend the unveiling ceremony for the Lane Xang EMU train at the China-Laos Railway Vientiane station in Vientiane, Laos, on October 16, 2021. Photo by Xinhua

By Clarisa Sendy and Alana Salsabila

Vietnam approved plans on Wednesday for a multi-billion-dollar railway project linking its largest northern port city to China. The $8 billion initiative strengthens economic ties between the two communist nations, adding to China’s growing network of regional rail projects under its Belt and Road Initiative (BRI).

China’s extensive investment in railway infrastructure across Asia has drawn both praise and criticism. While projects have modernized transportation and bolstered economic ties, concerns over debt and stalled developments have emerged in several countries. Vietnam’s latest approval follows similar China-backed railway expansions in Indonesia, Laos, Thailand, and Central Asia.

China’s railway push across Asia

China’s Belt and Road Initiative has financed numerous railway projects, connecting key economic hubs across the region. These projects aim to facilitate trade, improve logistics, and enhance transportation networks, but many have faced financial and political challenges.

Indonesia: Southeast Asia’s first high-speed rail

Indonesia launched its first high-speed railway in October 2023 after years of delays. The $7 billion Jakarta-Bandung rail project, backed by China, reduced travel time between the two cities to just 45 minutes, compared to the previous three-hour journey.

The joint venture between Indonesian state firms and China Railway International Co. was initially projected to cost under $5 billion, with completion expected in 2019. However, construction setbacks and the COVID-19 pandemic led to delays and cost overruns. Despite the challenges, Indonesia’s then-president Joko Widodo hailed the railway’s opening as a milestone in the country’s modernization efforts.

Laos: A transformative but costly project

Laos inaugurated its $6 billion Chinese-built railway in 2021, connecting the capital Vientiane to China’s Kunming city. The 414-kilometer route was expected to boost the country’s tourism industry and economic growth.

However, the project was met with resistance as thousands of farmers were displaced to make way for construction. Additionally, concerns about Laos’s ability to repay its debt to China remain, with public debt reaching 116 percent of GDP in 2023. Despite these issues, the railway is viewed as a major step in integrating Laos into the regional economy.

Thailand: High-speed rail project progressing

Thailand’s China-backed high-speed railway, part of a broader plan to connect Bangkok with China’s Kunming via Laos, is set for partial operation by 2028. The full project, valued at $5.4 billion, is expected to be completed by 2032.

Unlike Laos, Thailand has committed to financing the project itself, positioning it as a key economic driver for trade with China. The railway will run from Bangkok to Nong Khai, near the Laos border, with trains reaching speeds of 250 km/h.

China-Kyrgyzstan-Uzbekistan: A strategic route to Europe

Kyrgyzstan launched construction in December on a railway linking China, Kyrgyzstan, and Uzbekistan. The project, estimated to cost up to $8 billion, is designed to enhance trade routes between China and Europe.

Kyrgyz President Sadyr Japarov stated that the railway would serve as a key supply route, benefiting not only Central Asia but also Turkey and the European Union. However, the project faces logistical challenges due to difficult mountainous terrain and permafrost conditions.

Vietnam’s growing railway ambitions

Vietnam’s newly approved $8 billion railway will connect key manufacturing hubs, including factories operated by Samsung, Foxconn, and Pegatron, which rely on Chinese components. A second proposed rail line, still awaiting approval, would link Hanoi with Lang Son province, another key industrial area.

By expanding its rail infrastructure, Vietnam aims to strengthen economic ties with China while enhancing its domestic logistics network. The move aligns with broader regional trends, as countries seek to balance economic benefits with concerns over Chinese influence and debt sustainability.

Malaysia’s railway revival

Malaysia has restarted construction on a $17 billion China-backed railway designed to connect the country’s east and west coasts. Initially launched in 2011 under former Prime Minister Najib Razak, the 665-kilometer project was delayed due to financial disputes. Now set for completion by 2027, the railway is expected to enhance trade and transportation within Malaysia.

Stalled projects in Pakistan, Myanmar, and the Philippines

Not all China-backed rail projects have progressed smoothly. Several have faced delays, cancellations, or political roadblocks:

• Pakistan: A proposed railway linking Gwadar Port to China’s Xinjiang province remains stalled due to its massive $58 billion cost estimate.
• Myanmar: Plans for a railway connecting Mandalay to China’s Yunnan province have faced setbacks, particularly after the country’s military coup.
• Philippines: Negotiations for three China-funded rail projects collapsed in 2023 amid rising tensions over the South China Sea dispute.

China’s influence in Asia’s railway development

China’s role in financing and constructing railways across Asia continues to expand. While these projects offer significant economic opportunities, they also raise concerns over debt dependency and strategic influence.

Vietnam’s approval of its latest railway project underscores the continuing demand for improved infrastructure in the region. However, as seen in Laos, Indonesia, and Malaysia, balancing financial sustainability with development remains a critical challenge for nations engaging in China-backed projects.