On October 31, General Secretary of the CPC Central Committee and President Xi Jinping awarded the People's Republic of China the "Friendship Medal" to Nguyen Phu Trong, General Secretary of the Central Committee of the Communist Party of Vietnam, at the Great Hall of the People in Beijing, and held a grand presentation ceremony. Photo: Xinhua News Agency
Recently, the construction of the railway network driven by high-level interaction between China and Vietnam has attracted international attention.
On November 1, during the visit of General Secretary of the Central Committee of the Communist Party of Vietnam Nguyen Phu Trong to China, China and Vietnam issued the Joint Statement on Further Strengthening and Deepening the Comprehensive Strategic Partnership between China and Vietnam, which mentioned in three places that the two sides would further strengthen the interconnection, especially to solve the problem of different railway gauges between the two countries.
The content immediately attracted international attention, with the South China Morning Post quoting Lampton, a prominent American China expert, as saying in a mid-November report that Vietnam fears missing out on access to the Chinese-built Trans-Asian Railway network, which will further strengthen its central position in the East and Southeast Asian economies.
Looking back at history, the merger of the China-Vietnam railway reflects the accelerated evolution of the great changes in the past century; Looking ahead, the merger of the China-Vietnam railway will become an important symbol of the rise of Asia's economy centered on China.
The 100-year great changes of the China-Vietnam International Railway Corridor
The construction of the cross-border railway between China and Vietnam originated in the early 20th century, when the railway began to extend beyond the European continent to the four continents.
After the Sino-Japanese War, China's railway construction power was gradually acquired by the imperialists. In 1903, the Qing government and France signed an agreement to build the Yunnan-Vietnam Railway, allowing France to lay the Yunnan-Vietnam Railway, which had an 80-year railway concession in Yunnan.
The railway, which cost 95 million francs at the time, was said to be the most ambitious colonization project ever undertaken by France, with a total length of nearly 900 kilometers, of which about 500 kilometers were in China. The railway is also the only railway in China to use a 1000 mm gauge and was put into service in April 1910.
During World War II, the Yunnan-Vietnam Railway was once controlled by the Japanese army. After the end of World War II, the Nationalist government signed an agreement with the French government, announcing the 1903 Yunnan-Vietnam Railway Agreement.
After the founding of the People's Republic of China, the Chinese government began to repair the railway damaged during World War II, and also opened the railway from Pingxiang in Guangxi to Hanoi in 1955. In April 1961, Premier Zhou Enlai took the Binh Siang-Hanoi railway to meet with Vietnamese leader Ho Chi Minh in Binh Siang.
After entering the 21st century, due to the aging of the line and management problems, the railway stopped passenger transportation. At the same time, China and ASEAN signed a free trade area agreement, and the Nanning Railway Bureau added soft sleepers to the railway in Nanning and Hanoi. This is the predecessor of China-Vietnam cross-border passenger transport in the new era.
The new electrified international railway freight corridor between China and Vietnam began in December 2014 with the opening of a line from Mengzi City, the capital of Honghe Hani Yi Autonomous Prefecture in Yunnan, to Hekou Yao Autonomous County under the jurisdiction of Honghe, and then connected to Lao Cai City in Lao Cai Province in Vietnam. Prior to this, the Yuxi-Mengzi section was opened in early 2013, while the Kunming-Yuxi expansion was completed in 2016. The China-Vietnam Railway was initially incorporated into the Trans-Asian Railway line.
However, Vietnamese goods still follow the traditional way of transiting through China to Europe, because the rails of the two countries are different, and the goods need to be re-tracked at the border. Vietnam's railways use 1,000 mm narrow gauges designed by the French, while those in China use 1,435 mm international standard gauges. One consequence of the change of track is that the volume of railway cargo between China and Vietnam is not large.
In November 2015, China and Vietnam signed the "Exchange of Notes on the Feasibility Study of the Lao Cai-Hanoi-Hai Phong Standard Gauge Railway Line Planning Project in Vietnam", which has a total length of about 390 kilometers and is expected to invest US$4.4 billion in the renovation at that time.
However, in the years since, China and Vietnam have been constantly discussing the merger plan, and third-party forces have also intervened, which does not want to see China and Vietnam quickly advance the railway merger plan. For example, in a 2017 assessment report, the Asian Development Bank gave a bad assessment of China's proposed Lao Cai-Hanoi-Haiphong standard gauge railway plan. Therefore, although Vietnam officially joined the Belt and Road project in November 2017, it did not officially join the China-Europe Express transport line project until July 2021.
The meter gauge of the Yunnan-Vietnam Railway at the mouth of the China-Vietnam Port in Honghe Prefecture, Yunnan, January 2014. Photo/IC photo
The North-South Line and the East-West Line of Vietnam Railways merge
Strengthening connectivity and expanding the opening of border ports was proposed by Vietnam. According to the Vietnam News Agency, Nguyen Phu Trong reiterated during his visit to Beijing that he hopes to keep the supply chain smooth and facilitate the smooth customs clearance of goods from the two countries; Increase the quota for goods transiting China by rail to third countries; Create favorable conditions for expanding cooperation in air, land and rail transport.
Article 1 of Part VII of the Sino-Vietnamese Joint Statement signed on November 1 reads as follows: The two sides agreed to actively promote the docking of the development strategies of the two countries, accelerate the signing of cooperation plans between the two governments to promote the joint construction of the "Belt and Road" initiative and the "two corridors and one circle" framework, carry out production capacity cooperation, carry out infrastructure construction and interconnection cooperation, and complete the planning review of the Lao Cai-Hanoi-Haiphong standard gauge railway as soon as possible.
Article 8 further states: Continue to expand the opening of border ports (passages), promote cross-border infrastructure construction, and focus on promoting negotiations on the Lao Cai (Vietnam)-Hekou (China) railway docking plan.
After Nguyen Phu Trong's visit to China, Vietnam's Ministry of Transport came up with a bolder plan. According to the "Railway International Intermodal Service Capacity Improvement Plan to 2030" submitted by the Ministry to the central government of Vietnam, Vietnam will significantly increase the import and export volume of railway goods, from 1.1 million tons in 2021 to 4 million to 5 million tons in 2030.
The plan connects Hanoi, Vietnam's capital, with Ho Chi Minh City, the largest city in the south, and is conceived to be the equivalent of the Beijing-Shanghai line on the mainland. Among them, the construction of the north-south high-speed railway is planned to invest 56 billion US dollars, to be developed by the Japanese government, the railway will be extended further north, through Tongteng to connect with Pingxiang, Chongzuo and Nanning in Guangxi.
At present, the railway from Nanning to Chongzuo has been opened, while the railway from Chongzuo to Pingxiang is expected to open in 2024. In the future, the railway will also connect large ports such as Fangcheng Port with new land-sea corridors in the west, and then form a larger range of logistics with sea-rail intermodal transportation in Hainan Free Trade Port.
The other is the east-west line centered on Hanoi, which connects Laojie to the mouth of Yunnan to the northwest, so that it can connect with the China-Laos Railway from Kunming. In fact, in March 2019, the Yunnan-Vietnam Railway has opened sea-rail intermodal transportation.
Vietnam will be further integrated into the emerging Trans-Asian Railway network
During Nguyen Phu Trong's visit to China, Sino-Vietnamese relations have also entered a new stage of development. According to Vietnam, relations with China are regarded as the first priority in Vietnam's foreign policy. Against the backdrop of the current world situation of instability and a significant increase in uncertainty, Vietnam also needs to strengthen cooperation with China from a political point of view.
China has maintained its position as Vietnam's largest trading partner for many consecutive years, Vietnam is China's largest trading partner in ASEAN and the sixth largest trading partner in the world, with bilateral trade exceeding US$230 billion in 2021.
Although Japan is an important economic partner, the largest official development assistance provider, and the second largest labor service partner of Vietnam, its development potential is far inferior to that of China. The United States is Vietnam's largest export market, reaching US$123 billion in 2021, making it Vietnam's second largest trading partner, but only Vietnam's 11th source of investment. In 2022, Vietnam's exports to the United States lagged behind exports to China and Mexico.
Vietnam is a typical export-oriented economic development model, affected by rising global inflation and exchange rate fluctuations, next year's economic growth rate will be lower than this year. In order to stabilize the macroeconomic situation, Vietnam wants to accelerate investment in domestic public facilities, including infrastructure.
In terms of medium- and long-term goals, Vietnam will further integrate into the emerging Trans-Asian Railway network and take advantage of the opportunities brought by China's development. Vietnam agreed to discuss railway integration in depth, and one consideration was that Vietnam had trade with Central Asia and Europe through the Chinese channel.
In March 2019, the "Vietnam-China-Kazakhstan-Europe" railway transport corridor was officially opened, which can be called Vietnam's version of the "Vietnam-Europe train". The first shipment was electronics shipped by South Korean companies to Duisburg, Germany, which took 22 days. In October 2021, Vietnam's Ministry of Transport conducted a survey on the railway project from Lao Cai to Hekou, and planned to dock with China's track renovation project.
Railway construction and cross-border transportation within China are progressing rapidly. On the one hand, in addition to the Yuxi Line, China has been building a high-speed railway from Maitreya to Mengzi in Honghe Prefecture since 2015, which is expected to open this year, which will greatly increase the passenger capacity of the Yunnan railway network to Southeast Asia.
At the same time, the China-Vietnam Express has increasingly extended to the central and western regions of China. For example, in early June this year, the "railway express" model of cross-customs customs area from Chongqing to Vietnam was launched, marking a new era for China-Vietnam trains. The railway port connecting to Vietnam is Pingxiang in Guangxi. As of the end of October, a total of 238 cross-border trains have been operated between China and Vietnam this year, a year-on-year increase of more than 178%. It is worth noting that the construction of the Fangdong high-speed railway from Fangcheng Port in Guangxi to Dongxing, a border city between China and Vietnam, is also progressing rapidly, and is expected to be completed and opened to traffic in 2023.
Sino-Vietnamese trade jumps and is embedded in production networks
The more fundamental driving force for Vietnam to accelerate the integration of railways is that Vietnam's economic development model is more and more like a replica of China's coastal areas in the early years. After the Sino-US trade friction, a new trade triangle between China and Vietnam and the United States has gradually formed, and it is deeply embedded in the production network in Asia.
Vietnam's manufacturing sector has increased from 13% 10 years ago to more than 17% today, and Vietnam attracts an average of 5% of GDP per year, the highest rate in East Asia to date. Some rating agencies have also upgraded Vietnam to BB, calling it an "emerging star." As of October 2022, Vietnam has accumulated nearly US$270 billion in utilised foreign capital. The World Bank even predicts that Vietnam's economic growth will reach 7.2% this year, leading East Asia.
Strengthening economic and trade cooperation with China is the most important external factor for Vietnam's remarkable achievements in the past few years. For example, Chinese data shows that in 2021, bilateral trade reached US$230.2 billion, a year-on-year increase of 19.7%. As of 2021, China's direct investment in Vietnam amounted to US$15.9 billion. As of the end of February 2022, Chinese enterprises have contracted US$71.7 billion in project contracts in Vietnam.
According to Vietnam Customs statistics, the bilateral trade volume between Vietnam and China reached US$165.8 billion in 2021, a year-on-year increase of 24.6%, and China is Vietnam's second largest export market. In 2021, exports to China amounted to US$55.9 billion, 37 times more than in 2002.
Vietnam's exports to China are mainly mobile phones and their spare parts, computers, electronic products and their parts, mechanical equipment and other parts, cameras, video cameras and their spare parts, all kinds of yarns and textile threads; Imports from China are mainly computers, electronic products and their spare parts, mechanical equipment and other parts, all kinds of fabrics, mobile phones and their spare parts, plastic products.
Considering the impact of the new crown epidemic and the deterioration of the world economy, such a rapid growth in Sino-Vietnamese trade is very rare. This also reflects the depth and breadth of cooperation between the two sides, not only due to the industrial transfer caused by Sino-US competition, but also due to the value chain trade that has been running in Asia for many years.
For Vietnam, participating in value chain trade has great advantages, not only to drive low-end labor into labor-intensive industries, but also to enter the international market without its own brand, and even produce parts of some well-known brands.
In the world market, Vietnam exported six commodities worth more than US$10 billion in the first 10 months of this year, the first being mobile phones and their components, reaching US$50 billion; In second place are electronics, computers and their components, with about $47 billion; In third place is machinery and equipment tools and other accessories, about $38 billion; In fourth place is textiles and clothing, with about $32 billion; In fifth place is footwear, about $20 billion; In sixth place is wood and wood products, with about $13.4 billion.
Comparing the products of Sino-Vietnamese trade, it can be seen that the categories of Sino-Vietnamese trade dominate the structure of Vietnam's trade with the world. To a certain extent, it can also be said that the outbreak of Vietnamese trade is a copy of the processing trade model in China's coastal areas. The Russia-Ukraine conflict has further enhanced Vietnam's trade status.
On August 1, 2020, the Free Trade Agreement between Vietnam and the European Union came into force. From August 2020 to July 2022, Vietnam's exports to the EU totalled US$83.4 billion, an increase of 24% compared to the 2016-2019 period. The competitiveness and market share of Vietnamese goods in the EU market have been significantly improved, and Vietnam has also emerged as the EU's largest commodity trading partner in the ASEAN region.
In addition, it is worth noting that Vietnam has increasingly become a third-party market for many large international companies to avoid strategic competition between China and the United States. In June, for example, Apple moved its tablet production line from China to Vietnam. As an exporter of electronic products, Vietnam jumped from 47th in 2001 to 10th in 2020, accounting for 1.8% of the total value of global electronics exports.
Against this background, it is not difficult to understand that both Nguyen Phu Trong, who visited Beijing, and Vietnamese President Nguyen Xuan Phuc, who attended the East Asia Summit in Cambodia, hoped that China and Vietnam would strengthen railway links, increase the number of Vietnamese goods transferred to third countries by rail, and hope that China would approve as soon as possible the opening and upgrading of some border ports and transportation connection projects in border areas.
From China's perspective, Vietnam's integration into the Trans-Asian Railway network will have a wider effect. Vietnam is an active participant in free trade agreements, not only a member of the RCEP (Regional Comprehensive Economic Partnership), but also a negotiator of the Indo-Pacific Economic Framework, and has also concluded a free trade agreement with the European Union. Vietnam's population is about to exceed 100 million, and Vietnam's leaders are flexible and have an increasingly rising status in global foreign investment and foreign trade, and will be important supporters of promoting world openness and global common development. These are equally important for China's next development and opening up.
Written by/ZHONG Feiteng (Research Fellow, Institute of Asia-Pacific and Global Strategy, Chinese Academy of Social Sciences / Director, Center for Regional Security Research, Chinese Academy of Social Sciences)
Editor/Curry
Proofreader/Liu Yue