Following a prime minister-level meeting on the sidelines of the BRICS summit in Rio de Janeiro, Vietnam and China have agreed to commence construction of a long-discussed cross-border railway in December, signaling a renewed commitment to economic cooperation amid escalating U.S. trade tensions.

Vietnam’s Prime Minister Pham Minh Chinh and Chinese Premier Li Qiang confirmed the plans as part of a broader pledge to enhance trade, infrastructure, and political ties. The railway, which will connect Vietnam’s Lao Cai province through Hanoi to the port of Haiphong and link with China’s Yunnan and Guangxi provinces, is seen as a strategic project to modernise Vietnam’s outdated metre-gauge system and ease regional logistics bottlenecks.

The announcement coincides with looming U.S. tariffs on Vietnamese exports—expected to reach up to 20%—and a 40% duty on Chinese goods re-exported via Vietnam, set to begin August 1 unless a resolution is reached. The pressure has reportedly accelerated Hanoi’s pivot towards deeper integration with Beijing, despite Vietnam’s traditionally cautious stance toward its northern neighbour.

Analysts view the railway as aligning closely with China’s Belt and Road Initiative, offering both nations a means to fortify supply chains and regional influence. However, the move places Vietnam in a delicate position as it balances economic reliance on China with strategic ties to the United States.

Vietnam’s National Assembly approved an $8.3 billion budget for the rail project earlier this year, with partial financing expected from Chinese loans. The December groundbreaking will test the durability of Hanoi’s diplomatic balancing act in an increasingly polarized global trade landscape.

References

  1. Reuters. (2025). Vietnam, China agree to boost trade ties as Trump tariffs hit.
  2. Time. (2025). Why the U.S.-Vietnam ‘Transshipment’ Clause Complicates Trade Tensions with China.
  3. Vietnam Aujourd’hui. (2025). Vietnam’s National Assembly approves $8.3 billion rail link to China.
  4. Vietnam Law Magazine. (2025). Vietnam, China agree to beef up cooperation in various fields.