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China and Vietnam are poised to strengthen their ties through various infrastructure projects, potentially including digital initiatives. This move is expected to bring Hanoi closer to Beijing amidst the ongoing struggle for influence in Vietnam. The agreements are anticipated during Chinese President Xi Jinping’s visit to Hanoi, marking his first visit to the Southeast Asian neighbour in six years. This visit occurred shortly after the visit of U.S. President Joe Biden to Vietnam in September, to enhance the bilateral relations.
China is reportedly willing to provide grants to Vietnam to improve the railway between Kunming and the Vietnamese port city of Haiphong and other transportation links from southern China to Hanoi. Chinese Ambassador Xiong Bo revealed this information, stating that China is ready to offer “non-refundable aid” for these projects. If confirmed, this would be a significant concession to Vietnam, a country that has traditionally been cautious about taking loans. However, it is unclear whether these grants would be accompanied by loans and what the proportion of each would be.
The substantial offer of grants could also be seen as a setback to the United States and other Western supporters of infrastructure projects in Vietnam. These countries have primarily offered loans at market values to help Vietnam reduce its reliance on coal, as part of a climate plan.
The plan is to upgrade the Kunming-Haiphong rail, which passes through the region where Vietnam’s largest rare earth mines are located. Vietnam, holding the world’s second-largest deposits of these crucial minerals for electric vehicles and wind turbines, has been unable to fully utilize them due to a lack of processing technology.
China, being the largest producer and refiner of rare earths globally, has not provided clear details on a potential agreement in this regard. Beijing is typically cautious about sharing its refining technology, and Hanoi restricts the export of unprocessed rare earths.
Apart from infrastructure, the Chinese ambassador has also emphasized the importance of digital interconnections in strengthening cooperation between China and Vietnam. This could involve Vietnam’s inclusion in China’s Digital Silk Road initiative, which focuses on optical fibre cables, data centres, and other telecom infrastructure in friendly nations, under the broader Belt and Road Initiative.
Considering Vietnam’s plans to establish a comprehensive 5G network, discussions on additional submarine cables may also take place, particularly due to the disruptions experienced by Vietnam’s undersea digital infrastructure this year.
However, it remains uncertain whether Vietnam is genuinely committed to these plans. As highlighted by Le Hong Hiep, a senior fellow at Singapore’s Iseas–Yusof Ishak Institute, national security concerns often take precedence over strategic projects, particularly in the South China Sea where Hanoi and Beijing have border disputes.
These developments indicate a strengthening of ties between China and Vietnam, which could have implications for regional dynamics. The upcoming visit of President Xi Jinping and the subsequent agreement on infrastructure and digital projects between China and Vietnam marks a significant milestone in the bilateral relations between these two nations. These initiatives are expected to play a crucial role in accelerating Vietnam’s infrastructure development and enhancing its digital connectivity, thereby giving a boost to its economy.
However, Vietnam’s cautious approach, influenced by historical distrust and geopolitical considerations, adds a layer of complexity to these developments. On the other hand, China, through these projects, is well-positioned to reinforce its economic and digital influence in the region, aligning with its broader Belt and Road Initiative. While these developments highlight the strengthening ties between China and Vietnam, they also have potential implications for the region’s dynamics.