China, Vietnam set to sign deals on railway links, agriculture, sources say

By Phuong Nguyen and Khanh Vu

China and Vietnam are expected to sign new agreements, including pacts to boost railway links and agricultural trade, during Chinese Premier Li Qiang's visit to Hanoi this weekend, two people briefed about the plans said.

Seamless rail links are a sign of growing trust between the two countries and would be a boost for trade and supply chains, as a growing number of Chinese manufacturers move some export-oriented operations to Vietnam amid trade tensions between China and the United States.

The deals, which one of the people said also included agreements on payment systems and customs procedures, could further boost economic ties between the two Communist-ruled neighbours after a series of high-level meetings and cooperation agreements signed in recent months.

The Vietnamese foreign ministries did not immediately reply to a request for comment. The Chinese foreign ministry had no immediate comment on the expected agreements.

Mistrust between the two neighbours, which fought a brief border war in the late 1970s and often still clash over boundaries in the South China Sea, has long hampered progress on rail links, but in recent months economic considerations appear to have prevailed over security concerns on the land border.

Both countries have repeatedly showed interest in boosting rail links, but have not yet announced concrete plans and estimated costs to upgrade the connections.

The main route currently relies on tracks connecting Kunming in the southern Chinese province of Yunnan to Hanoi and the Vietnamese port city of Haiphong. That railway was built by the French during their colonization of Vietnam more than a century ago and is still in use in Vietnam, whereas China has replaced its route with high-speed connections.

That makes the tracks incompatible, forcing passengers and goods to change train at the border, in a hurdle for the booming commercial flows between the two countries which amounted to $148.2 billion in the first three quarters of this year, a 21% increase from the same period last year.

In August, during Vietnamese Party chief and President To Lam's trip to Beijing, China and Vietnam signed documents for planning and feasibility studies for standardized railway routes, following initial agreements in December during President Xi Jinping's state visit to Hanoi.

On Sunday, the two countries are expected to sign a new agreement on survey activities, one of the sources said without elaborating.

Both sources declined to be identified because the information was not public.

In addition to the Kunming-Haiphong rail line, the two countries are planning the upgrade of another connection from China's Guangxi region to Hanoi, and a potential new one linking Shenzhen to Haiphong.

It is unclear how many agreements will be signed, but the sources said that at least a dozen were being discussed.

Li will meet Lam on Saturday, and Vietnam's Prime Minister Pham Minh Chinh on Sunday morning before attending the "signing ceremony of cooperation documents," according to a tentative schedule from Vietnam's foreign ministry.