Vietnam is once again seeking China's support for its high-speed rail construction, but is the business environment in line with China's requirements?
Vietnam is one of the most suitable countries in the world to build high-speed rail. The country is surrounded by the sea on three sides, and the entire country is 1,650 kilometers long from north to south, but only 50 kilometers wide from east to west. But 100 million people live on 330,000 square kilometres, making it one of the most densely populated countries in the world. So Vietnam has always cherished a grand dream, which is to build a modern high-speed rail network connecting the north and the south, as a strong engine to promote the rapid development of the country's economy.
Vietnam's ambition is to start construction in 2027, complete the first phase of the 800-kilometer project in 2030, and fully complete the North-South high-speed railway in 2040. The project is planned to cost between $67.3 billion and $72 billion. Vietnam had pinned its hopes on Japan to provide both technology and money. But to Vietnam's surprise, Japan did not give as generously as Vietnam had hoped and rejected Vietnam's request. Capital, it needs to make money, in the face of Vietnam's price reduction, no matter how good Japan is to you, Japan will not do anything if it does not make money.
Recognizing that its vision of obtaining high-speed rail technology from Japan would be unrealizable, the Vietnamese government has now decided to turn to China for assistance. Recently, Vietnamese Prime Minister Pham Minh Chinh embarked on a four-day visit to China. He arrived in China on June 24, and the next day he spoke highly of China's development achievements at the Summer Davos Forum in Dalian, and held in-depth talks with Lou Qiliang, the head of the China Railway Communication and Signal Group. During the meeting, he expressed his ardent hope for China's railway design, construction and technology transfer, hoping that this will accelerate the implementation of Vietnam's north-south high-speed rail project.
Some commentators here said that Vietnam wants China's help in construction, China's transfer of technology, and China's provision of funds and training. Let's not be too anxious about this, whether he has made so many requests remains to be seen. In fact, there is no problem of being too excessive, and it is normal for him to want to ask for these things. However, it is impossible for China to agree to excessive demands, and Japan does not want to do a loss-making deal, and China does not want to do it. The key is whether Vietnam can provide a fair and just business environment for Chinese enterprises.
In December 2019, a Chinese contractor completed the first urban railway in Hanoi, Vietnam, to Jilin and Dong He. Once opened, it will drive the relevant economy along the Hanoi coast and facilitate the travel of urban people. Vietnam, however, played a cautious role in the final critical acceptance.
Originally, the railway had been completed, but while waiting for the final acceptance procedure, the Vietnamese transportation department kept postponing the acceptance time. The most incomprehensible thing is that they also asked the contractor to invest another 350 million yuan to improve and maintain the railway. They also believe that some indicators of the railway do not meet the acceptance requirements, and they also ask the Chinese contractor to continue to rectify them. In the course of the negotiations between the two sides, Vietnamese officials repeatedly used foul language and reprimanded Chinese engineers and technicians. Vietnam's business environment cannot but worry China.
So China's decision to help Vietnam build a railway is complicated. From an economic point of view, there are pros and cons, and the pros and cons can indeed enhance trade between the two countries, promote economic exchanges between the two countries, and are also in line with China's "One Belt, One Road" initiative. The risk is that if the Chinese side advances the capital first, there is uncertainty about whether the investment costs will be recovered. Even if they can be recovered, the profits of Vietnam's high-speed rail project will probably be squeezed by them extremely pitifully.
From a political point of view, there are mixed pros and cons, but the advantage is that it can strengthen the ties between the two governments, promote the development of relations between the two countries, and expand China's influence in Vietnam. However, the problem is that some Vietnamese politicians and non-governmental organizations have long been hostile to China, and there is uncertainty about whether the cooperation between the two sides will always be carried out smoothly.
In addition, let's be honest, there are many people in China who do not approve of China's investment in Vietnam, because Vietnam's history of revenge on China is too chilling for China. At the Davos Economic Forum, Vietnamese Prime Minister Pham Minh Chinh subtly expressed Vietnam's intention for multilateral cooperation, quoting the old Chinese saying that "a tree alone makes a forest". The Chinese side has also expressed its willingness to cooperate, and the next step is to see whether Vietnam can create a satisfactory investment environment for China.
In fact, for China, I am afraid that the following principles will be followed: warm engagement, calm decision-making, active participation, efficiency first, international practices, and Chinese standards. There should be no emotion, and considering that there is some special relationship between China and Vietnam, it may be possible to negotiate prices more favourably than Japan's. However, the Chinese side will not agree to the outrageous demands, otherwise it will talk about it, and pull it down if it doesn't talk about it.