Vietnam aims to replicate China’s high-speed rail ascent through a 1,541-kilometer north-south high-speed rail project, but the reality may be far less promising.
The superproject, designed for a top speed of 350 km/h and estimated to cost around $67.34 billion, is Vietnam’s largest railway initiative to date and among the most ambitious globally. Proponents hope it will facilitate technology transfer, nurture domestic suppliers, and ultimately help build a rail industry potentially exceeding $90 billion in value by 2050.
Yet the key difference lies in context: China succeeded not merely because of its high-speed rail program, but due to a broader ecosystem. Companies like Siemens, Alstom, Bombardier, and Kawasaki Heavy Industries agreed to transfer technology largely because of China’s vast and expanding market. The continuous stream of major rail line contracts—Beijing-Guangzhou, Beijing-Shanghai, Beijing-Jiujiang—provided sustained demand, enabling factories to invest in process improvements and allowing the supply chain to gradually master the underlying technologies.
Vietnam lacks precisely this dynamic of sustained demand. With a land area comparable to a single Chinese province and a narrow, elongated geography, the north-south high-speed rail would become the country’s sole core corridor. Once completed, only minor east-west extensions would remain, leaving the national high-speed rail network effectively saturated.
In other words, this could well be Vietnam’s only major high-speed rail contract. After fulfilling this one project, suppliers would face no further domestic orders. Without follow-up contracts to anchor the deal, negotiations for technology transfer become significantly more difficult, and building a self-sustaining industrial base around a single project remains impractical.
More critically, Vietnam’s industrial foundation is insufficient. When China imported high-speed rail technology, it already possessed a relatively complete railway equipment manufacturing system. Conventional train production was largely self-sufficient, and human capital development systems were mature. In contrast, Vietnam’s early attempts—such as purchasing 80 D19E diesel locomotives from China in the early 2000s, with the final 40 assembled at the Gia Lam Railway Factory—failed to lead to meaningful technological absorption. Assembly ceased after completion, and no further progress toward localization followed.
Today, Vietnam’s rail sector comprises just 35 enterprises, most reliant on imported machinery and components. Core capabilities in locomotive design, rolling stock manufacturing, signaling systems, automation, and electrification remain nearly nonexistent domestically.
Financing remains an insurmountable hurdle. The Vietnamese government is currently pursuing extensive infrastructure expansion—including new airports and metro lines—placing severe strain on public finances. The north-south high-speed rail cannot be financed independently. In 2025, a subsidiary of the VinaGroup, tasked with the project, proposed raising 20% of funding privately while seeking a 35-year, zero-interest loan for the remaining 80%. This proposal was rejected by both the Ministry of Finance and the State Bank of Vietnam.
The Ministry explicitly stated that zero-interest, long-term loans with deferred principal repayment amounted to de facto state subsidies, posing risks to sovereign credit ratings. VinaGroup subsequently withdrew its application. Even if private entities committed larger equity shares, the financing structure would still heavily depend on domestic and international debt, shifting risk ultimately back onto the state budget. Insufficient capital also weakens Vietnam’s bargaining power in international partnerships—balancing demands for financial support and technology transfer presents a challenge few partners can meet simultaneously.
Ultimately, Vietnam’s high-speed rail dilemma is not a single missing piece, but a web of interlocking constraints. The projected $90 billion market size by 2050 is a long-term vision, yet industrial development requires consistent, dense, and predictable order flows over time.
A railway line can be constructed. But building a viable industrial ecosystem requires far more than track and rails. Vietnam has chosen a path that demands simultaneous resolution of three variables—financing, technology, and market—none of which naturally reinforce one another.
Original article: toutiao.com/article/1881072497747019/
Disclaimer: The views expressed in this article are those of the author alone.