China, Vietnam to assess viability of new railways: document

Highlights:

• Railways agreement signed during Xi's visit to Hanoi on Monday
• China to conduct feasibility studies for two rail lines
• Xi asked Vietnam to preserve supply chains amid tariff chaos

China and Vietnam took initial steps during Chinese President Xi Jinping's visit to Hanoi this week to develop new rail links, as they agreed to conduct feasibility studies for two lines, according to one of the agreements reviewed by Reuters.

The two neighbours have long been discussing plans to upgrade two railways that were built by the French more than a century ago, and develop a third direct link along their adjoining coast.

Amid growing concerns over US tariffs, Xi urged Vietnam on Monday to strengthen supply chains, in which components made in China are often assembled in northern Vietnam before being exported.

Vietnam's top leader To Lam said on Monday the building of the three railways was "the highest priority" in infrastructure cooperation between the two countries and encouraged China to offer concessional loans.

They agreed China will carry out feasibility studies for two of the planned rail links, at a cost of 9.95 million yuan ($1.36 million), according to the two-page cooperation document, dated April 14, seen by Reuters.

The studies will take place within 12 months from the selection of the contractor to conduct the work, according to the document, which provided no deadline to complete the selection process.

The agreement concerns a railway connecting southern China's Guangxi region to Vietnam's capital Hanoi, and another new line that would link the port cities of Shenzhen and Haiphong.

There is already a railway line from Nanning in Guangxi to Hanoi but passengers and goods currently have to swap trains at the border because the Vietnamese gauge - dating from French colonial times - is incompatible with China's modern high-speed tracks.

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

A third railway linking Vietnam's northern coast to Kunming in China will begin construction this year, the Vietnamese parliament said in February, estimating the section through Vietnam would cost $8.3 billion and be partly covered with loans from China.

The Vietnamese part of the line also dates back to the French colonial period.

There has been no loan announcement so far during Xi's visit, which will end on Tuesday after the launch of what is listed as a "Vietnam-China Railway Cooperation".

Reuters could not establish what that cooperation entails and whether it adds new commitments.