China Focus · Carrie Zhao Dec 30, 2025
Recently, Vietnam’s high-speed rail project has turned into quite a comedy of errors. Vietnam tried to replicate China’s classic “two peaches kill three warriors” strategy to pit countries against each other and drive down prices. Instead of trapping China, they ended up ensnaring themselves, with Germany’s Siemens unexpectedly winning the bid in a bewildering turn of events.
Vietnam’s geography is indeed ideally suited for high-speed rail. The country is elongated with over 100 million people concentrated in two major population centers: Hanoi in the north serves as the political capital, while Ho Chi Minh City in the south functions as the economic hub. A high-speed rail line connecting north and south would dramatically unleash Vietnam’s development potential.
Twelve years ago, China proactively approached Vietnam offering to build their high-speed rail system. No money? No problem—loans were available at highly favorable interest rates. Why such generous terms? At that time, China was eager to enhance the reputation of “Made in China” and promote industrial upgrading, with high-speed rail being one of China’s most impressive technological showcases. The first overseas project would naturally offer the best terms and service, likely a “loss leader” focused on long-term gains rather than immediate profits.
However, Vietnam didn’t believe such a good deal existed. They suspected China of having ulterior motives, worrying about potential leverage. These concerns were entirely unnecessary—they overestimated their own importance. Additionally, internal power struggles between Vietnam’s northern and southern political factions complicated matters, with one side often sabotaging the other’s projects.
Vietnam, having absorbed some Chinese cultural influence, possessed limited strategic thinking. They devised a plan to make rivals compete, leaking China’s proposal to Japan. Vietnam had actually approached Japan back in 2000, when Japan demanded a staggering $64.8 billion—half of Vietnam’s entire GDP at the time. Unable to afford it, the matter was dropped.
By 2013, Chinese high-speed rail technology had matured considerably, with costs potentially only 60% of Japan’s. Whether considering cost, construction efficiency, or technical capabilities, China was the obvious choice. But once Japan learned of the project, they began interfering.
China and Japan are bitter rivals in high-speed rail projects. Years earlier, China had outmaneuvered Japan using the “two peaches kill three warriors” strategy while also acquiring substantial technology from them. Upon learning of Vietnam’s project, Japan naturally wanted to steal it away, badmouthing China while offering even better terms—where China offered low interest, Japan promised zero interest.
Why could Japan afford zero interest? Because after Prime Minister Abe took office, he implemented “Abenomics,” running Japan’s money-printing presses so hard they nearly smoked, even setting benchmark interest rates negative. Japanese loans could genuinely be interest-free. Consequently, Vietnam rejected China, citing Japan’s superior terms. However, after the rejection, Japan raised prices again, claiming additional costs hadn’t been factored in. The Vietnamese high-speed rail project stalled once more.
In late October 2022, a massive Vietnamese delegation visited Beijing, proactively raising the high-speed rail project again. Unfortunately, Vietnam’s appetite had grown too large—they wanted China to provide money, labor, AND transfer technology free of charge. To strengthen their negotiating position, they brought up Japan, Germany, and even India, claiming India also wanted to help build their high-speed rail. While mentioning Germany and Japan was understandable, bringing up India was absurd—India has zero kilometers of high-speed rail and is currently entangled in troubled projects with Japan.
China naturally refused but didn’t outright reject the proposal. We dangled the possibility while they dangled theirs. This piece of meat might not be ours, but we wouldn’t let Japan have it either. After China’s refusal, Vietnam threw a little tantrum, publicly cozying up to Japan and actively requesting Japanese assistance. This was clearly meant to exploit China’s eagerness to export high-speed rail technology and make China jealous of Japan.
But Vietnam couldn’t afford Japan’s prices because Japanese high-speed rail has virtually no market, neither abroad nor domestically. Given Japan’s geography, one main trunk line suffices for the entire country, providing no economies of scale. Vietnam also flirted with Germany’s Siemens. In 2023, Vietnam’s largest private conglomerate, Vingroup, signed a high-speed rail cooperation agreement with Siemens.
However, I believe these were all diversionary tactics—Vietnam still wanted China to build it, because China’s technology, costs, and efficiency made the other two simply non-competitive. In late May 2023, Vietnam’s Minister of Transport led a delegation to China, meeting with relevant Chinese ministries and state-owned enterprises. Yet they still hoped China would provide money, labor, and technology. Chinese representatives inwardly smiled, encountering yet another fool who believed “if China can do it, so can we,” thinking to themselves: “You dare play ‘two peaches kill three warriors’ with the grandmaster of the game?”
In August 2024, Vietnam pulled in South Korea. Vietnamese leaders met with South Korea’s president in Seoul for high-profile talks, with high-speed rail cooperation listed as the top agenda item. South Korea does have one high-speed rail line, less than 400 kilometers long, operating at 300 km/h. However, this line serves as a cautionary tale for high-speed rail—constantly plagued by problems, either collisions or derailments.
So when someone came looking for a high-speed rail project, South Korea felt flattered, leveraging their actual strengths like semiconductors and bundling these projects with the rail deal. South Korea’s strategy was probably to secure the project first—such opportunities are rare—and worst case, subcontract to China. Still, South Korea wasn’t foolish, offering to transfer only 30% of assembly technology.
Thus Vietnam courted five or six potential partners, though they remained most interested in China. Then on December 17th came the shocking news: Germany’s Siemens had won the bid. I immediately sensed Siemens was in for serious trouble.
I suspect Siemens and others were invited merely as decoy bidders to pressure China on price. When Siemens submitted their bid and China didn’t follow, Siemens won by default. Siemens has high-speed rail technology, but at much higher costs.
When pretense becomes reality, Vietnam felt most distressed because they never actually wanted Siemens. But there was no turning back—the rice was already cooked, and high-speed rail concept stocks had risen for several consecutive days.
However, Vietnam’s partner VinSpeed refused to proceed. This company, a subsidiary of Vingroup owned by Vietnam’s richest man Pham Nhat Vuong, is a private enterprise. After calculating repeatedly, they found the project increasingly unprofitable.
Then the comedy reached its climax. On December 25th, Pham Nhat Vuong announced his withdrawal, formally exiting the Vietnamese high-speed rail project. Now only Siemens remains bewildered in the wind, unsure whether to advance or retreat, wondering: “We were only supposed to be decoy bidders—how did we end up in this pit?”
Vietnam tried to replicate China’s old playbook: two peaches kill three warriors. But the fundamental problem is, you need to have peaches first. China’s “two peaches” weren’t literally two peaches, nor even two peach trees, but two entire peach orchards.
During those negotiations, China presented a crisscrossing, nationwide high-speed rail network that made everyone’s mouths water. Companies thought even if they couldn’t win the first project, their turn would eventually come—these were entire orchards they could feast on indefinitely.
China used Siemens to pressure Japan, Japan to pressure Alstom, Alstom to pressure Bombardier, while Bombardier circled back to pressure Siemens. Everyone was forced into cutthroat competition until they all agreed to transfer technology.
Alstom, facing bankruptcy at the time, had to go all-in, desperately cooperating with technology transfer—what if they could land just one contract? Once they led the way, Japan also agreed to technology transfer. The winner? China’s CSR and CNR, later merged into CRRC. Why? Because CRRC had the most comprehensive technology and the lowest prices. Having absorbed technology from multiple companies, how could they not be comprehensive?
Vietnam’s biggest mistake was thinking “if China can do it, so can we.” They failed to recognize they only had one peach. Once this high-speed rail line is built, there won’t be any major follow-up projects, and the technology isn’t something they can learn anyway.
If Vietnam has a way forward, it’s to properly join the community of shared future for mankind that China advocates. Any thought of outsmarting China should be abandoned entirely.
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