China and Vietnam are in talks about modernising the 855km colonial-era railway between Kunming in southern China’s Yunnan Province and Vietnam’s port city of Haiphong.

France built the railway between 1904 and 1910, but its narrow gauge track is incompatible with China’s standard gauge system. It carries limited freight, notably fertiliser from China and zinc ore from Vietnam.

Vietnam is China’s main trading partner in Southeast Asia, and China’s fourth largest trading partner in the world, after the US, Japan and South Korea.

Last year, China-Vietnam trade rose 5.5% to reach $176bn. In recent years Vietnam has emerged as “China’s China”, assembling products made in its northern neighbour to Chinese designs.

Reuters notesthat the railway would give China better access to Vietnam’s large deposits of rare earth elements, of which China is the world’s biggest refiner.

It adds that Chinese and Vietnamese rare earths industry experts discussed industrial cooperation at the end of November.