As the rivalry between the U.S. and China heats up, Vietnam struggles to maintain its autonomy. So far, close party ties have helped keep relations with Beijing cordial. However, should pressure from the North increase, Vietnam could start exploring other options.
In a nutshell
- Vietnam’s most important goal is to maintain autonomy
- China’s rise is complicating Hanoi’s relationship with Beijing
- There is plenty of room to improve relations with the U.S.
Like the rest of Southeast Asia, Vietnam finds itself in the midst of an escalating geopolitical rivalry between the U.S. and China. How Hanoi reacts will draw on a narrow view of its national interests, a long-held desire for autonomy and the political interests of the Communist Party of Vietnam (CPV).
Historically, Vietnam’s geography has been a source of insecurity. It shares a land border and a maritime border with China. The land border has been settled for more than 20 years, demarcated for 10 years, and is now jointly patrolled. In August 2020, Chinese State Councilor and Foreign Minister Wang Yi visited Vietnam to commemorate this landmark development.
The maritime border with China is almost completely unsettled. This is evident in the ongoing dispute over the Spratly and Paracel Islands and over the rights in the waters around them. (In the Gulf of Tonkin, maritime borders were settled about 20 years ago.)
Vietnam is also highly dependent on the food resources nourished by the silt of the Mekong Delta: fish, fruit, and rice. This, in turn, makes the country dependent on the Mekong-Lancang headwaters in China thousands of miles away. It has long been alleged by downstream countries that China manipulates the flow of the river to their disadvantage, causing or intensifying droughts and floods. Earlier this year, Eyes on Earth, an American consulting company, published a thorough study (funded by the U.S. Agency for Development) that substantiated such claims.
Sustained liberalization has globalized Vietnam, highly dependent on trade with a diverse group of partners and now caught in the middle of a rivalry between the U.S. and China.
The U.S. has a large naval presence in the Western Pacific. Vietnam uses this profile to signal China about its strategic alternatives, through American port calls and other naval cooperation. Neither the U.S. nor any other outside power, however, has a presence in the Mekong region analogous to the American foothold in the Pacific. There, Vietnam can only team up with the other Southeast Asian countries that share the Mekong: Laos, Myanmar, Cambodia and Thailand. All but Thailand are weak and very much subject to Chinese economic inducements.
Among the Mekong countries (including China), only Vietnam has ratified the United Nations Watercourses Convention, a legal mechanism with the potential to play a role similar to the UN Convention on the Law of the Sea in the South China Sea.
Economically, sustained liberalization has globalized Vietnam, highly dependent on trade with a diverse group of partners and now caught in the middle of a rivalry between the U.S. and China. While the latter has grown as an export market for Vietnam, the former remains larger. The U.S.-China trade war appears to be accentuating this trend.
Vietnam’s exports to the U.S. are up more than a third over 2018, and to China by about a quarter. The EU, Japan, and South Korea are also crucial markets. Moreover, the country is dependent on foreign investment. In this regard, it has led the region, including China, for more than a decade when inbound investment is measured as a percentage of gross domestic product. Leading investors include South Korea, Japan and Singapore. For a decade, China has been growing significantly as a source of investment, but it still ranks behind these leaders.
Facts & figures
In terms of foreign policy, Vietnam is overwhelmingly focused on its immediate neighborhood. It seeks connections beyond the region only to reinforce its freedom of action close to home. It does not entertain entanglements with foreign powers from outside that could compromise this stance. Instead, it works to build relationships with all, trying to keep them in balance. The U.S. is prominent in this regard because it is the biggest outside power in the region. Vietnam also has a strong relationship with Russia, especially in national defense.
China, however, is a neighbor, not an outside power. Vietnam has no choice but to deal with it directly, even if, at the same time, it seeks to offset the relationship with others. Beijing therefore influences Hanoi’s decision-making in ways that Washington and Moscow do not. A case in point is the pressure China has successfully brought to bear on Vietnam’s efforts to drill for offshore oil and gas. Beijing’s hand was most conspicuous in the forced withdrawal of Spanish company Repsol, at great expense to Vietnam. Hanoi is coming under similar pressure from China over the work of Russia’s Rosneft.
Vietnam’s membership in the Association of Southeast Asian Nations (ASEAN) is another instrument the country uses to secure its autonomy. The year 2020 brought Vietnam’s turn to chair the organization. Hanoi was expected to use the opportunity to significantly advance its interests, especially in the South China Sea. The global Covid-19 crisis, however, hobbled that effort. ASEAN meetings have been canceled, delayed or held in a virtual format that eliminates the interpersonal interaction that is their most valuable feature.
Vietnam is an autocracy ruled by the Communist Party of Vietnam. This affects the way it interacts with the rest of the world in three key areas. First, it strengthens ties to China. It is true that the Vietnamese people have strong negative feelings about China. These feelings most recently came to a boil in 2014, with popular protests and riots over the presence of a Chinese oil rig in Vietnamese waters. This volatile anti-China public attitude restrains what the government can achieve in its relationship with China. For instance, such sentiment makes it highly unlikely that Vietnam would relinquish any of its claims in the South China Sea as a part of a deal with China.
Vietnam’s governing structure makes it naturally distrustful of the U.S..
Vietnam does, however, have a close, extensive formal relationship with China, in great measure driven by party-to-party ties. This rapport is important in helping keep disputes with Beijing from getting out of hand. Neither the U.S. nor any other country has anything comparable with that relationship.
Second, Vietnam’s governing structure makes it naturally distrustful of the United States. As Vietnamese, the country’s leaders welcome the U.S. overtures to counter China. As communists, they fear Washington ultimately wants to see their party driven from power through peaceful evolution. This is similar to the Chinese Communist Party’s long-held anxiety about engagement with the U.S. Vietnam’s leaders also worry a meeting of the minds between Washington and Beijing could leave them out in the cold.
Third, Hanoi’s autocratic style of governance will always act as a brake on its relationship with Washington. Even when an American administration downplays ideological differences, the U.S. Congress keeps these issues front and center. This tension has been overcome in the past, for example in 2001 with Congressional approval of the U.S.-Vietnam Bilateral Trade Agreement and in 2006 with a vote to approve Permanent Normal Trade Relations for Vietnam. However, such action requires concerted focus by an administration and the expenditure of political capital that may or may not be available.
Vietnam will navigate the unfolding great power rivalry by continuing its quest for autonomy. The leadership will still welcome all outside powers, including the U.S., but will not move ahead fast or far with any of them. It will also continue to accommodate China when necessary. Within this framework, however, there is the possibility of smaller movements in policy approach.
The 25th anniversary this year of the normalization of U.S.-Vietnam relations highlights their remarkable transformation. Before 1995, there was little that was positive in the relationship beyond cooperation on legacy issues from the Vietnam War, such as accounting for missing American service members. Yet after 25 years, the relationship is not as close as it could be – certainly not as close as Vietnam’s relationship with either Russia or China.
Without further Chinese pressure on the South China Sea and the Mekong, and assuming continued U.S. interest in the region, Hanoi will continue strengthening its relationship with Washington at the current pace. Vietnam will show interest in low-end U.S. military and coast guard equipment. There will be a regular schedule of naval port calls and a range of defense consultations. Moreover, under this scenario, Vietnam would be receptive to increasing levels of U.S. military assistance and cooperation in areas like maritime domain awareness and humanitarian and disaster relief.
Even with the lifting of an arms embargo during the Obama administration and discussion of big-ticket American weapons purchases, Vietnam has refrained from purchasing arms from the U.S. in favor of Russia and other lower-cost options. The highlight of American arms transfers during this time has been two retired coast guard cutters, two dozen small coastal patrol boats and six coast guard drones. This is likely to remain the status quo going forward. New, high-end American equipment is too expensive and rattles too many party and government sensitivities, including the military’s ties to Russia.
On the economic side, Vietnam will try to maintain its diversity in trade and investment. Its membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and trade agreement with the European Union are parts of this effort, as is its long-standing involvement in ASEAN-centered economic arrangements. It will look for more opportunities to expand its network of free trade partners and bet on an improving business environment to attract investors.
In the event of greater Chinese pressure, Vietnam will accommodate China’s demands while moderately accelerating its ties with the U.S. This could include ramping up defense cooperation and purchases of new American military equipment, such as maritime patrol aircraft. It could also include the symbolic upgrade of U.S.-Vietnam relations to a “comprehensive strategic partnership,” the same formal designation it gives its relationship with China. Vietnam will also intensify outreach to other powers like Russia, India, Japan, Australia and South Korea, and quietly try to galvanize a greater sense of urgency in ASEAN.
If an alarming development should occur in the South China Sea, Vietnam could file a formal legal case on its maritime rights there. This would be a major step for Vietnam and would be resisted vigorously in party-to-party channels. To go that route, Hanoi would likely require Chinese action more dramatic than the many confrontational moves it has made to date.
At the end of 2019, Vietnam released a new defense white paper. It restates Vietnam’s decades long “three nos” policy: no alliances, no foreign bases and no relationship with one country to be used against another. The new white paper adds a new “no” – “no use of force or threat to use force.”
More importantly, many analysts have also read into the white paper a significant caveat: “depending on circumstances and specific conditions, Vietnam will consider developing necessary, appropriate defense and military relations with other countries.”
This raises the possibility of a third, least likely, scenario. China’s growing power and steady pressure on Vietnam, even short of a dramatic event, will force it to break from nonalignment and more closely and explicitly align with the U.S. This would involve an even more robust level of defense cooperation than in the second scenario, including increased equipment transfers, training and combined military exercises. Vietnam could also permanently join the quadrilateral security dialogue comprising the U.S., Japan, India and Australia. There have been more extreme suggestions, including that Vietnam could lease space at Cam Ranh Bay Naval Base or islands in the South China Sea to the U.S. However, these outcomes seem impossible, even in this scenario.