US President Donald Trump holds a Vietnamese flag as Vietnam's Prime Minister Nguyen Xuan Phuc (L) waves a US flag upon their arrival for a meeting at the Government Office in Hanoi on February 27, 2019, Photo: Saul Loeb/AFP

When Vietnam’s Viettel announced on April 25 that it had successfully trialled the nation’s first 5G broadcast with bandwidth speeds similar to those piloted in the West, it marked a certain technological milestone for Southeast Asia.

Viettel, the country’s military-owned largest telecommunications company, accomplished the feat without the help or technology of China’s leading telecom equipment maker Huawei, which stands accused by the US and others of spying on behalf of Beijing.

Across the world, from Australia to the Czech Republic, a “Huawei Curtain” is descending to separate countries loyal to the US, which warns allied nations against allowing Huawei to build their 5G telecom infrastructure, and those that aspire to deeper economic integration with China.

Vietnam has given Huawei the cold shoulder more for reasons of self-reliance than kowtowing to the US, it seems, but how Hanoi finally positions itself in the widening chasm between America and China will have big economic and security implications for the wider region.

“More friends and fewer enemies” was a policy the ruling Communist Party adopted in 1988, and today’s communist apparatchiks still cling tightly to the foreign policy blueprint.

China, Vietnam’s largest trading partner and communist cousin, has long held sway in economics and politics, while Russia remains Vietnam’s main military supplier.

Chinese President Xi Jinping (C) and Vietnam’s Communist Party Secretary General Nguyen Phu Trong (R) at the presidential palace, Hanoi, November 12, 2017. Photo: AFP/Hoang Dinh Nam

But in recent years relations with America have soared with rising trade, closer diplomacy and Washington’s tacit vow to protect Vietnam’s interests in the South China Sea vis-à-vis China’s expansionism in the contested maritime area. That all raises questions about how China views Vietnam’s closer relations with the US and what it might do in response.

Derek Grossman, a senior defense analyst at the RAND Corporation, a US-based think tank, says that is it difficult to know exactly “because there isn’t much available in the public domain.”

“However, I suspect that Chinese policymakers continue to believe China maintains the preponderance of influence,” he said, “not only through their breadth and depth of economic exchanges… but through party-to-party relations bolstering their common socialist systems as well as both shared culture and history over millennia.”

China is now the largest foreign investor Vietnam, the main purveyor of its imports (35% of all Vietnam’s imports in 2017) and its second largest export destination, trailing only the US. China invested some US$1.6 billion in Vietnam in just the first four months of this year, according to the Ministry of Planning and Investment in Hanoi.

At the same time, the US has seen trade with Vietnam grow from $451 million in 1995 to more than $58.9 billion last year. Two-way trade has doubled in the five years spanning 2013 and 2018, official statistics show.

The day before US President Donald Trump and North Korean premier Kim Jong Un met in Hanoi in late February for summit peace talks, Trump joined Vietnamese Prime Nguyen Xuan Phuc to sign three new trade deals worth $21 billion, chiefly involving US aerospace giant Boeing.

Such deals significantly reduce Vietnam’s trade surplus with the US, a major source of frustration for Trump during his first year in office when he complained that Vietnam was “stealing” American jobs. This export-import rebalancing is now likely to allow deeper trade relations between the two nations.

US President Donald Trump next to a bust of late president Ho Chi Minh at the Presidential Palace in Hanoi, February 27, 2019. Photo: Saul Loeb/AFP

Shortly after these deals were signed in Hanoi, China’s normally-jingoistic tabloid Global Times put out a surprisingly conciliatory message.

“The deal between Boeing and Vietnam highlights a fact: the world has formed an integrated industry chain. As China tries to move up the value chain, some low-end manufacturers are shifting production to Vietnam,” stated the February 28 article.

“China has no reason to be jealous of Trump’s economic gain in Vietnam. In contrast, we hope the US can increase economic interaction with enterprises in Southeast Asian countries. Hopefully, everyone can learn that economic engagement is not a zero-sum game.”

For Grossman, the Global Times’ commentary is dubious since “China has consistently viewed the world in terms of spheres of influence. Vietnam is certainly within China’s sphere, and Beijing wants to keep it that way. That is a zero-sum attitude.”

That said, scholars at the China Institute of International Studies (CIIS), a prestigious think tank affiliated with the country’s Ministry of Foreign Affairs, have often been quoted acknowledging the fact that Vietnam’s main foreign policy goal is to ally itself with as many friends as possible while avoiding reliance on any one nation.

For example, after the USS Carl Vinson warship docked in Da Nang last year, becoming the first American aircraft carrier to moor in the country since the Vietnam War, the China Daily mouthpiece paraphrased Teng Jianqun, a senior researcher at CIIS, as saying it “meets with Vietnam’s strategy to maintain equidistant diplomacy with China, Russia and the US.”

A Vietnamese soldier keeps watch in front of US aircraft carrier USS Carl Vinson after its arrival at a port in Da Nang, Vietnam, March 5, 2018. Photo: Twitter

Self-interest might be another factor. Another Global Times article, published in March, spelled out rather explicitly why Chinese firms might think it useful if Vietnam grows closer to the US economy.

“Chinese companies should be encouraged to establish factories in Vietnam to bypass high tariffs targeted at them [by the US] … ’Made in China’ will become ‘Made in Vietnam,’ helping China avert unfair tariffs,” it stated.

Vietnamese Prime Minister Phuc reaffirmed his country’s cooperative partnership and friendship with China when he traveled to Beijing last week to meet Xi Jinping, China’s president and chief of its Communist Party, and take part in the second Belt and Road Forum.

But it would be a mistake to think that just because both nations are ruled by communist parties their relations are always comradely; Beijing knows Vietnam is no fawning sycophant.

Nowhere is this more apparent than in the South China Sea, where Hanoi has become the last Southeast Asian nation to seriously contest Chinese expansionism in the waters. Beijing claims roughly 80% of the territory.

The Chinese state-run media, which is strictly controlled by Beijing, has been allowed to engage in bellicose criticism of Vietnam in this realm.

When, in August 2017, Vietnam tried pressuring the Association of Southeast Asian Nations (ASEAN) in publishing a critical statement on China building military stations in the waters, the China Daily opined that Hanoi was seeking to “sow seeds of discord” with ASEAN, while another state-run publication called Vietnam a “thief crying stop thief.”

Beijing has often thrown around its new military weight to threaten Vietnam into quietude.

Last year, just as drilling was about to begin, Vietnam’s state-owned PetroVietnam instructed its partner, Spanish energy firm Repsol, to suspend work on a major oil project in the South China Sea, for which $200 million had already been spent on investments.

It is alleged that work on the so-called ‘Red Emperor’ development was abandoned because of a show of military force by Beijing, including the sailing of a 40-ship flotilla near the oil well.

The threat of military pressure from China had previously forced Repsol to cancel another offshore oil exploration project in Vietnamese waters in 2017.

Beijing has also blackmailed international energy companies, such as BP and Chevron, against engaging in Vietnam’s oil ventures in the 2000s and used Chinese vessels to cut Vietnamese undersea cables in 2012, Bill Hayton, an associate fellow at the Asia-Pacific Program of Chatham House, a British think tank, stated last year.

Vietnam’s willingness to back down to these threats most likely assures policymakers in Beijing that Chinese hostility isn’t likely to be met with a violent response from Hanoi.

“Vietnam could probably sink a few Chinese ships if it came to a fight, but the consequences for it – both military and economic – would be dire. By backing down over this oil drill Vietnam has demonstrated its lack of a credible naval deterrent,” Hayton wrote.

Zhang Baohui, a mainland security expert at Hong Kong’s Lingnan University, stated as much back in 2016 when Reuters quoted him saying that the Vietnamese military could never compete against China’s. Vietnam’s choice to make “the US into an enhanced deterrence strategy” is the “cheapest form of defense” for Hanoi, he added.

The question then becomes what Beijing actually thinks about America’s loose military commitment to Vietnam. American military officials have visited Vietnam more often in recent years and have given Hanoi assurances of its assistance. The US has also conducted regular freedom of navigation operations in the waters since 2015.

But as Hayton noted, “not even the visit of one of the mightiest warships on earth, the USS Carl Vinson, to Da Nang days before the scheduled start of Repsol’s oil drilling [last year] was sufficient to give Vietnam the confidence to ignore Chinese threats.”

Vice Admiral Phillip G Sawyer (R), Commander of the US Navy’s 7th Fleet, greets Vietnamese officials after the US aircraft carrier USS Carl Vinson docks in Da Nang on March 5, 2018. Photo: AFP/Linh Pham

Grossman, of Rand, makes clear that “Vietnam does not have US protection in any sense,” adding that “there is no security alliance, like Washington has in place with the Philippines, South Korea, Japan, Thailand, and Australia.”

“However, there is a deepening defense and maritime security relationship between the US and Vietnam that should make China think twice about whether Washington would come to Hanoi’s aid militarily during the next South China Sea crisis,” he said.

For China, domination in the South China Sea serves not only a nationalist cause, which is becoming particularly important to Xi Jinping’s leadership, but also an economic one.

The 21st Century Maritime Silk Road, the coastal component of its US$1 trillion Belt and Road Initiative (BRI), eyes trade routes flowing from China through the South China Sea to the Indian Ocean and the Mediterranean.

This “makes the South China Sea one of the important BRI routes. A peaceful South China Sea is imperative to the progress of BRI,” recently wrote Weng Peng, a researcher at the Charhar Institute, a Chinese-based think tank.

For critics of Beijing, peaceful actually means Chinese-dominated. Yet some fear that America’s growing interest in South China Sea’s affairs, including the protection of Vietnam’s interests, could lead one day to conflict between the two superpowers.

Peking University’s South China Sea Strategic Situation Probing Initiative, a think tank, released a report last month that claimed: “The US military will continue intensifying military operations in the South China Sea, constantly exploring the grey zones between peace and conflict, and probing China’s bottom line, which will inevitably push the threshold of small-scale armed conflict and war.”

Yet military officials in Beijing have hardly avoided making belligerent statements. “As our capability grows, we are likely to take more actions to counter provocations,” said Senior Colonel Zhou Bo, director of the Center for Security Cooperation under the Defense Ministry, in March.

A Chinese boat (L) supposedly ramming a Vietnamese vessel (R) in contested waters near China’s deep sea drilling rig in the South China Sea in a 2014 file photo. Photo: AFP/Vietnam maritime police

China says it wants to engage with rival claimants in joint development agreements, which would allow for bilateral economic activities in the waters, such as offshore oil and gas extraction. The Philippines agreed to one with China last year, though Vietnam resists such advances.

Instead, Hanoi has tried to force Asean into issuing stricter motions on Chinese expansionism in the South China Sea, as well as a more subtle tract by trying to get Beijing to agree with the regional bloc to a Code of Conduct (COC) for the contested maritime area.

While Hanoi doesn’t want to appear weak, not least for domestic political reasons, in the face of Chinese aggression, neither does it want to appear too hostile given that it cannot be sure of how the US would respond to Chinese aggression. The same is true of China, although its stakes are much higher.

The emerging diplomatic problem for Hanoi is that its desire to forge a position equidistant between Beijing and Washington is “not working,” wrote Joshua Kurlantzick, senior fellow for Southeast Asia at the Council on Foreign Relations, a US-based think tank, in a discussion paper published last November.

“If Vietnam moves even closer to the United States, it could draw a rhetorical backlash, and possibly other punishments, from China,” he stated, adding: “They have not prevented China from expanding its territorial claims in the South China Sea, intimidating Vietnam into giving up oil and gas claims, and sidelining Vietnam within ASEAN.”

That means Beijing likely reckons that Vietnam’s policy of “more friends and fewer enemies” might have only created a collection of tepid associates, not committed defenders.

If Hanoi looks to the US for protection, the risk is that Washington will finally not want to be drawn into a war with China just to defend Vietnam’s claims over a few islands.

If it looks instead to China for trade and communist solidarity, lest it be drawn too close to democratic America, it knows through a long and often unfortunate history that Beijing expects a certain amount of suzerainty for such an arrangement.

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