China and the World

We’re comrades

Why relations between Beijing and Hanoi were back in focus this month

Xi, Peng pose for a photo with Trong and Man during a welcoming ceremony in Hanoi

Red carpet for Xi Jinping, who met Vietnam’s leader Nguyen Phu Trong earlier this month

We will continually review disagreements and overcome obstacles for the healthy, practical and steady development of bilateral relations for the sake of the two peoples as well as for peace and prosperity in the region and the world.”

The above quote is not, as you might predict, about President Xi Jinping’s historic meeting with Taiwanese leader Ma Ying-jeou in Singapore but from Nhan Dan, a newspaper in Vietnam, citing words from a speech by Xi on Sino-Vietnamese relations this month.

Xi’s Hanoi trip was the first Chinese presidential visit to Vietnam in a decade and he was the first foreigner in long memory to speak to the National Assembly, Vietnam’s legislative body. More concrete stuff came of it than the meeting between Taiwan’s Ma and Xi. Twelve bilateral agreements were signed, and a commitment of $157 million for Chinese investment in schools and hospitals, plus $500 million for infrastructure. Xi also promised to promote Vietnamese imports, an important pledge given that a trade imbalance between the nations helped drive Vietnamese enthusiasm for the Trans-Pacific Partnership (TPP), a trade liberalisation deal between the US and 11 Pacific countries.

But above all the visit was a chance for what the foreign media called a “reset” after territorial tensions blew up last year when China moved an oil rig into what Vietnam terms its exclusive economic zone. Chinese actions in the South China Sea – very forcefully called the East Sea in Vietnam – had set off protests before, often small groups of activists marching around Hanoi’s central Hoan Kiem Lake each Sunday morning (these were allowed by the usually wary authorities as a means to ‘send a message’ to Beijing).

Despite both governments’ testimonies of great friendship it is believed that many in Vietnam remain deeply suspicious of China. According to a recent survey by the Pew Research Centre, a Washington-based think tank, only 19% hold a favourable view of China. The two countries fought a brief but intense war in 1979, just a few years after the end of the Vietnam War.

When a slew of anti-China protests broke out in 2014, factories were attacked and four Chinese nationals were killed in riots. China evacuated thousands of its citizens (see WiC237). Those factories were actually Taiwanese, but damage had been done to the relationship and a series of high level visits to smooth things over have been going on since. This culminated with Xi’s arrival.

The tenor of his speech stressed the traditional friendship between Vietnam and China, stating it should be stronger than any temporary disagreements. At the same time he highlighted that both were successful socialist countries with strong market economies. He did not mention the South China Sea. Ties had seemingly been reset and Xi hit the road to Singapore.

But once the Chinese leader got to Singapore his subsequent speech on China’s “historic” claims in the South China Sea annoyed Vietnam enough for its foreign ministry spokesman Le Hai Binh to issue a condemnatory statement. According to Thanh Nien news it said: “We demand that relevant parties respect Vietnam’s sovereignty over these islands [namely Spratly and Paracel] and restrain words and actions that may complicate the situation in order to maintain peace and stability in the region.”

Verbal shots thus fired from both sides, things went quiet again. However on November 17 Vietnam and the Philippines signed a strategic partnership agreement, making Vietnam the Philippines’ second strategic partner, after Japan.

“Mr President [Benigno Aquino III] and I shared our concerns over the recent developments in the East Sea, or the South China Sea, affecting trust, peace, security and stability in the region,” Vietnamese President Truong Tan Sang told Thanh Nien.

In fact, when Xi was in Hanoi Vietnam was also hosting the Japanese defence minister and allowing a Japanese ship into its deepwater port on Cam Ranh Bay. Vietnam and Japan, a close ally of the Americans, will soon hold their first joint naval exercise.

Beijing has been closely watching the rapidly evolving US-Vietnam relationship too, from the establishment of bilateral ties only 20 years ago to earlier this year when Nguyen Phu Trong visited the White House – a significant moment for a former “hardliner”, sceptical of the US.

Xi’s many references to the long friendship between Vietnam and China not-so-obliquely underlined Beijing’s unease at this state of affairs.

Leading Vietnam expert Professor Carlyle Thayer at the Australian Defence Force Academy reckons President Obama will also visit Hanoi before the end of the year, the first US Presidential visit since Bill Clinton’s rockstar welcome in 2000.

Some analysts, such as Zachary Abuza at Washington’s Naval War College, reckon that China has a “very zero-sum view of the world” and so interprets Hanoi’s recent foreign policy as a way to contain China’s rise. In this regard Vietnam is a particularly useful friend for the US and its ‘pivot’ to Asia (several secretaries of state and defence have visited Vietnam under Obama)

It has been China’s actions that have latterly pushed Vietnam closer to the US and forced even hardliners to rethink their policy, a point made by Australia’s Prime Minister Malcolm Turnbull earlier this year.

The other thing to watch is Vietnam’s upcoming General Party Congress. Though due next year the important decisions are being made now. Whilst it is simplistic to divide the ruling Communist Party on pro-US and pro-China lines, Beijing wouldn’t welcome a new leadership full of ‘China-sceptic modernisers’, a term oft used of Prime Minister Nguyen Tan Dung who may yet take take top place next year as General Secretary. Dung is regarded as pro-US and very pro-business (his American-educated son-in-law opened the first McDonald’s in Vietnam last year) but not many observers expect him to cut ties with Beijing too substantially.

Trade is the other factor. Vietnam is part of the TPP and is predicted to be one of the biggest winners if the trade pact makes it through the US Congress and other legislatures. China is still Vietnam’s biggest trading partner, but the TPP might be a way to lessen that reliance and also encourage more factories to relocate from China. Currently, Sino-Vietnamese two-way trade is over $83 billion with $50 billion of that Chinese exports.

Maritime sovereignty issues will not be solved soon and the continuation of Chinese island building will antagonise.

But none of this changes a basic reality for Hanoi: its own geography and the fact China is always to the north. The friendlier tone of the recent Xi meeting is a further illustration that Vietnam knows it has more to gain from balancing its ties rather than favouring either superpower outright.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.