ASEAN
20 October 2024
Vietnam’s bamboo diplomacy
Vietnam has long had to dance between powerful allies and enemies. That’s left it poised to maneuver in the political chaos that now swirls around it.
The United States protested when Vietnam welcomed Russian President Vladimir Putin 20 June 2024. A U.S. embassy spokesperson in Hanoi told the Reuters global news agency: “No country should give Putin a platform to promote his war of aggression and otherwise allow him to normalise his atrocities.”
Members of the International Criminal Court, which issued a warrant for Putin’s arrest over alleged war crimes in Ukraine, were also disturbed — although neither China, Russia, Vietnam nor the United States are members of the court.
Vietnam has adopted a position of neutrality over the Ukraine war. It has also taken a neutral stance more generally in a world of great power rivalry, where Russia, China and the United States seem to flex their muscles in all regions of the world, but particularly in Vietnam’s backyard.
Under its “bamboo diplomacy,” Vietnam seeks to develop balanced relations with great powers, as well as diversify to other countries. Bamboo, which grows widely in Vietnam, is known for its ability to bend as needed without snapping, thereby serving as a metaphor for the country’s foreign policy.
Fostering relations with as many countries as possible minimises its vulnerabilities as a middle power and dependence on any one partner. During Putin’s visit, Vietnam President To Lam and Putin signed 11 memorandums for cooperation in areas including civil nuclear projects, energy and petrol cooperation, education and disease prevention.
Vietnam has much to gain from the fracturing of geopolitics and geoeconomics. It has been attracting foreign investment from Chinese companies, in response to China’s rising labour costs and the trade restrictions imposed by the United States and other Western countries. And for their part, as U.S. and other Western companies seek to “de-risk” their economic relations with China, they are increasingly looking to Vietnam.
The country has emerged as Asia’s latest miracle economy and now finds itself in a curious situation as it is being simultaneously courted by all three great powers.
What is remarkable in Vietnam is its growing national self confidence. Vietnamese people routinely refer to their victory in the “American War.” Moreover, economic reforms since 1986 have helped propel Vietnam from being one of the world’s poorest nations to a lower middle-income economy in one generation.
Today, Vietnam’s GDP per capita — the total value of all goods and services produced a year, divided by the population of the country — stands at $15,200 per person in purchasing power parity terms. While that is still way behind the US at $81,700, it is now well ahead of neighbouring Philippines ($10,800) and has almost caught up to Indonesia ($15,600). Vietnam’s rapid development has helped lift 40 million people out of poverty and only 4.4% of the population live below the national poverty line.
But there is another side of Vietnam, with its “dualistic” economy. Outside a few major cities, much of the population live precarious lives and are at the risk of falling back into poverty if hit by unemployment, serious illness or a natural disaster. All that said, Vietnam’s progress and dynamism are palpable.
There are many reasons why Vietnam has done so well. Education levels put it ahead of its neighbors and put it in the same league as the United States, Singapore, Japan and South Korea, according to the Organisation for Economic Co-operation and Development.
Vietnam has fairly good transport and energy infrastructure, although it lags behind regional peers like China, India, Indonesia, Malaysia and Thailand. The digitisation process in Vietnam has progressed rapidly in recent years. Vietnam is also a signatory to a number of free trade agreements.
These factors have enabled Vietnam to attract foreign direct investment, especially from China, South Korea, Japan, Singapore and Hong Kong and participate in global networks for manufacturing and producing goods such as electronics, furniture, clothing and footwear.
For example, over the past 15 years, Korea’s Samsung has established its undeniable position as the largest foreign direct investor in Vietnam. Companies like Apple are now moving some of their manufacturing out of China and into Vietnam in light of China’s rising labour costs and geopolitical tensions.
To capture stronger gains, though, Vietnam needs to foster a high-skilled workforce and invest in technology and innovation. The prominent and entrenched state-owned enterprise and poor enforcement of intellectual property rights also do not help.
On the political side, corruption and weak rule of law represent deep governance challenges. Repressive regimes can manage to grow their economies from a very low base to a middle-income level. But social and political repression act as a break on innovation and creativity, essential elements for graduating high-income status.
All things considered, however, it is because of Vietnam’s impressive economic performance it is now being courted by the world’s great powers.
Just over a year ago, U.S. President Joe Biden visited Hanoi. The two countries elevated their relationship to a “Comprehensive Strategic Partnership,” something which had also previously been extended to China, India, Japan, Russia and South Korea. Vietnam had long avoided the move with the United States out of fear of upsetting Beijing.
In a joint statement, thhe U.S. and Vietnam leaders said they “underscored their unwavering support for the peaceful resolution of disputes in accordance with international law, without the threat or use of force.”
Most analysts see the United States’ courtship of Vietnam and other Asian countries as part of its push to “contain” China’s rising power, even if the United States would staunchly deny such characterisation. For its part, Vietnam sees its relationship with the United States as a means to help balance its relationship with its overbearing neighbour, China, with which it shares a border of some 1,300 kilometres.
Three months after Biden’s visit, Xi Jinping visited Vietnam his first visit in six years. In an article published at the time in a Vietnamese newspaper, Xi wrote that “Asia’s future is in the hands of no one but Asians.”
On the occasion of Xi’s visit, Vietnam resisted Chinese pressure to upgrade its relationship to become a member of a “community of common destiny.”
But Vietnam has prospered under the current U.S.-led, rules-based order. And it knows that a Chinese-led world order could leave it vulnerable to Chinese domination.
Despite its desire to maintain independence from China, Vietnam must labour hard to maintain good relations with its big neighbour. China is its most important trading partner and source of investment. And ideologically it is much closer to China than to the West, being governed by an Communist Party that has an appalling human rights record.
During Xi’s visit, the two sides signed 37 different deals on diplomatic relations, railways and telecommunications projects. But eight proposed deals — tied to critical and rare materials — were left unsigned.
Russia also has a long relationship with Vietnam, notably as a major arms supplier, dating back to the post-decolonisation wars and conflicts. The current relationship offers both sides potential benefits. Russia is desperate to overcome its isolation, and reduce its dependence on China. For its part, Vietnam has the opportunity to extract further military arms and technologies from Russia. Moreover, fostering its friendship with Russia could minimise the threat of a tight China-Russia alliance.
All told, Vietnam’s “bamboo diplomacy” seems to be effective. By remaining neutral in the face of international disputes and being friends with all, Vietnam can balance relations and minimise the vulnerabilities of being a middle power in a world with divisive great power politics.
Members of the International Criminal Court, which issued a warrant for Putin’s arrest over alleged war crimes in Ukraine, were also disturbed — although neither China, Russia, Vietnam nor the United States are members of the court.
Vietnam has adopted a position of neutrality over the Ukraine war. It has also taken a neutral stance more generally in a world of great power rivalry, where Russia, China and the United States seem to flex their muscles in all regions of the world, but particularly in Vietnam’s backyard.
Under its “bamboo diplomacy,” Vietnam seeks to develop balanced relations with great powers, as well as diversify to other countries. Bamboo, which grows widely in Vietnam, is known for its ability to bend as needed without snapping, thereby serving as a metaphor for the country’s foreign policy.
Fostering relations with as many countries as possible minimises its vulnerabilities as a middle power and dependence on any one partner. During Putin’s visit, Vietnam President To Lam and Putin signed 11 memorandums for cooperation in areas including civil nuclear projects, energy and petrol cooperation, education and disease prevention.
High level meetings
On 19 August Lam met with Chinese president Xi Jinping in Beijing and this week, Lam is expected to speak to the United Nations in New York and meet with the heads of several U.S. technology corporations including Meta and Google.Vietnam has much to gain from the fracturing of geopolitics and geoeconomics. It has been attracting foreign investment from Chinese companies, in response to China’s rising labour costs and the trade restrictions imposed by the United States and other Western countries. And for their part, as U.S. and other Western companies seek to “de-risk” their economic relations with China, they are increasingly looking to Vietnam.
The country has emerged as Asia’s latest miracle economy and now finds itself in a curious situation as it is being simultaneously courted by all three great powers.
What is remarkable in Vietnam is its growing national self confidence. Vietnamese people routinely refer to their victory in the “American War.” Moreover, economic reforms since 1986 have helped propel Vietnam from being one of the world’s poorest nations to a lower middle-income economy in one generation.
Today, Vietnam’s GDP per capita — the total value of all goods and services produced a year, divided by the population of the country — stands at $15,200 per person in purchasing power parity terms. While that is still way behind the US at $81,700, it is now well ahead of neighbouring Philippines ($10,800) and has almost caught up to Indonesia ($15,600). Vietnam’s rapid development has helped lift 40 million people out of poverty and only 4.4% of the population live below the national poverty line.
The two sides of Vietnam’s economy
Visitors to Ho Chi Minh City, with its international hotels and luxury stores, might imagine that Vietnam is a first world country.But there is another side of Vietnam, with its “dualistic” economy. Outside a few major cities, much of the population live precarious lives and are at the risk of falling back into poverty if hit by unemployment, serious illness or a natural disaster. All that said, Vietnam’s progress and dynamism are palpable.
There are many reasons why Vietnam has done so well. Education levels put it ahead of its neighbors and put it in the same league as the United States, Singapore, Japan and South Korea, according to the Organisation for Economic Co-operation and Development.
Vietnam has fairly good transport and energy infrastructure, although it lags behind regional peers like China, India, Indonesia, Malaysia and Thailand. The digitisation process in Vietnam has progressed rapidly in recent years. Vietnam is also a signatory to a number of free trade agreements.
These factors have enabled Vietnam to attract foreign direct investment, especially from China, South Korea, Japan, Singapore and Hong Kong and participate in global networks for manufacturing and producing goods such as electronics, furniture, clothing and footwear.
For example, over the past 15 years, Korea’s Samsung has established its undeniable position as the largest foreign direct investor in Vietnam. Companies like Apple are now moving some of their manufacturing out of China and into Vietnam in light of China’s rising labour costs and geopolitical tensions.
Why the world courts Vietnam
There is room for more growth. While Vietnam has attracted a large amount of foreign investment, business links between multinational enterprises and domestic firms are still relatively undeveloped. Vietnamese suppliers are mainly relegated to lower tiers of integration in global production networks, specialising in low value parts or assembly functions.To capture stronger gains, though, Vietnam needs to foster a high-skilled workforce and invest in technology and innovation. The prominent and entrenched state-owned enterprise and poor enforcement of intellectual property rights also do not help.
On the political side, corruption and weak rule of law represent deep governance challenges. Repressive regimes can manage to grow their economies from a very low base to a middle-income level. But social and political repression act as a break on innovation and creativity, essential elements for graduating high-income status.
All things considered, however, it is because of Vietnam’s impressive economic performance it is now being courted by the world’s great powers.
Just over a year ago, U.S. President Joe Biden visited Hanoi. The two countries elevated their relationship to a “Comprehensive Strategic Partnership,” something which had also previously been extended to China, India, Japan, Russia and South Korea. Vietnam had long avoided the move with the United States out of fear of upsetting Beijing.
In a joint statement, thhe U.S. and Vietnam leaders said they “underscored their unwavering support for the peaceful resolution of disputes in accordance with international law, without the threat or use of force.”
An unstable region
Vietnam is one of several Southeast Asian countries which have competing claims to the South China Sea and are concerned about China’s assertive actions in the area. Biden’s visit yielded many agreements on everything from semiconductors to security.Most analysts see the United States’ courtship of Vietnam and other Asian countries as part of its push to “contain” China’s rising power, even if the United States would staunchly deny such characterisation. For its part, Vietnam sees its relationship with the United States as a means to help balance its relationship with its overbearing neighbour, China, with which it shares a border of some 1,300 kilometres.
Three months after Biden’s visit, Xi Jinping visited Vietnam his first visit in six years. In an article published at the time in a Vietnamese newspaper, Xi wrote that “Asia’s future is in the hands of no one but Asians.”
On the occasion of Xi’s visit, Vietnam resisted Chinese pressure to upgrade its relationship to become a member of a “community of common destiny.”
But Vietnam has prospered under the current U.S.-led, rules-based order. And it knows that a Chinese-led world order could leave it vulnerable to Chinese domination.
War and peace
Vietnam’s tragic history is dominated not only by the war it fought with the United States in the 1960s but also its long history of wars and historical enmity with China, a country which is not very popular with the Vietnamese public.Despite its desire to maintain independence from China, Vietnam must labour hard to maintain good relations with its big neighbour. China is its most important trading partner and source of investment. And ideologically it is much closer to China than to the West, being governed by an Communist Party that has an appalling human rights record.
During Xi’s visit, the two sides signed 37 different deals on diplomatic relations, railways and telecommunications projects. But eight proposed deals — tied to critical and rare materials — were left unsigned.
Russia also has a long relationship with Vietnam, notably as a major arms supplier, dating back to the post-decolonisation wars and conflicts. The current relationship offers both sides potential benefits. Russia is desperate to overcome its isolation, and reduce its dependence on China. For its part, Vietnam has the opportunity to extract further military arms and technologies from Russia. Moreover, fostering its friendship with Russia could minimise the threat of a tight China-Russia alliance.
All told, Vietnam’s “bamboo diplomacy” seems to be effective. By remaining neutral in the face of international disputes and being friends with all, Vietnam can balance relations and minimise the vulnerabilities of being a middle power in a world with divisive great power politics.