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US-Vietnam economic relations: The China factor

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While addressing a joint Press Conference at Hanoi, after his summit, with North Korean Leader Kim Jong Un, US President, Donald Trump spoke not just about the Summit, but also the current state of US-China relations.  Trump criticized his predecessors, for not doing enough to address the trade imbalance with China, while also making the point,  that he was all for China’s economic progress and growth, but not at the cost of the US.

If one were to look beyond the Summit in terms of the US-Vietnam economic relations, top US companies – Boeing and GE electric sealed some important deals.

Given the focus of Trump’s visit (which was the Summit with North Korean leader) perhaps these deals did not draw the attention they ought to have. The fact is that the US has begun to recognise Vietnam’s economic potential, as well as geo-political significance in Asia. This paper will give a backgrounder to Vietnam’s economic growth story in recent years, some of it’s key strategic relationships and then examine the nature of the China-US-Vietnam economic triangle.

Vietnam’s growth story: The key reasons

There is absolutely no denying the fact, that Vietnam has emerged as an important engine of economic growth within Association of South East Asian Nations (ASEAN) region in general, and has been able to emerge as a top performer within Cambodia, Myanmar, Laos, Vietnam (CMLV) bloc in particular Economic reforms (doimoi) began over three decades ago in 1986. In recent years, some of the key factors which have driven Vietnam’s growth story, especially its success in drawing FDI are;  a large labour force (57.5 million), lower wages for workers (there are varying estimates, but the wages of production workers are estimated at around 216 USD, monthly, and this is half of what labour would charge in China). Electricity too is way cheaper in Vietnam than other competitors in the ASEAN region. As of June 2018, Vietnam charged 7 U.S. cents per kilowatt hour, while the cost of electricity in Indonesia was 10 U.S. Cents, and Phillipines charged nearly thrice the amount — 19 U.S. Cents.

If one were to look at the growth and FDI figures, they are a clear reflection of Vietnam’s success. In 2018, Vietnam’s growth rate was estimated at a little over 7% (7.08) this was the highest in 11 years. Disbursed FDI into Vietnam was estimated at19.1 Billion for the year 2018 (disbursed FDI for three years was estimated at well over 50 Billion USD). Total FDI for the year 2018 was estimated at 35 Billion USD. Japan with over 8 Billion USD was the single largest investor in 2018. Other countries which have a strong presence in Vietnam are South Korea and Singapore. China is the 7th largest investor in Vietnam. One of the major attractions apart from the economic potential is the country’s location (it is easier to expand to other countries like Myanmar, Laos and Cambodia)

As a result of growing consumer demand and increased tourism, revenues from Retail Sales and Consumer Services and Travel and Tourism also witnessed a significant increase in 2018. Revenue from retail services was estimated at over 190 Billion USD, while from travel and tourism was nearly 2 Billion USD. The increased revenue from travel and tourism it is driven by the rise in tourism in 2018 (almost 20 percent)

Vietnam has close trade relations with both China (Vietnam is China’s largest trade partner in ASEAN) and US. Bilateral trade between both countries for the period January-November 2018 was estimated at 97 Billion USD, though this was heavily skewed in favour of Beijing (the total trade deficit was over 20 Billion USD). In the case of US-Vietnam trade, it is heavily skewed in favour of Vietnam (US runs a trade deficit of over 25 Billion USD).

Strategic Importance

Vietnam’s strategic importance is also increasing. Even before the recent Trump-Kim Jong UN Summit, Vietnam has hosted a number of important events in recent years such as the Asia Pacific Economic Cooperation meeting in 2008 (in Hanoi) and in 2017 (in Danang), the high-powered World Economic Forum in 2018, and frequent ASEAN summits.

It is strengthening defense and security ties with Japan, US and India in recent years. One of the key reasons for this pro-active strategic outreach is the China factor.

 During former Vietnam President, Truong Tan Sang’s Japan visit, both sides issued a joint statement which referred to the need for upgrading the bilateral relationship to an “Extensive Strategic Partnership for Peace and Prosperity in Asia’. The joint statement made references to closer security cooperation, the joint statement made mention of Japanese assistance for capacity building of it’s maritime enforcement agencies. Both sides also reiterated their shared opinion on the South China Sea Issue as well as denuclearization in North Korea. In July 2018, Japan and Vietnam held the 6th Defence Policy Dialogue (this was co-chaired by Deputy Defense Ministers of both countries.   In September 2018,a Japanese Maritime Self-Defense Force (JMSDF) submarine Kuroshio docked at Cam Ranh International Port in Kham Hoa on September 17. While security cooperation has been increasing in recent years, this development emphasized the increasing convergence of both sides on important geo-political issues. Japan has also been batting for greater Japan-Vietnam cooperation in the context of the Indo-Pacific. The Japanese PM, in an interview, in February 2019 reiterated the need for a stronger Japan-Vietnam partnership for pushing forward the idea of a ‘Free and Fair’ and ‘Open’ Indo-Pacific.

Vietnam has also been bolstering strategic ties with the US. In July 2017, Washington and Hanoi conducted the 8th Naval Engagement Activity. The United States is also providing support for Vietnam’s participation in UN peacekeeping operations. In 2018, more than four decades after the end of the Vietnam war, US Navy aircraft carrier USS Carl Vinson arrived in the city of Danang a key battle ground during the war. This was an important step in the context of strategic cooperation between both countries,  but to send a message to China that the latter’s militarization and aggression over the South China Sea issue will not be taken lying down.

Vietnam is also enhancing security ties with Japan and India. During his visit to Vietnam in 2016, Indian PM Narendra Modi had offered a credit line of 500 Million for defense cooperation. During Vietnamese President Tran Dai Quang both sides resolved to work jointly for a ‘free and prosperous’ Indo-Pacific.

While Vietnam has been strengthening it’s strategic ties with the above countries, it has been a tad cautious with regard to the Indo-Pacific narrative and has said that  was against any military alliance as this would have an adverse impact on security in the region.

US-Vietnam relations

If one were to look at the trajectory of US-Vietnam relations (which were influenced by the baggage of the war) have steadily increased over the past two decades. Both sides have made efforts to put behind the acrimony arising out of the Vietnam war – though this is extremely tough given the fact that was amongst the bloodiest conflicts of the 20th century.  Some important steps were taken in the 1990’s during the Presidency of Bill Clinton. In 1994, US lifted the trade embargo against Vietnam. A bilateral trade agreement between both countries came into being in 2001 after it was approved by the US Congress as well as the Vietnamese National Assembly.

 During the Obama Presidency again crucial steps were taken to strengthen the economic relationship. The Trans Pacific Partnership (TPP) signed in 2015 for which Obama pushed would have benefited Vietnam immensely as the South East Asian Country would have gained preferential access to US market.

President Trump did make the massive trade deficit with Vietnam an election issue, and US exit from TPP was a setback but a number of important developments have taken place in the context of US-Vietnam bilateral ties. In May 2017, during the Vietnam President’s, Nguyen Xuan Phuc visit to the US, deals worth 8 Billion USD (two major US companies were Caterpillar and General Electric) were signed between both sides. Trump mentioned the US’ trade deficit and hoped to balance that over a period of time.

While addressing the APEC Summit in November 2017, the US President had a word of praise for Vietnam’s economic progress:

….’ Vietnamese economy is one of the fastest-growing economies on Earth. It has already increased more than 30 times over, and the Vietnamese students rank among the best students in the world..’

China-US-Vietnam triangle

After the China-US trade wars many argued, that Vietnam could be the biggest beneficiary. So far, Vietnam has benefitted (export orders to certain sectors have witnessed a rise) but not in a dramatic way (some companies are likely to relocate from China with Vietnam being a possible choice, but current evidence suggests that this has not happened on a large scale.

Deals signed during Trump’s Vietnam visit: How China has sensed an opportunity

As mentioned earlier, during the US President’s Vietnam visit a number of significant deals were signed. Viet Jet will buy 100 Boeing 737-Max jets and 215 GE/CFM joint venture engines, Bamboo Airways (a start up owned by Hanoi-based conglomerate FLC Group) is buying 10 Boeing 787-9 jets.

U.S.-based aviation technology company Sabre also inked a deal with the flag carrier Vietnam Airlines. The deal estimated at 300 Million USD is supposed to help Vietnam Airlines in upgrading its digital abilities, and to achieve its aim of becoming a digital airline by 2020. Total deals signed during Trump’s visit were estimated at 20 Billion USD.

The China-US-Vietnam triangle is interesting not just from a historical context, but also an economic dimension. What is significant is that while there is talk of US-China trade wars and the likely benefit for Vietnam, Beijing kept a close eye not just on Trump’s statements with regard to North Korea, but also the deals signed during his Vietnam visit.

An article in Global Times makes a mention of how China can be part of the global production chain through a “completion and delivery center” in Zhoushan, East China’s Zhejiang Province. Interior work of over 700 planes can be completed in this centre.

The focus of the Trump visit was North Korea, the deals signed will give a boost not just to economic ties between Vietnam and US, and are a clear illustration of how much importance Trump gives to big ticket business deals. It is interesting to see the approach of China towards these deals, while keeping a close watch on the outcomes of the summit with Kim Jong Un, China also closely watched the economic outcomes of the visit and analysed how it could benefit from the same.

The conclusion of the article is especially interesting:

‘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’.

Conclusion

The China-US-Vietnam triangle is important, not just in the strategic context especially with regard to the South China Sea Issue as well as the aim of achieving a ‘Free and Fair Indo-Pacific’. As for the economic context, both Trump and the Chinese are equally transactionalist and it is interesting to see Beijing de-hyphenate US’ strategic ties with Vietnam from the economic relationship.

Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India

Southeast Asia

Vietnamese PM Chinh visit to Japan: A new era of cyber, space and defence cooperation

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pham minh chinh

Vietnamese Prime Minister Pham Minh Chinh visited Japan from November 22-25 and discussions about trade, investment, defence, cultural and enhancing political ties took place between the two leaders. The former prime minister of Japan Suga had visited Vietnam in October 2020, and it was his first visit to any foreign country. With the coming of Fumo Kishida new prime minister in Japan, Vietnamese Prime Minister thought it prudent to engage the new political leadership. When recently Kurt Campbell stated that India and Vietnam will be crucial in deciding the fate of Asia and the three countries namely India, Vietnam and Japan have been closely cooperating with one another because of two major factors. The three countries are in the periphery of China and have major stakes in the resolution of the South China Sea dispute. Second, these three economies are promising economies in Asia and are seen to be major harbingers of technology, economic growth and sustainable development. 

The visit of Vietnamese prime minister is primarily seen from the point of view of projecting the need for ‘Free and Open Indo Pacific’ and developing close cooperation between Vietnam and Japan. During the visit of Japanese defence minister to Vietnam last year several agreements have been signed between the two sides which included transfer of technology and defence trade between the two sides. Vietnam is facing a few challenges related to trade and investment, growing cases of Covid 19 pandemic, need for modernisation of its armed forces and realising the potential of the regional organisations such as ASEAN .In terms of developing necessary technical acumen for renewable energy sources and facilitating foreign direct investment from Japan were the major agendas for the visit of the Vietnamese Prime Minister. 

The Vietnamese Prime Minister visit was his first official visit to Japan. Vietnam is increasingly seen as a middle power which requires support and cooperation from Japanese in areas such as waste management, infrastructure development, developing technology parks, export processing zones and vocational training skills to emerge as one of the engines of economic growth in Southeast Asia. In fact, Japan was the only few countries in Asia with which Vietnam has developed air bubble agreement during COVID-19 to facilitate travel of passengers and businesspeople from the two countries. Given the fact that Vietnam is slowly opening its trade and investment and tourism sector it would be looking for countries in Europe and in Asia to spur development in the country. Japanese tourists are important incoming visitors for Vietnam because of their spending and booking high end resorts and hotels.  

Following the COP- 26 meeting which was held in London there have been huge expectations from the Asian countries to reduce their carbon footprints and look for other viable sources of energy. The visit of Vietnamese Prime Minister explored diverse issues related to politics, security, cultural interactions and development of human resources in Vietnam. The two defence ministers also signed aagreements related to transfer of technology and exports of Japanese defence equipment and weapons to Vietnam. Japan has already embarked on a policy to support littoral countries of South China Sea through patrol boats and fast attack crafts. 

One of the critical areas that Vietnam is looking for is the development of technology and scientific rigour within the country. In this context collaboration with Japanese scientific institutions and academic community would help Vietnam to develop skills and human resources to cater to the industrial revolution 4.0. Also, Vietnam is looking for developing expertise in areas such as machine learning, big data mining, artificial intelligence, underwater systems, developing sustainable development and energy resources in those South China Sea islands so that the soldiers can become self-sufficient in energy and clean water resources. Japan has been looking for alternate sources of investment and developing infrastructure in countries such as Vietnam Cambodia and Laos. Vietnam itself is emerging as a viable alternative to China in the wake of recurring cases of COVID-19 pandemic in China. Japanese investors and entrepreneurs are looking for relocating their businesses and investments. 

There is no denying of the fact that developments in South China Sea are of critical importance both for Vietnam and Japan, and it is expected that the two leaders discussed these issues in detail. The Chinese assertive activities in South China Sea have been deplored by Japan and other allied partners in the past. Vietnam is looking for cooperation with Japan in terms of submarine hunting capabilities and developing acumen for better management of human resources in defence sector. In terms of military cooperation between the two sides there is a lot of potential in terms of maritime surveillance aircraft, fast attack crafts, and coastal radar systems. Also, sonar systems and developing helicopter mounted surveillance systems would and has Vietnamese defence and surveillance capabilities. The two countries signed an agreement on space defence and cyber security. 

One of the important critical areas that the two countries discussed was related to the implementation of Regional Comprehensive Economic Partnership (RCEP) and promoting intra regional trade so that better complementarities could be developed between the two sides. Another important forum where Japan and Vietnam are members is CPTPP and there is speculation that President Joe Biden might be interested in re-joining the grouping. Taiwan and China have expressed interest in joining it, but Japan is in favour of only Taiwan.  In such a context when the two countries are at the crossroads of economic integration and regional economic groupings, it is expected that the two leaders discussed necessary checks and balances so the trade interests of the two countries can be protected while enhancing the integration at the regional level. 

Vietnam is also seen as a probable candidate for the Quad Plus initiative and Japan has been very insistent on engaging the country in a more proactive way. India, Vietnam and Japan could be one trilateral which will bring in a large market, Strong technology fundamentals, unique cultural identities and common strategic concerns acts as glue between the three countries. The development of Vietnam and Japan ties would reconfigure Asian identity and future.      

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ASEAN’s prospects in 2022 under Cambodian Chairmanship

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Exactly a decade later Cambodia faces the big question that whether the memory of the past can be erased, given the fact that during the last ASEAN meeting in Cambodia in 2012 the ASEAN communiqué was not released because of strong differences on the issue of South China Sea among various ASEAN claimant states. In the year 2021 after the ASEAN chairmanship of Brunei, Cambodia assumed the charge as the chairman of ASEAN for next year and there are expectations among the ASEAN member countries regarding the future course of action of the organization as such. During the 2021 ASEAN summit there were number of issues which were raised pertaining to the COVID-19 pandemic, return of democracy in Myanmar, participation of dialogue partners in reviving trade and investment in the region, and realizing the blueprint for ASEAN communities.

During the year 2021 the ASEAN meeting’s theme was “we care, we prepared, we prosper”, and the stress was on regaining the ASEAN community and working on harmonious region with more focus on people. The meeting reflected the desire of the people for maintaining the regional organization’s momentum within the ASEAN and beyond. During this year’s meetings (38th and 39th) the stress was on economic recovery and addressing the aftereffects of COVID-19 pandemic. There was much stress regarding the regional organization’s resilience, peace, security, and social progress. In fact, most of the member countries tried to work on strengthening the ASEAN’s capacities and working on solutions in the wake of economic slowdown because of the pandemic.


Under the ASEAN Community Vision 2025 the stress was on realizing the targets which are been set in the past and this year took note of the achievements in the last decade. The stress was on implementing the provisions of the ASEAN charter and improve the efficiency of the regional organization. Time and again it has been stated that ASEAN centrality is critical for peace and security in the region and therefore dialogue partners should make extra effort to recognize provisions of Treaty of Amity and Cooperation (TAC) in the current context. The cohesiveness of the organization which was stimulated under the Vietnam chairmanship in 2020 gained support and it is expected that Vietnam whatever was required to support the agenda for future.

The mid-term review of the ASEAN community blueprints, and ASEAN agenda would progress further during Summit in Cambodia in 2022. However, the ASEAN’s Cambodian Summit would be seen with apprehension given the fact that Hun Sen has stated that he would go that extra distance so that the ASEAN summit meetings are held peacefully and there are no domestic protests during that time against ruling party. This year’s ASEAN meeting already took note of the developments in Myanmar and raised apprehensions about the human right violations in the country and the atrocities which have been committed against the pro-democracy protesters.The dialogue partners have also raised concerns regarding developments in Myanmar. In such a context it would be interesting to note how Cambodia manages the domestic upheavals as well as demands from China which in the past has dictated terms to Cambodia on various issues which concern China. One issue which ASEAN is facing is the increasing Chinese assertion in the contested waters of South China Sea. As it has seen in the past the criticism of China was not accepted by the Cambodian Prime minister Hun Sen and therefore the issue of politics and security would shadow ASEAN unity and centrality.


One of the important things which have been achieved by Cambodia in the past was the adoption of the Declaration of Code of Conduct of Parties (DOC) in South China Sea in the year 2002. It would be two decades when the negotiations related to South China Sea have taken place and there is no sign of adoption of Code of Conduct in the contested waters. More importantly, the global community will be looking at the ASEAN Summit in Phnom Penh because it will facilitate better trade and investment opportunities for the three countries namely Cambodia, Laos, and Vietnam. This region is also seen as a potent competitor against China for shifting of select production and manufacturing facilities to this region. However, Cambodia is seen as increasingly getting into China’s strategic orbit because of Belt and Road Initiative (BRI) and the development of the Ream naval base by the Chinese PLA. Even US investment in Cambodia is suffering because of increased influence of China in Cambodia ‘s political apparatus.


Cambodia ASEAN Summit 2022 is expected to be in person summit and there is attendance likely to be of all the other member states and the dialogue partners as well. The 2022 ASEAN summit meeting would be seen as a precursor to other developments in the  region, particularly in the context of managing pandemics, promoting inter-ASEAN trade and investment, encouraging people to people connectivity, and also undertaking efforts to build digital and financial infrastructure in the region. The region itself is facing various challenges, particularly in the context of adopting measures required for realization of the Regional Comprehensive Economic Partnership (RCEP) and reducing tariffs and non-tariff barriers among the signatory countries. Therefore, in the year 2022, the summit at Phnom Penh might see the utility of new alliances such as AUKUS and how Cambodia responses to the request of United Kingdom to be the dialogue partner of the organization.

Also, as it has been seen in the year 2016 Cambodia hindered any reference to Permanent Court of Arbitration (PCA) judgment in favour of Philippines while entertaining Chinese request in this regard. The critical security challenges that the organization faces would again get reflected during the Cambodian Summit and it would be interesting to note whether Cambodia will come out of Chinese shadow and release the joint statement which was missing during the last Cambodia Summit. Invariably, it would also pave the way for ASEAN to emerge as a formidable organization or  be relegated just as a ‘talk shop’. 

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Green Volunteering ASEAN: Our common future

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Volunteerism is the voice of the people put into action.  These actions shape and mold the present into a future of which we can all be proud.“ — Helen Dyer

The Merriam-Webster dictionary defines ‘volunteerism’ as an act in which a person voluntarily undertakes or expresses a willingness to undertake a service. People who volunteer in non-profit organizations, for example, are willing to offer their personal services, oftentimes expecting nothing in return. Taking it a step further, what is ‘green volunteering’?

Green volunteering refers to a range of activities which include environmental monitoring, ecological restoration, and educating others about the natural environment. It can come in three forms: practical, fundraising, and administrative.

Practical green volunteering involves environmental volunteers who are involved in habitat management, for example, such as vegetation cutting or removal of invasive species. Fundraising green volunteering involves organizations that raise funds for a particular environmental cause. Finally, administrative green volunteering refers to volunteers who offer their skills and expertise in terms of legal support and public relations, to name a few. In other words, there are many types of green volunteering initiatives that you can take on today.

In the Association of Southeast Nations (ASEAN), which consists of 10 member states, there are plenty of green volunteering initiatives that one can participate in. For instance, in Bali, Indonesia you can become a reef conservation supporter wherein you will work with other volunteers and local communities to restore and protect Bali’s coral reef ecosystems. Meanwhile, in Thailand, you can volunteer in an Elephant Sanctuary and help provide refuge to domesticated elephants that have been rescued from a life of working in zoos or other establishments. Finally, you can also do conservation work in the island of Palawan in the Philippines, wherein you will assist in the restoration of a mangrove swamp.

As reports have shown, several countries in the ASEAN will be among the most to be most significantly impacted by the climate crisis. Rising sea levels, increasing temperatures, and declining biodiversity are just a few environmental issues that ASEAN countries are facing. On a bright side, we are also seeing many opportunities when it comes to a sustainable energy transition and sustainable finance, to name a few. It is, indeed, a big set of challenges and opportunities we are facing, which is why we need different people and organizations to work together. Green volunteering in the ASEAN is one great way to contribute towards the sustainability agenda.

Clearly, there are many opportunities to choose from in green volunteering in the ASEAN. As Helen Dyer highlighted, volunteerism is the voice of people put into action. As the climate crisis intensifies across the world, we need to translate our voices into action. One way to do this is by participating in green volunteering work.

International Volunteering Day 2021

The International Volunteering Day (IVD) 2021 is coming this December 5, and what better way to celebrate it by highlighting the initiatives taking place across the globe during the pandemic. In 2020, the United Nations (UN) reported that it had 9,459 volunteers hosted by various UN entities. These partners come from 100 different professions, 158 countries of assignment, and served with 60 UN partners worldwide. The UN also received a total of 68,173 online volunteer applications. Despite the impact of the pandemic, this did not stop the volunteers from offering their services.

The theme of IVD 2021 is “Volunteer now for our common future,” which aims to inspire people, whether they are decision makers or citizens, to take action for people and the planet. As IVD 2021 draws near, the ASEAN youth and young professionals are called on to take action and participate in green volunteering across the region.

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