UNRAVELLING CHINA–VIETNAM RELATIONS

Contemporary ties

• Since establishing formal diplomatic ties in 1950, China and Vietnam have navigated a complex terrain marked by territorial disputes, notably in the SCS. Despite this, a significant upgrade in relations, exemplified by the signing of numerous agreements during Chinese President Xi Jinping's visit to Vietnam in December 2023, underscores the ongoing efforts to consolidate these ties. These agreements cover a wide range of areas including infrastructure development, trade, security, and digital economy cooperation. Notably, the establishment of joint naval patrols in the Gulf of Tonkin and agreements on maritime issues signal a desire to manage disputes and enhance security collaboration in strategic maritime domains.
• Special importance should be accorded to Vietnam's decision to participate in China's "community of shared future," reflecting a nuanced approach aimed at balancing cooperation with China while preserving its sovereignty and strategic autonomy. However, Vietnam has simultaneously upheld a commitment to neutrality in great-power competition. Despite significant ties with China, Vietnam maintains a diversified network of diplomatic partnerships that extend beyond China and the US, in a bid to mitigate dependence on any single nation and uphold its strategic autonomy in foreign policy.
• Furthermore, the emphasis on economic cooperation, including infrastructure projects and development initiatives such as the Cat Linh-Ha Dong metro line, the Thai Nguyen steel plant and Hanoi-Lao Cai-Hai Phong express railway link, reflects a pragmatic approach to leverage China's economic prowess for mutual benefit.
• However, Vietnam's engagement with China is not without its challenges as it seeks to navigate a delicate balance between reaping the benefits of cooperation as well as safeguarding its national interests amidst Chinese assertion.

Economic symbiosis between China and Vietnam

• China stands as Vietnam's foremost trading partner, commanding a formidable bilateral trade volume that surged from USD 50.21 billion in 2013 to a substantial USD 229.74 billion by 2023. This economic symbiosis manifests through Vietnam's exports to China, encompassing commodities like coal, crude oil, rubber, seafood, and footwear, while China reciprocates with high-value-added manufactured goods such as cars, machinery, and pharmaceuticals. However, Vietnam grapples with a mounting trade deficit with China, exceeding USD 50 billion in 2022.
• Vietnam's burgeoning trade imbalance underscores its vulnerability to fluctuations in the Chinese market and overreliance on Chinese imports (according to WITS data on Vietnam’s 2021 import partner shares, China accounts for 33.21%). Its Chinese imports include consumer products, raw materials, auxiliary materials, machinery, equipment, and electronic products. High-value items such as computers, electronic products, machinery, equipment, as well as textile and garment materials, leather, and footwear, feature prominently among these imports. The inundation of Chinese goods adversely impacts domestic production sectors, particularly in consumer goods. Conversely, exports include telephones, integrated circuits, non-retail pure cotton yarn, and agricultural products.
• In response, Vietnam has moved towards diversifying its trade portfolio, implementing the "China Plus One" strategy. This initiative is aimed at broadening its trade horizons and mitigating risks by enticing foreign investments from nations beyond China. Despite Vietnam being a significant beneficiary of this strategy owing to strategic advantages such as lower labor costs, location, favourable trade agreements, investment incentives, a younger workforce, and political stability, its dependency on China may persist particularly with regards to raw materials. Notably, imports from China encompass crucial inputs such as raw materials, auxiliary materials, machinery, equipment, and electronic products. The implementation of the Regional Comprehensive Economic Partnership (RCEP) could reshape China–Vietnam trade dynamics by offering alternative sources of raw materials and components.
• Vietnam's strategic manoeuvres within its trade relationship with China underscore a dual imperative: harnessing economic opportunities while safeguarding against overreliance and vulnerabilities. While the economic interdependence between China and Vietnam has contributed to the latter’s economic growth, it has also exposed Vietnam to vulnerabilities, including overreliance on Chinese imports, trade imbalances, susceptibility to political influence and competitive pressures.
• Thus, Vietnam’s trajectory in global commerce will be shaped by its adeptness in navigating the evolving landscape of international trade dynamics.

Geopolitical dynamics

ASEAN relations

• Vietnam's membership of the Association of Southeast Asian Nations (ASEAN) exerts a notable influence on China's diplomatic strategies, particularly for its efforts to navigate relations with individual ASEAN members to mould broader regional dynamics. Since joining ASEAN in 1995, Vietnam has emerged as China's leading trading partner within the bloc. This elevation of Vietnam as a pivotal regional actor has the potential to challenge China's hegemonic sway in terms of diplomatic influence and regional alliances, military balance, and economic competitiveness, prompting Beijing to recalibrate its diplomatic overtures.
• Firstly, Vietnam's burgeoning economic strength and strategic partnerships within ASEAN open up the possibility of diversifying trade relationships, helping to reduce reliance on Chinese markets and undermining China's economic leverage; this may compel it to adapt to a more competitive trade environment. Second, Vietnam's collaborative efforts can develop a network of alliances that counterbalance China's influence. By bolstering cooperation with regional players, Vietnam has contributed to the emergence of a more multipolar environment, challenging China's unilateral dominance. Third, Vietnam's assertiveness in territorial disputes in the SCS directly challenges China's claims and actions in the region, necessitating strategic recalibrations by Beijing. Furthermore, Vietnam's soft power diplomacy, bolstered by its cultural influence, historical ties, and adept diplomatic engagements, presents an alternative narrative to China's regional aspirations. This enhances Vietnam's influence and diminishes China's ability to monopolize the discourse.
• Vietnam's proactive engagement within ASEAN augments its standing as a regional middle power, amplifying its voice and enabling strategic alliances that counterbalance China's assertiveness, which is particularly evident in SCS disputes. Leveraging ASEAN as a platform for multilateral cooperation, Vietnam presents a formidable challenge to China's regional dominance. ASEAN's proactive role in fostering amicable relations among South East Asian nations, including Vietnam, has led to a collective stance against unilateral actions in the SCS. Specifically, Vietnam's assertiveness in the standoff near Vanguard Bank showcases how it has leveraged ASEAN support and strategic alliances to resist Chinese pressure and assert its maritime rights. 
• Moreover, as China's regional influence burgeons across trade, investment, and tourism, ASEAN nations, including Vietnam, have adopted a cautious balancing act, viewing contentions with China more as a strategic challenge than an outright threat. Consequently, Vietnam’s ASEAN membership has fostered a nuanced and intricate dynamic in China's diplomatic strategies, necessitating astute management of relations with individual member states to safeguard its broader regional interests. Through meticulous engagement with Vietnam and other ASEAN nations, China seeks to rebalance the regional power equilibrium while safeguarding its own strategic imperatives in Southeast Asia.

Regional power dynamics

• Vietnam's strategic alliances with the US, India, and Japan have significantly reshaped regional power dynamics. Vietnam has deepened ties with the US such as through the 2015 Vietnam–US Joint Vision Statement on Defence Cooperation, the Political, Security, and Defence Dialogue, and the Defence Policy Dialogue as well as with its allies in Asia, enhancing security cooperation and signing agreements focusing on critical sectors like semiconductors. Similarly, Vietnam and Japan elevated their relations to comprehensive strategic partnership, emphasizing security and economic ties amidst trade tensions between China and the West. Moreover, Vietnam's deepening strategic partnership with South Korea has seen increased collaboration in trade, investment, technology, and defence, bolstering Vietnam's economic development and expanding its regional network. These partnerships highlight Vietnam's strategic balancing act between major powers, adopting a proactive foreign policy approach to diversify alliances while managing regional dynamics.  
• Vietnam's soft balancing strategy, marked by diplomatic engagement and limited security cooperation with various countries, has significantly complicated Beijing's approach. In addition to strengthening ties with the US and partners in Asia, as mentioned above, Vietnam's growing defence and security cooperation with Australia adds another layer to its strategy of diversifying alliances to counterbalance China's influence.
• The pivotal factors underlying Vietnam's partnerships with the US, India, Japan, and other nations encompass historical context, economic cooperation, and regional security considerations. Vietnam's pursuit of an independent foreign policy, coupled with its strategic location and burgeoning economy, renders it an attractive partner for initiatives like the Quad Plus construct. However, joining the Quad Plus could potentially tilt Vietnam’s stance towards the West and raise concerns about the extent to which its foreign policy becomes intertwined with Quad’s interests. Thus, by carefully navigating strategic rivalries, Vietnam must ensure that its participation in the Quad Plus construct aligns with its broader objectives of promoting peace, stability, and economic growth in the Indo-Pacific region while safeguarding its sovereignty and autonomy.

Security dynamics in the South China Sea

• China's pursuit of natural resources, particularly in the SCS, has become a focal point in regional geopolitics. China's assertive actions, including diplomatic pressure and military posturing, to assert its claims over the SCS have heightened tensions and posed challenges for Vietnam's quest to maintain independence and autonomy.
• As a vital maritime corridor for global trade and energy resources, the SCS has emerged as a crucial strategic asset for China to counterbalance US influence in East Asia. Through the construction of artificial islands, military installations, and frequent maritime patrols, China has expanded its presence and consolidated control over key areas within the SCS to challenge the US-led regional order. Consequently, the SCS has become a major point of contention, with the US actively conducting freedom of navigation operations to challenge China's expansive territorial claims. Additionally, the US has strengthened military alliances and partnerships with regional powers like Vietnam and the Philippines to counter China's growing assertiveness.
• This rivalry is fuelled by differing perspectives on regional order; China seeks to assert its influence, while the US claims that it intends to uphold the principles of international law and ensure a rules-based system promoting stability and openness in the region. The resulting tensions, military posturing, and diplomatic confrontations make the SCS a focal point of strategic competition and contention in East Asia.
• Vietnam has responded to China's assertiveness in the SCS by adopting a nuanced strategy, engaging in multilateral forums like ASEAN while bolstering security partnerships, notably with India (the recent transfer of the Indian Navy’s INS Kirpan to the Vietnam People’s Navy is one such example), to counterbalance China's maritime ambitions and maintain regional stability. Furthermore, China's actions in the SCS have strained Vietnam's relations with Russia, particularly due to Russian energy companies operating within Vietnam's exclusive economic zone. These dynamics underscore the intricate interplay between geopolitical rivalries and economic interests in shaping Vietnam's foreign policy calculus.

Balancing act and global partnerships

• Vietnam's burgeoning alliances with key players like India, the US, and Japan carry profound implications for China's regional influence. Despite Vietnam's "Four No" policy—rejecting alignment, foreign military bases, siding with one country against another and forceful tactics — it navigates a fine line between the US and China, employing active hedging, assurance, and deterrence.
• Vietnam frames its partnership with the US as a comprehensive strategic partnership, seeking to assure China of its benign intentions. However, Vietnamese officials also engage in dialogue with China to alleviate concerns about containment tactics. Vietnam's cautious approach is influenced by historical memories of conflicts, motivating it to pursue avenues for peaceful coexistence and prevent a recurrence of past tensions.
• Conversely, Vietnam's collaboration with Japan, despite historical tensions, presents a less contentious prospect for the former. Japan's less aggressive stance aligns more closely with Vietnam's diplomatic goals, offering potential for regional stability.
• However, China perceives Vietnam's regional growth as a complex and delicate matter. While economic ties boost Vietnam's economy, it treads carefully to avoid angering China, mindful of historical conflicts. Balancing these relationships underscores Vietnam's strategic acumen and commitment to maintaining sovereignty and its efforts to navigate a rapidly evolving Indo-Pacific landscape, all while considering China's perspectives.
• Thus, the evolving relationship between China and Vietnam encapsulates a complex interplay of historical legacies, strategic calculations, and regional dynamics. Vietnam's strategic partnerships with key players such as the US, India, and Japan, coupled with its active engagement within ASEAN, present both opportunities and challenges for China's regional influence. The economic interdependence between China and Vietnam, alongside security tensions in the SCS, underscores the intricate nature of this relationship from China's perspective, necessitating a nuanced and strategic response to Vietnam's diplomatic manoeuvres.