Thayer Consultancy Background Brief

ABN # 65 648 097 123

Chinese Investment Rises in
Vietnam: Are Relations
Warming?
September 5, 2018

New Chinese Belt-and-Road investment is rising in Vietnam along with the start of
renminbi border trade
Do you see a warming trend in economic ties behind these developments? And, to
what extent can increased Chinese investment and trade help ease political tensions?
ANSWER: When Vietnam and China became strategic partners they set up a Joint
Steering Committee to oversee bilateral relations across the entire spectrum including
economics, trade, commerce and investment. The Joint Steering Committee is headed
by deputy prime ministers who are also members of the Politburo of their respective
communist parties.
The Vietnam-China strategic partnership has been retitled several times, the
relationship is now called a comprehensive strategic cooperative partnership, the
highest level accorded any country.
Vietnam welcomes Chinese investment partly to offset Vietnam’s huge trade deficit.
Vietnam also presses Beijing to remove restrictions on Vietnamese investment in
China. In sum, the two sides have kept the South China Sea dispute from spilling over
and affecting bilateral economic relations in general.
In 2003, Vietnam adopted a policy of "cooperation and struggle" [vừa đối tác vừa đấu
tranh] in its relation with the major powers. regardless of their domestic political
systems. This meant cooperation when it suited Vietnam's economic interests and
struggle (standing up to) a country when it infringed Vietnam's national interests [lợi
ích dân tộc]. This “cooperation and struggle” formula depreciated ideology and
replaced it with national interest as the key measure of bilateral relations.
While the Vietnamese government welcomes Chinese investment, its Ministry of
Planning and Investment cautions against accepting development assistance and
preferential loans from China.
Chinese investment has become a serious domestic issue, as evidenced by the
explosion of anti-China protests in June over the prospect that Chinese investment
would dominate three proposed special economic zones. The National Assembly put
off discussion of the Law on Special Administrative and Economic Zones until October
and this past week this law has been rescheduled for next year.
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Suggested citation: Carlyle A. Thayer, “Chinese Investment Rises in Vietnam: Are

Relations Warming?” Thayer Consultancy Background Brief, September 5, 2018. All
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.