China Surpasses US to Become Vietnam’s Number One Export Market

Written by Adam Garrie on 23rd February 2018

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For many years, China has overall been the number one trading partner with Vietnam. Today, not only does Vietnam import more goods from China than from any other nation, but China is now the number one buyer of Vietnamese goods.

As reported in Xinhua,

“Vietnam exported roughly 3.7 billion U.S. dollars worth of goods to China last month, up 106 percent against January 2017, said the department.

Specifically, Vietnam exported nearly 895 million U.S. dollars worth of phones and their components to China, a 19-fold increase from January 2017; some 691 million U.S. dollars worth of computers, electronic appliances and components, up 80.1 percent; and 296.3 million U.S. dollars worth of vegetables and fruits, up 68.6 percent.

Last month, Vietnam spent nearly 5.8 billion U.S. dollars importing products from China”.

Vietnam’s historical rivalry with China has thus far prohibited any 21st century reconciliation as the scars of 20th century wars and a Cold War rivalry stemming from the Sino-Soviet split, still retard progress in this area. Consequently, Vietnam’s other 20th century foe, the United States has stepped into the void in order to exploit Sino-Vietnamese tensions.

However, the economic realities dictate that as is the case for many ASEAN nations, including western leaningThailand and a Cambodia whose Prime Minister once fought against China along with Vietnamese forces in the 1979 war, the power of trade with China can overcome political suspensions of the past.

In Philippines, a country that was once a US colony, President Duterte’s pivot towards multipolarity has seen Manila renounce hostility in respect of South China Sea disputes with Beijing and as a result of Duterte embracing dialogue over conflict, China has agreed to invest more heavily in the Philippine economy while Duterte recently praised the efforts of Chinese and Chinese-Filipino businessmen for their contribution to the national economy.

While both Indonesia and Thailand are quietly increasing their trade with China, Philippines under Duterte has taken a lead in articulating and implementing a model which stresses long-term cooperation with China.

Due to China’s status as the soon to be undisputed leading economy of the world and due to South East Asia’s regional proximity to the leading superpower, those nations which show a willingness to embrace the “win-win” Chinese model while abandoning the confrontational zero-sum model that the US has thrust upon much of South East Asia, will ultimately reap the rewards for doing so.

At the same time the Philippines models itself not as a Chinese “ally” but as a genuinely non-aligned state whose regional and global partnerships are designed to extract the greatest maxim of prosperity for Filipinos while minimising old conflicts. In this sense, the best trade that all nations can make is the swapping of territorial conflicts for agreements based on trade and cultural exchange. This model has been beneficial in minimising tensions throughout the world and while the US seeks to use the South China Sea as a means to sow discord among ASEAN members and between ASEAN and China, Duterte has proven that the opposite approach is the one which will result in mutually assured prosperity and increased diplomatic cooperation.

While Vietnam’s relations with the US have gone from a state of bloody war, to one of sceptical but increasingly close cooperation, China is nevertheless Vietnam’s number one trading partner. As a country whose relations with the US are far less historically intertwined than that between Manila and Washington, Duterte’s model could serve as a useful starting point for the necessary rapprochement between Vietnam and China. If Philippines can take a realistic “win-win” approach to China, Vietnam, in spite of a fractious history could eventually do the same, especially considering Russia’s historically good ties to Vietnam and its current superpower partnership with Beijing.

While Non-Aligned Movement members will never agree on everything, as this was never the goal of the bloc, there are clear generational leaders of the movement who typically attain their stature based on the ability to win new friends, increase meaningful sovereignty and prosperity, all without alienating former allies beyond that which is inevitable.

In this sense, Duterte has not only led a peaceful political and geo-political revolution for Philippines and more broadly in South East Asia, he has also become the leading light of the Non-Aligned Movement in an era where old global alliances are collapsing, thus renewing the importance of a movement whose inception represented a rejection of dogmatic relations with other states.

As I wrote previously, 

“Vietnam’s economy continues to grow based on an economic model which combines central planning with market based enterprise that is not entirely different from the Market Socialist economy of China. However,  while geopolitically China looks to open doors to the wider world, Vietnam has made a decision to close positive doors while opening up doors which will do nothing for the country apart from insulting the dignity of many living war heroes.

While under Duterte, The Philippines has renounced violence in respect of the South China Sea and has built new healthy relationships with China, Russia and among fellow ASEAN members including Malaysia with whom Duterte has agreed to prioritise trade rather than territorial disputes, Vietnam has become sucked in to the zero-sum American game of attempting to provoke China in its own region.

The memories of the brutal American war on Vietnam still fill the minds of many Vietnamese people. While The Philippines suffered its own war at the hands of the US in the late 19th and early 20th century, Vietnam’s war against the United States only ended in 1975. This is not to say that old adversaries cannot be friends – indeed I am arguing that old adversaries can and should be friends under the correct circumstances.

The problem is that Vietnam has chosen the wrong old adversary to become friends with. While disputes between China and Vietnamese rulers go back thousands of years, China today has no malicious designs on Vietnam or on any other Asian country. Indeed, China is Vietnam’s number one trading partner, but in spite of this, diplomatic tensions remain and the US relationship with Vietnam is predicated on exacerbating rather than ameliorating these tensions.

The US has never signed a fair trade deal with any country in its existence. The US has simply used its economic and more importantly, its monetary might to lure countries into its military and geopolitical orbit for the purposes of enhancing US power far from its own shores. One would think that a country whose Communist government fought against the US for decades would understand this, but instead, Vietnam remains blinded by ancient hatred of China. The latest instalment of this rivalry is the protracted dispute regarding the South China Sea, a dispute which Duterte has provided a model for solving that could be easily applied to Vietnam and any other ASEAN member.

While the US partnership with Vietnam which has steadily grown since the George W. Bush era has not fundamentally altered Vietnam’s long term economic outlook, there exists a golden opportunity for Vietnam to integrate its economy into the One Belt–One Road trading network of China. The key here is Russia, a country that maintains its Soviet era base in the country while also remaining on good diplomatic terms with Vietnam.

Russia could easily help negotiate a diplomatic rapprochement between China and Vietnam that would be to the benefit of both countries, all while helping two Asian powers reduce the embarrassing presence of the US in the region. Instead, Vietnam has opted to taunt China with the presence of a US aircraft carrier in its port.

The Philippine model of Rodrigo Duterte ought to be adopted by Vietnam. As an historic Russian ally, Vietnam is in fact in a better position to work a Duterte style multi-polar pivot than The Philippines ever was. The fact that Duterte was able to accomplish what he has, is a testament to the fact that a long term political vision for the future can overcome the tensions and mistrust of the past when dealing pragmatically and respectfully with new partners.

Vietnam’s future remains bright, but so long as it is blighted by the economic straitjacket that is an un-even partnership with the US, Vietnam will fail to reach its potential, while Duterte’s Philippines makes strides in all the right directions”.

While old wounds in respect of a Sino-Vietnam rapprochement will not heal immediately, one ought to consider areas where many other former rivals have become partners or have otherwise developed a positive understanding. This is the case in respect of Russo-Turkish relations, Russo-Iranian relations, Iran-Turkey relations, Russo-Pakistan relations, Philippine-Malaysian relations, the Korean rapprochement, the transformation of the Sino-Soviet split to a modern Sino-Russian partnership and Russia’s ability to maintain good ties with both Palestine and “Israel”.

There is no reason, especially given the current positive economic trends, for Vietnam and China not gradually ironing out suspicions and disputes in the name of reaching a kind of gentleman’s understanding for the mutual well being of both nation’s economies. While such a process will not be easy, there is no reason not to begin movement towards such a win-win reconciliation as soon as possible.

With cross-border tourism continuing to expand, both countries should work constructively to put the past behind them as much as possible and work towards a bright future based on the win-win economic and diplomatic model.