By Hoang Thu Huyen and My Nguyen, Dezan Shira & Associates
Jan. 31 – One of the great enigma’s concerning managers across Asia today is Vietnam’s trade relationship with China, its massive northern neighbor with which it shares an 840-mile border.
This is a timely question to examine, not least because Vietnam is one of Asia’s “Tiger Economies” and, although it has suffered over the past three years like everyone else in the wake of the Global Financial Crisis, the country has proven remarkably resilient.
The addition of an ASEAN-China free trade agreement in 2015 will likely mean that ASEAN, with Vietnam as a core member, will become China’s largest trade partner that same year, with total trade worth some US$500 billion. To contrast the enormity of this figure, the entire United States sold just one-fifth of that in exports to China in 2011.
Vietnam can easily link with China’s supply chain infrastructure – there are already extensive rail connections between Hanoi, Kunming and Nanning, and the northern Hai Phong Port is undergoing substantial development. Yet Vietnam’s relationship with China is both economic and political, and the manner in which these play out that will provide clues as to the true nature of the stresses and opportunities within the trade gap. Despite both countries being officially communist regimes, Vietnam has offered a cool hand to China, wary of getting too close due to the 1979 war and ongoing territorial disputes still fresh in many people’s minds.
While other Asian nations – including nearby Myanmar and Cambodia – have fully embraced China in the past in terms of economic assistance, Vietnam has remained and continues to remain aloof. That is not to say that bilateral trade between Vietnam and China is not booming, because it is, reaching US$35.7 billion last year.