Vietnam's communists look to Biden to offset growing Chinese power

HANOI (BLOOMBERG) – As officials in Vietnam’s Communist Party jockey for position during a twice-a-decade meeting to refresh the leadership ranks, they largely agree on one thing: Closer ties with the US are set to become even more important to grow the economy and counter a rising China.

The new leaders, set to be announced on Feb 2, will be tasked with meeting a goal to turn Vietnam into an industrialised economy by 2030 with an annual economic growth of around 7 per cent and a per-capita gross domestic product of US$7,500 (S$9,960), or about double what it is today.

A good relationship with the US is key to both meeting that goal and keeping China’s increasing territorial assertiveness in check.

“The US is by far the largest export market for Vietnam” and “the only great power capable of acting as a counterweight to China,” said Alexander Vuving, a Southeast Asia expert at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Hawaii.

“Vietnam, with its decades-long sovereignty disputes with China, badly needs the presence and involvement of a great power that can balance the rise of Chinese power.”

For leaders in Hanoi, President Joe Biden will be a welcome change in the White House after four years of engaging with the unpredictable Donald Trump. They spent the fall staving off threats of new American tariffs even while they benefited from the US-China trade war, as suppliers for global giants such as Apple Inc. moved some Chinese operations to Vietnam.

Secretive proceedings

At the secretive nine-day National Party Congress that kicked off on Monday (Jan 25), some 1,600 delegates from across the country will formally sign off on leadership changes. They will elect a party chief and submit nominations to fill the top three government positions – prime minister, president and National Assembly chair. The sole candidate for each position will be voted on by the National Assembly in May or June.

Unlike in China, where President Xi Jinping has consolidated power since becoming Communist Party chief in 2012, Vietnam’s leaders tend to operate on a more collective basis.

Top priorities for the next administration include gaining greater access to US consumers, possibly through a regional trade agreement, while avoiding punitive tariffs tied to allegations of currency manipulation.

“The country has signed trade agreements with all the world’s major trading partners and the only missing piece is the United States,” said Vu Tu Thanh, senior Vietnam representative of the US-Asean Business Council.

While Vietnam depends on China for critical material and equipment in its factories, the Southeast Asian country is also seeking closer ties with the US, Japan and India to become less dependent on its powerful neighbour.

Under attack

During the Trump administration, Vietnam came under attack for its yawning trade surplus with the US, which in 2020 was expected to break the previous year’s record $56 billion, and for Chinese trans-shipments – exports routed through the country to avoid US tariffs. Vietnam’s exports to the US jumped to US$77.1 billion in 2020, up 26 oer cent from a year earlier, according to Vietnam government statistics.

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Under Mr Biden, Hanoi can also expect greater criticisms from his administration and Congressional Democrats for jailing Vietnamese citizens who are critical of the one-party system. But the US also views Vietnam as key to its Asian strategy, said Huong Le Thu, senior analyst at the Australian Strategic Policy Institute.

“The recognition of Vietnam’s strategic importance will remain among the top decision-makers in the Biden cabinet,” she said.

The US and Vietnam resumed diplomatic relations in 1995, two decades after they fought a war. Relations have become warmer over the past 10 years as China grew more powerful and began asserting territorial claims off Vietnam’s coast, complicating its efforts to exploit energy resources.

In 2016, former President Ba­rack Obama lifted a decades-long embargo on lethal arms sales to Vietnam. Two US aircraft carriers have since visited the central coastal city of Danang, and America has transfered 24 patrol boats as well as two high-endurance cutters to Vietnam.’

Information sharing

Communist Party General Secretary Nguyen Phu Trong had a first-of-its-kind Washington meeting with Obama in 2015 and Prime Minister Nguyen Xuan Phuc visited the Trump White House in 2017. Vietnam also hosted Mr Trump’s 2019 summit with North Korean leader Kim Jong Un.

Former National Security Advisor Robert O’Brien said in during a late-November trip to Hanoi that Vietnam is interested in more information sharing between militaries as well as obtaining additional US Coast Guard equipment. Officials also expressed a desire for US companies to be involved in offshore oil and gas projects as a hedge against Chinese interference, he said.

“It’s very crucial for Vietnam to develop closer relations with the US while managing to maintain cooperative and equal ties with China,” said Le Dang Doanh, a Hanoi-based economist and former government adviser.

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