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Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

Vietnam-China Relations
Carlyle A. Thayer
May 5, 2019

We are preparing a report on Vietnam’s relations with China in light of the likely
reintroduction of the draft Law on Special Economic Zones that provoked an outcry
last year when it was tabled in the National Assembly.
We request your assessment of the following issues:
Q1. Do you think the Vietnam Communist Party can effectively keep at arms distance
the anti-China nationalism prevalent among the public at the same time as welcoming
Chinese investment in Vietnam necessary for economic growth, or is it becoming an
increasingly difficult problem for the Party?
ANSWER: Vietnam’s leaders will continue to stifle internal criticism of China while at
the same time promoting economic engagement with China. This reflects the Vietnam
Communist Party’s long-standing policy of restricting but not completely censoring –
anti-China reporting in the domestic media while “cooperating and struggling with
China” in their bilateral relations. The most recent example of the latter is Vietnam’s
dispatch of two warships to participate in ceremonies to mark the 70th anniversary of
the People’s Liberation Army Navy and Vietnam’s rejection of China’s annual three-
month ban on fishing in the South China Sea.
Vietnam attempts to address its massive trade deficit with China by urging Beijing to
further open its markets to Vietnamese goods and investment, encouraging more
Chinese investment in Vietnam, while at the same time negotiating free trade
agreements with the Eurasian Economic Union, European Union and the United
The anti-China protests last year were in response to national security concerns about
Chinese investors gaining a 99-year foothold in strategic areas reserved for new
Special Administrative and Economic Zones. This was akin to the national security
concerns that surfaced over Chinese bauxite mining in the Central Highlands in 2009.
Anti-China sentiment in Vietnam is toxic. No doubt the party and government were
taken aback by the ferocity of the anti-China outbursts last year. The draft Law on
Special Administrative and Economic Zones will not be be re-introduced at the
National Assembly’s seventh session scheduled from May 20 until June 13.
Q2. How will Vietnam-China relations play out in coming years?

ANSWER: Vietnam’s framework for managing its relations with the major powers,
China included, will not alter much in coming years. Vietnam and China have elevated
their bilateral relations to a Comprehensive Strategic Cooperative Partnership (the
highest declaratory level among all Vietnam’s strategic partnerships). Bilateral
relations are managed by a Joint Steering Committee led by their respective deputy
prime ministers who are also members of their respective party Politburos. This
scaffolding is reinforced by party-to-party, military-to-military and people-to-people
ties. In other words, Hanoi views bilateral relations with China as much wider than the
South China Sea dispute. Vietnam tries to avoid letting the South China Sea define
relations with China.
China has stated publicly that its negotiations with ASEAN members on a Code of
Conduct in the South China Sea will take three years to complete or roughly until
August 2021. This process should dampen Chinese adventurism, especially as Vietnam
will be ASEAN Chair in 2020.
There are two “wild cards” (1) U.S. naval presence patrols, continuous bomber
presence patrols and Freedom of Navigation Operational Patrols in and over the South
China Sea and (2) the health of Secretary General Nguyen Phu Trong. Trong will steer
a steady course if he recovers and guides the party to the 13th national party congress
scheduled for early 2021. Until Trong’s health issue is resolved there is some
uncertainty about how a potential leadership transition will play out in Vietnam.
The first wild card could result in increased tensions in the South China Sea and U.S.
pressure on Vietnam to cooperate more closely on maritime security. The second wild
card will likely reinforce caution in Hanoi in its dealing with China; abrupt change in
policy is unlikely.

Suggested citation: Carlyle A. Thayer, “Vietnam-China Relations,” Thayer Consultancy

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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.