Vietnam’s Lam puts local diplomacy up front with China
Vietnam’s new leader emphasizes border trade and infrastructure links over sea frictions in first trip abroad to China
This week, Vietnam’s newly installed President To Lam headed to China, marking his first foreign visit since taking over for the now-deceased Nguyen Phu Trong.
Mainstream news coverage of his visit mainly focused on Vietnam and China’s close ideological and economic ties and Vietnam’s flexible “bamboo diplomacy” approach to foreign affairs.
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To be sure, Lam signaled that the main aim of his visit was to engage Chinese leader Xi Jinping on key issues like railway development, managing tensions in the South China Sea, and strengthening overall cooperation.
Yet Lam’s first stop in China wasn’t its northern capital, Beijing. Rather, he began his trip by landing in southern Guangzhou, meeting with the Guangdong party secretary and encouraging Guangdong firms to expand investment in Vietnam.
While the province does not border Vietnam, Guangdong accounts for around a fifth of Sino-Vietnamese trade due in large part to the vibrancy of its firms.
The province’s economic weight in Vietnam is poised to strengthen as Chinese firms relocate production to the country and rely on proximate suppliers across the border.
In a survey of Chinese firms that have invested in Vietnam, the Vietnam Chamber of Commerce and Industry found that 59% of Chinese firms relied on home country suppliers, 15% higher than other types of firms.
Once overshadowed in their country’s development drives due to a long-simmering Sino-Vietnamese border conflict, these provinces now have renewed importance with the growth in manufacturing in Vietnam.
Chinese suppliers along the border provide inputs and intermediates to factories and producers in Vietnam, creating a tightly bound lattice of goods moving daily across state lines.
And provincial leaders are not sitting idly by as they engage in a spate of local diplomatic efforts that leverage the current strength of Sino-Vietnamese commercial relations.
Across the border in northern Lao Cai province, a mountainous and traditionally agricultural area, Vietnamese provincial authorities have lobbied both Hanoi and Chinese counterparts to develop the region as a trade hub.
Lao Cai has proposed a pilot cross-border e-commerce zone to bridge Vietnam with the Chinese market and met with Yunnan authorities, located just across the border, to cooperate on industrial parks this year.
Elsewhere, China’s Guangxi has actively courted the northern Vietnamese border provinces of Ha Giang, Quang Ninh, Lang Son and Cao Bang in regular meetings.
These efforts bore fruit in Quang Ninh’s electricity purchases from Guangxi’s power grid last year and the resumption of a border gate between Lang Son and Guangxi that was shuttered during the pandemic and not reopened until recently.
With Lam’s visit, Beijing and Hanoi are moving closer toward concrete plans to construct two high-speed railways. If built on schedule by 2030, these lines would connect the aforementioned border states to the key port of Haiphong and Hanoi – linkages that would greatly improve Vietnam’s infrastructure and logistics capacity.
While border localities laud and promote such trade-promoting initiatives, tighter economic links have to be considered in the context of the region’s intensifying geopolitics.
The US is increasingly scrutinizing and cracking down on China’s trade diversion through Southeast Asia to avoid sanctions and other blocks, potentially heralding more US trade restrictions on Made in Vietnam goods.
China’s deepening infrastructure ties with Vietnam, both in logistics and energy, also belie the two sides’ frictions in the South China Sea.
While managed to date, these tensions could easily boil over as they have in the Philippines, putting Vietnam’s China-linked production networks at potential collateral risk.
While local diplomacy is an essential feature of Sino-Vietnamese relations, they are not divorced from broader geopolitical risks that threaten to upend recent joint development successes along the Chinese-Vietnamese border.
Olivia Tan Jia Yi is senior analyst at Singapore’s Onyx Strategic Insights. The views expressed here are her own