On September 10, Vietnamese Prime Minister Nguyen Xuan Phuc embarked on his first visit to China since his June election during the first session of the 14th National Assembly. Phuc brought 32 ministerial officials and other delegates with him, indicating the priority and importance of the country’s relationship with its northern neighbor and traditional ally. During the visit, Phuc reiterated Vietnam’s foreign policy of maintaining its traditional friendship with China and offered Vietnam’s willingness to enhance cooperation with China on political, economic, and cultural affairs. Of course, the major sticking point in relations has been — and continues to be — the South China Sea.

Chinese President Xi Jinping insisted that the two countries’ shared interests outweigh their differences. As for their maritime dispute, Chinese Premier Li Keqiang maintained that the South China Sea was an issue of sovereignty and maritime rights as well as “national feelings.” In Vietnam, that diplomatic description encompasses an anti-Chinese narrative and domestic dynamics that are undermining the Communist Party of Vietnam’s (CPV) legitimacy.

The 2014 Haiyang Shiyou-981 incident, in which a Chinese oil rig conducted drilling inside of Vietnam’s exclusive economic zone, saw a wave of anti-China protests turn violent as angry crowds set fire to industrial parks and factories. The protests resulted in the death of 21 people and severely strained relations between Hanoi and Beijing. Then in May of this year, demonstrators marched in Hanoi to commemorate the 28th anniversary of the Johnson Reef Skirmish to protest China’s recent assertiveness in the South China Sea.

Additionally, Phuc’s visit comes only two months after the Permanent Court of Arbitration dismissed China’s historical claims to the South China Sea, ruling in favor of the Philippines, an award which China dismissed as “null and void.” Although Vietnam welcomed the case, public frustration has emerged at the Vietnamese government’s lack of action after the ruling. Pockets of protests erupted in Hanoi, with some protesters gathering outside the Philippine Embassy. One particularly symbolic banner read, “Thank you, Philippines, you have a brave government.” These protests were quickly halted by the police given the government’s high sensitivity to opposition.

So why doesn’t Vietnam follow suit and file a case with the Permanent Court of Arbitration? Or at the very least offer a tougher line to Beijing given the court’s ruling? Three hypotheses emerge. The first is that Beijing is using its political and economic weight to put pressure on Vietnam to avoid taking its claims further. This would play into the populist narrative that the VCP is weak in standing up to China, an image the new government is keen to shake off. A second hypothesis would be that Vietnam favors a status quo approach that avoids escalating tensions further and focuses on peaceful and international solutions.

A third hypothesis, and the most likely scenario, is that Vietnam is not putting direct pressure on Beijing, but sending warning signals through a broad-based balancing tactic that involves cultivating relations with other powers. Prior to Phuc’s visit to China, Indian Prime Minister Narenda Modi visited Vietnam. During the visit India and Vietnam upgraded their strategic partnership to a comprehensive strategic partnership, a relationship status Vietnam previously shared only with Russia and China. India also offered a $500 million line of credit to Vietnam to buy defense equipment. This is in addition to Hanoi’s increased defensive cooperation with the United States, Japan, and Russia.

Whatever the reason, however, the government must act fast if it is to shake off its image problem. Vietnam’s protest culture is growing, as corruption, ecological problems, human rights issues, and Chinese assertiveness put the government at loggerheads with its citizens. A worrying sign for the CPV is that anti-Chinese protests often transgress into anti-regime protests given that citizens do not have ample outlets for airing grievances. Demonstrations against the ecological disaster that hit central Vietnam in early 2016 even contained anti-Chinese overtones, despite the fact that a Taiwanese steel plant was responsible.

Back in 2009, a highly controversial bauxite-mining contract awarded to a Chinese company led to serious political debate about the environmental and security issues that the project might bring. Accusations that the government had gone against national interests and sold the country out to China were met with strong condemnation from members of the public, intellectuals, and technocrats. Ultimately the protest and petitions demonstrated that there were limitations to what the CPV was able to do.

This highlights the delicate balancing act facing the CPV. On the one hand it must tread carefully with its neighbor given the asymmetries in their relationships and the fact that China represents the most prominent threat to Vietnamese sovereignty and territorial integrity. On the other hand, given the economic importance and the historical political support, Vietnam does not want to put further strains on its relationship. Yet, domestic discontent, beset with anti-Chinese nationalism, puts the party on a collision course with its own people and brings into question the government’s ultimate objective: ensuring the CPV remains the “vanguard of the people and nation.”

Nevertheless, Vietnam is clearly taking China’s militarization in the South China Sea seriously and is taking bold steps. In August, Vietnam displayed its intent to deter China militarily when it secretly installed sophisticated, highly accurate “EXTRA” rocket artillery systems acquired from Israel onto five bases in the Spratly Islands, placing them within range of China’s runaways and military installations. It has also acquired six advanced Kilo-class submarines from Russia. Whether or not these proactive steps will be recognized domestically is another matter.

Given the increasing complexities of Vietnam’s most important, yet most contentious relationship, will we see the rise of a two level game when it comes to Vietnamese-Chinese relations? In other words, will the CPV be forced to negotiate with both its domestic audience and China? Not necessarily. Vietnam still experiences considerable leeway in its foreign policy decision making. Furthermore, the party maintains relative control over its domestic situation for now. Yet as recent events illustrate, Vietnam must tread carefully in its dealings with China. Phuc must have surely been aware of how critical it was to strike the right tone on his recent visit.

BY Nicholas Chapman - The Diplomat - September 16, 2016

Vietnamese PM’s China visit significant

Vietnamese Prime Minister Nguyen Xuan Phuc’s recent trip to China raises hopes for rebuilding trust and mending ties between the two communist neighbors. However, what matters is not what they say or pledge but rather their actual actions in the South China Sea where the two remain divided. Mutual trust can be restored, bilateral ties revitalized and regional peace secured only if there will be no aggressive action in the disputed sea.

On September 15, Vietnamese Prime Minister Nguyen Xuan Phuc completed a six-day trip to China, his first since taking office in April.

However, as the two communist neighbors are at loggerheads over the South China Sea dispute, the official visit, instead of being a moment for Hanoi and Beijing to celebrate their friendship, comraderie and cooperation, was an occasion to rebuild mutual trust and restore strained ties.

Maintaining or rebuilding trust is important, especially from the Vietnamese perspective. Choosing it as the theme of his keynote address at the Shangri-La dialogue in 2013, Nguyen Tan Dung, Phuc’s predecessor, had said that “trust is the beginning of all friendships and cooperation, the remedy that works to prevent calculations that could risk conflicts” and “if trust is lost, all is lost.”

Talking to top defense officials and security experts at Asia’s largest security summit, Dung said: “Somewhere in the region, there have emerged preferences for unilateral might, groundless claims, and actions that run counter to international law and stem from imposition and power politics.”

Territorial disputes should be settled “on the basis of international law, respecting the independence, sovereignty and the legitimate interests” of all parties, he said.

Dung made the remarks at a time when there existed heightened tensions in the region over maritime disputes in the South China Sea. Though he did not single out any country by name, most participants and observers believed that his comment was aimed at China as around that period Beijing’s assertiveness in the region was already a major concern for many countries.

However, Dung’s message was ignored by Beijing because a year later, China decided to place its huge oil rig, HS-981, within Vietnam’s 200-nautical-mile exclusive economic zone. This resulted in a crisis in Vietnam’s relations with China.

Faced with outcry from Vietnam and international pressure, China eventually withdrew the rig. Following its removal, both sides exchanged high-level visits – including Vietnamese communist chief Nguyen Phu Trong to Beijing and Chinese leader Xi Jinping to Hanoi in April and November 2015, respectively – to mend their ties.

Yet, mutual trust – or more exactly, Hanoi’s confidence in Beijing – has not yet been fully restored. This is due to China’s continued behaviors and actions in the disputed sea.

During his state visit to Singapore two weeks ago, President Tran Dai Quang, another key figure in the country’s new leadership, gave a public lecture in which he said that “recent worrying developments” in the South China Sea threatened to erode trust and affect the cooperation process of the region.

Though Quang, who also assumed office in April, did not mention any country by name, China was again seen as the one that has most caused these “worrying developments” because it made a number of aggressive moves like large-scale land reclamation and militarization in the disputed waters.

Against this backdrop, Phuc’s China tour was relevant as it provided Hanoi and Beijing with a good opportunity to rebuild their trust and ties.

One of the key points Phuc stressed in his meetings with Chinese leaders, including President Xi Jinping, was “the extreme importance of strengthening political trust” between the two sides.

It seems that the Chinese leadership has also recognized how trust – or the lack of it – has affected their ties. Hanoi’s distrust of China’s adventurism in the South China Sea is a defining factor that has pushed it away from Beijing and into forging closer ties – including stronger military cooperation – with China’s main geopolitical rivals, notably the US, Japan and India.

Thus, (re-)gaining Vietnam’s trust and confidence is also beneficial for China because it will prevent its southern neighbor from further distancing from it.

In fact, many indications from this trip show that both sides attached great importance to the visit and wanted to use it to restore mutual trust and repair their stained relations.

One of these is the timing. Beijing extended its invitation to Phuc and the latter chose to travel to China relatively early in his term. Phuc’s predecessor, Dung, who took office in June 2006, visited China only in October 2008, when he went there for an Asia-Europe Meeting summit.

Phuc was accompanied by a large number of high-ranking officials. They included two members of the Vietnamese Communist Party’s Politburo, the country’s most influential body, namely Tran Quoc Vuong, Secretary of the Party Central Committee, and Pham Binh Minh, Deputy Prime Minister and Foreign Minister.

The Chinese side gave Phuc and his delegation special treatment. China rolled out the red carpet for the Vietnamese leader and most of its all-powerful, seven-member Politburo Standing Committee, including President Xi Jinping and Premier Li Keqiang, received him during his visit.

During their talks, Phuc and Chinese leaders pledged to “properly” manage their maritime disputes and foster friendly and healthy relations.

Balancing trade

While the South China Sea has dominated and sometimes overshadowed their overall relations, cooperation between these two communist neighbors, which share many political and economic similarities, is in fact, deep, extensive, multi-dimensional and all-encompassing.

China has been Vietnam’s largest trading partner for the past 12 years and this will continue. The two-way trade between them rose from $30 million in 1991, when Hanoi and Beijing re-established their diplomatic ties, to $66.3 billion in 2015.

According to a Chinese estimation, China-Vietnam trade will surpass $100 billion this year, and Vietnam will overtake Malaysia, becoming China’s biggest trading partner in Southeast Asia.

Yet, Vietnam has faced an unhealthy trade imbalance with China, which has drastically risen since 2001.

According to Vietnam’s General Statistics Office (GSO), of the $66.3 billion bilateral trade in 2015, Vietnam’s exports to the latter were worth only $17 billion. This means its trade deficit with the northern power last year was $32.3 billion.

Without the trade surplus with the US, which is now Vietnam’s biggest export market, and the European Union, Vietnam could not balance its trade books. In 2015, Vietnam enjoyed a surplus of $22.5 billion with the US and of $20.6 billion with the EU.

The latest data of its GSO showed, in the first quarter of 2016, Vietnam’s trade deficit with China fell by 15.6% year-on-year to $6.5 billion. If this continues, it is estimated that its trade deficit with China could drop to $28 billion for 2016 from the record level of $32.3 billion in 2015.

While that is a good sign for the Vietnam and its businesses, a $28-billion trade deficit remains enormous.

Furthermore, there are other reasons to be cautious about these latest figures.

One of these is that the data of Vietnam’s GSO is often different from China’s official statistics. For instance, based on China’s official data, some Vietnamese officials and newspapers pointed out that in 2014, Vietnam’s actual trade deficit with China was worth $43.8 billion, not $28.9 billion as provided by their country’s GSO.

Another is that huge amounts of a variety of goods, food and commodities, including counterfeit goods, are smuggled into Vietnam on a daily or weekly basis. These illegal, cheap and poor-quality products negatively impact Vietnam’s businesses, industries and people.

That is why seeking to work with the Chinese side to reduce trade deficit and create a healthy and sustainable economic relationship with the 1.36-billion-people neighbor is another important objective of Phuc’s China visit, part of which was to attend the China-ASEAN Expo, a trade and investment summit, in Nanning, Guangxi – an autonomous region that shares border with Vietnam.

According to Vietnam’s state media, in his meetings with Chinese officials and leaders in Nanning and Beijing, Phuc talked about existing problems in economic and commercial cooperation between the two countries and asked China to cooperate in taking measures to gradually balance bilateral trade.

He was quoted by Vietnam News Agency as saying that China should continue importing goods that Vietnam has advantages over and soon license Vietnam’s export of its meat, dairy and processed juice products to China.

A new era ?

Judging by the reaction of the both sides to Phuc’s China outing, it seems that Hanoi and Beijing are quite upbeat. In an opinion piece on September 13, Xinhua, China’s official news agency, said that with the visit, “a new era of stronger bilateral ties is well in sight.”

While the trip has eased tensions, it remains to be seen whether it will result in any major change in the relationship between the two countries, especially with regard to the maritime disputes.

Though both sides pledged to manage these disputes “properly” or “soundly”, their approaches remain significantly different from each other.

According to Vietnam News Agency, during his talk with Li, Phuc underlined his country’s “consistent viewpoint of persistently resolving East Sea disputes by peaceful measures in line with international law, including the 1982 UN Convention on the Law of the Sea (UNCLOS), and respect for diplomatic and legal processes.”

Many other regional countries, including the US, Japan, India and (several) ASEAN states, also share and support this position.

In contrast, China, which has hitherto rejected the South China Sea ruling, strongly favors bilateral negotiations. That is why, as reported by Xinhua, during his meeting with Phuc, Xi called on Vietnam “to solve the South China Sea issue through bilateral consultations.”

Moreover, what really matters is not what they say or pledge but rather their actual actions in the South China Sea.

In his Singapore Lecture, Quang said that the desire for peace, security and prosperity in the region has never been greater. However, he added, such “a desire will forever remain a desire unless we take actions” to enhance peace and prosperity.

Mutual trust is only restored, bilateral ties revitalized and regional peace secured if there will be no other aggressive actions like militarization in the disputed sea.

Nevertheless, that Hanoi and Beijing are willing to meet and seek to resolve their disagreements and improve – or at least, stabilize – their relations, instead of preparing or calling for (a people’s) war, is a positive sign. This is because, as it is famously said, “jaw-jaw is better than war-war”.

By Xuan Loc Doan - Asia Times - September 16, 2016