[Analytics] US, China rivalry puts Vietnam in a no-win bind

When a Chinese survey ship departed energy-rich waters claimed by Vietnam, many saw the two sides’ three-month standoff over the Vanguard Bank as indication that Hanoi is becoming bolder in challenging Beijing in the South China Sea. David Hutt specially for the Asia Times.

Over the last three years, China has forced Vietnam to cancel two oil exploration projects in the sea, including one with Spanish energy giant Respol, as Hanoi opted for conciliation over confrontation in both instances.

There were even reports in 2017 that Beijing had threatened to use force if Hanoi did not shut down energy exploration in a contested sea area. In the latest showdown, Vietnam attempted to engage Beijing “at least 40 times”, according to one strategic analyst, while not yielding its position.

Now, as Vietnam more firmly stands its ground in the maritime area, some wonder if the recent confrontation reflects a discernible shift in Hanoi’s foreign policy away from China and towards its ex- adversary and emerging strategic partner the United States.

Since the 1990s, Hanoi has bid to balance its great power relations, namely between China and the US, to maximize diplomatic benefits without overtly taking sides. That’s summed up in its “three no’s” policy, which bars military alliances, alignment with one country, and hosting foreign military bases.

In the ruling Communist Party’s jargon, Vietnam seeks to simultaneously “cooperate and struggle” with both great powers. In that formulation, the US offers a measure of strategic protection against China’s more overt forms of aggression, including in the South China Sea, while China provides economic aid and investment, as well as friendly communist solidarity.

At its core, Vietnam’s foreign policy is predicated on maintaining the status quo. That, in turn, requires both the US and China to compete to gain influence with Vietnam, and for disputes to be settled through negotiations where Hanoi has at least has some parity with Chinese and American interlocutors.

But questions are rising about whether the status quo can hold in the current geo-strategic environment. China is clearly growing more assertive in pressing Vietnam to drop its rival claims in the South China Sea and to stop oil exploration in disputed areas.

At the same time, Washington is growing ever more bellicose about China’s alleged expansionist designs across the Asia-Pacific, with China increasingly the enemy in the Pentagon’s defense papers and anti-China rhetoric expected to feature prominently on campaign trail to the 2020 US presidential election.

Vietnam is wary of both super powers, for historical and other good reasons. A maxim that informs much of Hanoi’s foreign policy decision-making says, “Alignment with the US will result in the collapse of communism; alignment with China will result in territorial loss” (Choi voi My mat che do, choi voi Trung Quoc mat nuoc).

If Hanoi were to give up its stated neutrality and align more closely with Beijing, it would almost certainly have to concede its territorial claims in the South China Sea, including over the Spratly and Paracel island chains, with Beijing likely promising to make up for the territorial loss with more trade and investment.

Some analysts contend that Hanoi cannot risk hotter confrontation with Beijing in territorial matters as it would put their broader economic relations at risk. That risk, though, is overstated as China is not a top investor in Vietnam compared to Japan and South Korea.

Moreover, Vietnam receives more than it sends to China in trade: In the first five months of this year Vietnam’s trade deficit with China grew to US$16.29 billion, up from US$11.05 billion at the end to 2018. The US, on the other hand, absorbed a $17.1 billion trade deficit with Vietnam through May, a huge jump from last year’s total $12.3 billion deficit.

Politically, a full alliance with China would tarnish the Party’s image in the eyes of the general public, which has become increasingly hostile towards China in recent years.

Vietnamese nationalism is rooted in its historic antagonism towards China, which occupied the country several times over the last two millennia. The two sides fought a brief but bloody border war in 1979 and exchanged deadly fire in the South China Sea over the Johnson South Reef in 1988.

Protests against Chinese firms mining for bauxite in northern Vietnam in the late 2000s sparked a first-wave of protests and demonstrations against the Communist Party, with many of the same protestors going on to form pro-democracy organizations. Many activists in Vietnam equate being pro-democracy with being anti-China.

The largest protests in recent decades took place last year against a hated law on special economic zones that anti-China demonstrators claimed would effectively cede Vietnamese land to Chinese businesses and investors.

Despite what the maxim says, full alignment with China would more likely lead to the “collapse of communism” in Vietnam than a full embrace of the US.

Indeed, the US has willfully looked the other way on Vietnam’s persistent rights abuses against mostly pro-democracy activists in pursuit of closer strategic and economic ties.

Donald Trump’s administration has largely followed the precedent set by his predecessor Barack Obama of paying lip service to human rights, but doing little to punish Vietnam for its repression. Nor have new deals and strategic agreements been conditioned on demonstrable progress on rights.

America’s tolerance would likely dissipate, however, if Hanoi were to more closely align with China, as seen recently in neighboring Cambodia’s case. US Congress representatives who are itching to impose punitive sanctions on Vietnam be cleared to forge ahead, imperiling the $49 billion worth of goods Vietnam exports to the US each year.

In the same instance, Trump would be less reluctant to come down harder on Vietnam’s massive trade surplus with the US, something he hinted at in a media comment in June when he said Vietnam was “almost the single worst abuser of everybody.”

Full alignment with China would thus likely prove disastrous, domestically and internationally, for the the ruling Communist Party and its one-party state. That raises questions, however, about how an overt alliance with the US would play out.

Some analysts suggest alignment with the US would open Vietnam to an even greater Chinese threat.

Derek Grossman, a senior defense analyst at the RAND corporation, a think tank, has suggested that Vietnam is already China’s “preferred warm-up fight” to a bigger superpower conflict as it is “a middle-sized power that should be easily defeatable”, both on land and in the South China Sea.

Vietnam officially has around 5.5 million military personnel, but less than 500,000 are believed to be active. China has four times as many active soldiers. China’s Air Force has 1,222 fighters to Vietnam’s paltry 108, while China has almost 11 times as many naval assets.

Vietnam spends roughly $3.3 billion on its defense budget annually; China spends $224 billion.

At the same time, allying with the US would mitigate somewhat Vietnam’s risk of a direct Chinese military assault, as it would be difficult for the US to stand by idly in the event of an attack, particularly in the South China Sea.

Last month, during a trip to Hanoi, US Defense Secretary Mark Esper announced a new defense aid package for Vietnam to bolster its maritime security capabilities, including a given second coast guard cutter. The US has donated six patrol vessels and equipment worth $12 million just this year.

Still, Hanoi surely doubts whether the US would actually come to its defense in an armed confrontation with China. Many in the region recall that Washington stood by idly in 2012 when China de facto seized the Scarborough Shoal from the Philippines, a US mutual defense treaty ally.

That calculus could also explain why de facto national leader Nguyen Phu Trong failed to visit Washington in October, a widely anticipated tour where the two sides were expected to raise relations to a “strategic partnership.”

The choice between trying to maintain a status quo that is fast fading and increasingly fragile, or instead aligning overtly with either the US or China, looks like a lose-lose proposition for Vietnam.

For now, at least, Vietnam’s diplomatic fate is still in its own hands, which may not be the case in the near future as US-China rivalry heats up and more pressure builds to choose superpower sides.