New Partnership Paves The Way For Billions Of Dollars In Business Deals
September 11, 2023—The United States and Vietnam elevated their relations to a new level on Sunday—the highest strategic partnership in Vietnam and a significant one in the United States.
U.S. President Joe Biden and General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong agreed on Sunday to deepen political and diplomatic ties while paving the way for billions of dollars in business deals.
It comes 10 years after the two countries formed the Vietnam–U.S. Comprehensive Partnership, and it reflects concerns both countries have about China’s use of its military and economic power.
A High-Level Partnership
Foreign policy observers say U.S. diplomats have long pursued a higher-level partnership with Vietnam. Up until now, Vietnam has been reluctant to do so. The government has been wary about getting involved in the increasingly tense relations between the United States and China. However, even as Vietnam cooperates with China on political, economic, and security issues, it struggles against China in the South China Sea and the Mekong Basin. According to an analysis by Bich Tran, an adjunct fellow with the Center for Strategic and International Studies, Vietnam first adjusted its foreign policy approach 20 years ago, signifying that its leaders “leaders no longer view any country solely as a partner or an adversary but as a combination of both.”
In Vietnam, the new framework raises the United States to the same level as China, Russia, India, and South Korea. That’s a significant upgrade and one that China’s diplomats have tried to prevent.
In the United States, the diplomatic deal is a step toward countering China’s dominance in the South China Sea and economic coercion more broadly. Asked about China during a press conference on Sunday, President Biden said he is not trying to contain China but he is concerned “China is beginning to change some of the rules of the game, in terms of trade and other issues.”
Biden said he is, therefore, strengthening U.S. relations with other countries, including Vietnam, India, Australia, and Japan.
“It’s not about isolating China. It’s about making sure the rules of the road — everything from airspace and — and space and in the ocean is — the international rules of the road are — are — are abided by,” Biden said on Sunday.
China’s Strategic Interest
Vietnam is one of five remaining communist governments in the world, next to China, Cuba, Laos, and North Korea. According to a statement in June by China’s Foreign Ministry, “China regards Vietnam as a priority in its neighborhood diplomacy, and believes that the two countries are a community with a shared future with strategic significance.”
Chinese President Xi Jinping met with Vietnam’s prime minister last June and invited Trong, Vietnam’s highest leader, to visit Beijing as well. In the June meeting, Xi leaned hard on the common political system and asked Vietnam to strengthen ties with China and oppose decoupling in the global economy.
Semiconductors and Precious Metals
In particular, recalibration of supply chains is a sensitive area of diplomatic concern today. Vietnam has an array of precious metals and could potentially lead in the semiconductor industry. According to data from the Observatory of Economic Complexity, the United States is the largest importer of Vietnam’s precious metals, taking in 45 percent of the country’s exports in 2021.
The agreement provides support for developing Vietnam’s semiconductor industry, including $2 million in seed money from the U.S. government.
Competition In The South China Sea
Although the Joint Leaders Statement released by the White House does not mention China directly, it’s clear the two leaders had that country in mind when mentioning the South China Sea. Specifically, they pledged “their unwavering support for the peaceful resolution of disputes in accordance with international law, without the threat or use of force, as well as freedom of navigation and overflight and unimpeded lawful commerce in the South China Sea.”
A Difference In Political Systems
It’s interesting the countries made peace with the past and agreed to disagree about what type of political system is best. Instead, their statement hails “respect for the United Nations Charter, international law, and respect for each other’s political system, independence, sovereignty, and territorial integrity.”
Billions of Dollars in Business Deals
Meanwhile, it is noteworthy the agreement makes way for billions of dollars in business deals. The key industries benefitting are in the fields of science, technology, and digital. Businesses likely to benefit include Boeing, Microsoft, and Nvidia, according to reporting by Mercedes Ruehl in the Financial Times. Moreover, the FT reported that Biden led an investment summit last week with Vietnam’s prime minister Pham Minh Chinh. The summit included senior executives from Google, Intel, Amkor, Marvell, and GlobalFoundries among others.
