Vietnam-Sino Relations

1. Vietnam-Sino Relations Dan Lemon

2. Overview • China Rise on World Stage • Political, Economic, and Military • 20th Century—Vietnam fought wars with 3 of 5 Permanent Members of United Nations Security Council • Question: What is Vietnam’s Foreign Policy with respect to China’s rise? • History • Over 2,000 year history • Chinese “ruled” Vietnam for over 1,000 years • Vietnam independence tenth Century • Fluctuates; eras of peace to conflict w/China • Vietnam’s Economic Strategy 1970s to 2000

3. Relied on the People’s Republic of China for economic aid Weapons, infrastructure support & humanitarian assistance 1976 Launched Five Year Plan, China provided $1.3 billion Sino-Vietnam split over territorial disputes/Cambodia Issue Vietnam leans toward Soviet Union and Eastern Block $800 million in aid, adopted centrally planned economy Imported steel, oil, cotton, and fertilizer Economic Crises at the end of 1979 Five Year Plan launched in 1976 goal was 14% Growth only .4% Wide-Spread Famine even though gov’t imported thousands of tons of food Vietnam Economy 1970s

4. Dependent of Soviet Union Over $2.5 billion Infrastructure Development, Oil and Coal for electricity State Owned Enterprises produce less 1980 - 1986 Mid 1980s Garrison Force in Cambodia and Troops Station in North Vietnam due to border tensions w/China drains resources Inflation in triple digits…700%, Unemployment 20% Economic aid 38% of state revenue—Soviet Union signs of retrenchment diminish economic aid 1986 Doi Moi (Renovation Launched) Transition to market economy…took notice of Asian Tigers At the time internationally isolated, “Pariah” State Integrate with world economy, access to capital and markets Vietnam Economy 1980s

5. Re-established Diplomatic ties w/Beijing Adopt “Signal Left, but Turn Right” economic concept Trade w/China increases throughout 1990s $32 million in 1991 to $1.25 billion in 1999 Problems: Chinese products saturate Vietnam markets China’s low cost products effects Vietnam’s infantile industries Trade embargo/smuggling Leads to a trade Imbalance of 4.7 to 1 (favor of China) “Economic Colonialism” Vietnam (similar to most ASEAN) exports primary products to China and imports manufactured goods Need to diversify, too dependent on China Vietnam-Sino Economic Relations 1990s

6. Foreign Policy Relations 1990s (con’t) • Hanoi: What to do with Beijing’s Economic Clout? • Omni directional foreign policy, economically motivated • Tie itself into regional and global institutions to improve its economy • ASEAN membership, relations with U.S. and European Union • U.S. drops trade embargo (in place since 1964), Vietnam access to IMF and World Bank • Trade with ASEAN and East Asia • Adopt Laws to attract Foreign Direct Investment (1987) • 1991, FDI from ASEAN $173 M • 1994, FDI from ASEAN $1.4 B

7. Vietnam Economic Diversification

8. Vietnam Economic Diversification

9. Vietnam FDI by Region Source: World Bank,Vietnam Business Development Report 2006

10. Vietnam Economic Diversification

11. Vietnam Economic Diversification

12. Vietnam Economic Diversification

13. Vietnam Economic Diversification

14. Vietnam Economic Future Outlook • Alternative to China • Cheaper wages… • Japan FDI to Vietnam due to tensions w/China • R&D for software and Outsourcing • Japan, Europe and U.S. • Panasonic, Cannon, and Intel

15. Conclusion • Vietnam Multi-Lateral Approach to Foreign Policy is working • Economic engagement with regional and external powers strengthens its position vis a vis China • GDP Growth since 1990…8% • Per Capital from $68.00 (1990) to $627 (2005) • Problems: Corruption and Environmental • Remains a poor country