By Carlotta Rinaudo
In April 1975 the Vietnam War was over. Roads and bridges were left in rubble, and orphans were walking barefoot in the streets of Saigon. Following the war, the US had imposed a trade embargo prohibiting any commercial dealings with Vietnam, isolating the country from international trade.
Unsurprisingly, in the early 1980s Vietnam was one of the poorest places on earth. The Vietnamese Communist Party adopted a centrally planned economy that led to stagnant agricultural production, explaining why a country covered with lush paddy fields had to import rice from abroad. One-fifth of the Vietnamese population was on the brink of starvation, and electricity was available only 4 hours per day.
This situation changed in 1986, when the country opened to the world. Vietnam launched a set of reforms known as “Doi Moi”, successfully replicating the Chinese model: the country would preserve its single-party system while shifting towards a market-based economy. These reforms quickly boosted the economy and attracted massive Foreign Direct Investments. If a few years before Vietnam had had to import rice from abroad, by 1989 it had become the second largest rice exporter in the world.
Over recent decades, Vietnam has presented itself as a good international citizen, earning recognition and respect within the ASEAN group. It has signed a wide array of bilateral trade agreements, while joining the WTO, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and recently, the Regional Comprehensive Economic Partnership (RCEP). In 2019 it took a mediating role in global diplomacy by hosting the second Trump-Kim summit in Hanoi, and in 2020 it assumed the ASEAN chairmanship while successfully handling the Covid19 pandemic. Hanoi was in fact praised for giving one of the world’s best responses to the pandemic, quickly introducing a massive program of contact tracing while mobilizing the Vietnamese society in a collective fight against the virus.
These factors suggest that Vietnam is walking the path of a rising middle power, demonstrating a growing ability to shape international events in three particular areas: the global supply chain, the South China Sea, and the realm of 5G technologies.
Vietnam’s place in the global supply chain
Amidst the China-US trade war, many multinational companies have been looking to relocate their supply chain outside of the Chinese mainland, adopting a “China Plus One” business strategy. In this context, Vietnam has emerged as the ideal “Plus One” candidate, thanks to its ability to offer solid infrastructure coupled with a large low-wage workforce. Nike and Samsung have been outsourcing their production to Vietnamese factories for years, and recently Apple has started to assemble its AirPod earphones on Vietnamese soil too. This is not to say that “Made in Vietnam” will ever be able to replace “Made in China”: Vietnam doesn’t have the capacity to become the new factory of the world. To Vietnam’s 55 million manufacturing workers, China has 800 million; and while Ho Chi Minh City’s container port can accommodate 6 million containers annually, Shanghai reaches 40 million. Yet, in a “China Plus One” world, Vietnam has been able to emerge as a valid alternative, thereby securing an important position in the global supply chain.
Vietnam in the South China Sea
According to scholar Do Thanh Hai, Vietnam’s psyche has been shaped by its cyclical and perennial struggle against Chinese invasions from the North. This traditional Vietnamese perception of China remains in the country’s consciousness. Vietnam often sees China not as a conventional neighbor, but, rather, as a force of nature – “like floods and storms that feed into the deltas (…) to which Vietnamese, like reeds, must at once bend while remaining firmly intact.”
Aware of its military inferiority, Vietnam does not seek direct confrontation with its northern giant, instead it resists, “firmly intact”, protecting Vietnamese interests.
When, in 2014, China deployed one of its oil rigs in Vietnamese waters, Vietnam responded with a policy of “cooperation cum struggle”, displaying extraordinary pragmatism. First, Vietnam resolutely responded by raising global media attention to China’s assertiveness in the South China Sea, therefore internationalizing and securitizing a bilateral issue. Then, when China pulled the oil rig back, Hanoi sent its officials to Beijing to heal their diplomatic ties.
Although this approach might appear unusual, Vietnam only revived an old tradition of the past, when, after a territorial dispute, it used to send symbolic homages and annual tributes to Chinese emperors in order to secure peace, harmony, and recognition. This policy of “cooperation cum struggle” is a mix of soft and hard methods that helps Vietnam escape a battle it cannot win, while vigorously standing up for its own territorial sovereignty.
While other Southeast Asian countries like Brunei, Malaysia and the Philippines have now softened their attitude in the South China Sea, Vietnam is increasingly perceived as the ASEAN champion that can contain Chinese maritime ambitions. This security leadership role has been widely acknowledged by the international community, with countries like Japan offering their support and providing offshore patrol vessels to Hanoi. With regards to China, Vietnam is indeed “bending like reeds, while remaining firmly intact.”
Vietnam in the technological race
Not only did Vietnam not include Huawei in its 5G network: Hanoi built its own domestic infrastructure and appears ready to deploy it for commercial use by 2021. Viettel, a Vietnamese state-owned telecom company, has collaborated with Ericsson to create its own 5G technology, and plans to expand the product to Myanmar, Laos and Cambodia. Hanoi has also provided a cheap mass access to the Internet for its citizens, while aiming to become a key player in e-commerce and online payment methods. After Ericsson, Nokia, Huawei, Samsung and ZTE, Viettel is the sixth producer in the 5G race, an impressive result for a country that 40 years ago was not able to keep up with food shortages.
A latecomer to the international community, Vietnam is now increasingly emerging as a regional middle power: it is well-integrated in the world economy, it operates on the front lines in the disputed waters of the South China Sea, and it is one of the only domestic producers of 5G technology. ASEAN was deliberately created to survive without a formal leader to ensure equality between its 10 member states – yet this has translated into mutual weakness rather than collective strength. For this reason, many scholars see in Vietnam a country that will be able to fill this leadership vacuum. From its isolation in the 1980s, Vietnam has come far: today, the vibrant streets of Hanoi tell the story of a place of possibilities.