GLOBALIZATION PART DEUX
Vietnam and the limits of Communist friend-shoringOpinion
Ambrose Evans-Pritchard
THE TELEGRAPH
Fri, December 15, 2023
Joe Biden has sponsored Vietnam as a premier offshore hub for America’s manufacturing nexus - AP Photo/Evan Vucci)
Vietnam is the friend-shoring superstar of the Far East. It has the irresistible recipe that foreign capital craves: lower wages than China, coupled with higher Pisa scores on maths and science than Iceland or Israel.
It has Communist social discipline – even the Brownian motion of its legendary scooters has a strangely beautiful order – while convincing Westerners that it is a safe commercial location if all goes wrong in the Sino-American cold war.
The president of the US Semiconductor Industry Association was in Hanoi last week singing paeans of praise, flanked by executives from Intel, Synopsys, Qualcomm, Ampere, and Marvell.
Jensen Huang, head of America’s AI chip giant Nvidia, was there too, extolling his “second homeland”. Intel runs its largest global packaging and testing plant at Saigon’s hi-tech park.
So it was a little odd to see China’s Xi Jinping in the country a few days later, literally holding hands with Vietnam’s Communist leader Nguyen Phu Trong, and together agreeing “unswervingly to follow the socialist road” and to defend party rule against all enemies.
You could call it Vietnam’s “bamboo diplomacy” (sturdy stems, wavy branches), a euphemism for trying to please everybody in a tricky neighbourhood. But the terms of the accord go beyond the pieties of “comrades and brothers”.
The closeness between Vietnam's Nguyen Phu Trong and Xi Jinping undermines any sense of the country's pivot toward the US - Nhac NGUYEN / POOL / AFP
“I think the Americans have been guilty of a lot of wishful thinking about how ‘pro-American’ the Vietnamese are really becoming,” said Bill Hayton, a Chatham House fellow and author of A Brief History of Vietnam: Colonialism, War and Renewal.
“The idea that Vietnam is going to break ties with Beijing and join some sort of anti-China coalition is pie in the sky. This is all about the Communist party staying in power. They see their Chinese sister party as a close friend, helping with the dark arts of social control,” he said.
The Xi-Trong agreement states that Vietnam commits to “relations with China as a top priority and strategic choice … and firmly opposes separatist activities of ‘Taiwan independence’ in any form”.
“As the world’s top two ruling Communist parties, the two parties of China and Vietnam must firmly support one another’s core interest,” it said. Furthermore, the “red flag of socialism” must prevail.
This revived solidarity follows a purge of the Vietnamese Communist party over the last year. A president and two politburo members have been sacked on corruption charges. They all came from the “pro-Western” or pragmatic wing of the party. No doubt corruption had reached toxic levels, just as it had in China before Xi launched his purges.
Officials stand accused of extorting millions of dollars from Vietnamese citizens returning home during Covid. Separately, a leaked video showed Vietnam’s security chief – not implicated in the scandal – tucking into a steak coated with gold leaf at Salt Bae’s London restaurant, reportedly costing £1,450.
But corruption charges are used selectively. M. K. Bhadrakumar, a veteran Indian diplomat, says the purge looks like cover for ideological cleansing by pro-China hardliners. The effect is to tilt the East Asian balance in favour of China and Russia at a perilous moment for the West.
Joe Biden is pressing ahead with his policy of deep rapprochement, either seeing only what he wishes to see or calculating that it is still worth pulling out all the stops to prevent Vietnam from falling back into the Chinese orbit.
He signed a Comprehensive Strategic Partnership with Vietnam’s leaders three months ago, including a deal to tap the country’s reserves of rare earth minerals. The US Geological Survey estimates that Vietnam holds a fifth of the world’s known deposits, the second largest after China.
Beijing has already restricted exports of gallium nitride, knowing that the US has no other viable source and no national stock. It is critical for advanced semiconductors, ultra-fast radar, and precision weapons. The Pentagon is now determined to stop China tightening its global lockhold on rare earth supply.
In a larger sense, Mr Biden has sponsored Vietnam as a premier offshore hub for America’s manufacturing nexus, with bilateral trade already exploding to $140bn – some of it illicit Chinese re-exports circumventing US tariffs, which Washington tolerates in pursuit of higher stakes.
Perhaps there is an element of expiation for past sins in Biden’s démarche. It was the Vietnam War, the Mai Lai massacre, and 390,000 tons of napalm that broke the (illusory) spell of American innocence, forging the political outlook of his student generation.
Vietnam’s ruling party is of course the same party that defeated half a million US troops in that terrible conflagration, all in the name of a discredited “domino theory”, or just saving face. That said, I once heard Margaret Thatcher tell a private dinner in Washington that the war had been a necessary sacrifice, buying time for the rest of Southeast Asia. This went down well. General Colin Powell (Mai Lai brigade major) smashed his fist on the table with rapture.
Fri, December 15, 2023
Joe Biden has sponsored Vietnam as a premier offshore hub for America’s manufacturing nexus - AP Photo/Evan Vucci)
Vietnam is the friend-shoring superstar of the Far East. It has the irresistible recipe that foreign capital craves: lower wages than China, coupled with higher Pisa scores on maths and science than Iceland or Israel.
It has Communist social discipline – even the Brownian motion of its legendary scooters has a strangely beautiful order – while convincing Westerners that it is a safe commercial location if all goes wrong in the Sino-American cold war.
The president of the US Semiconductor Industry Association was in Hanoi last week singing paeans of praise, flanked by executives from Intel, Synopsys, Qualcomm, Ampere, and Marvell.
Jensen Huang, head of America’s AI chip giant Nvidia, was there too, extolling his “second homeland”. Intel runs its largest global packaging and testing plant at Saigon’s hi-tech park.
So it was a little odd to see China’s Xi Jinping in the country a few days later, literally holding hands with Vietnam’s Communist leader Nguyen Phu Trong, and together agreeing “unswervingly to follow the socialist road” and to defend party rule against all enemies.
You could call it Vietnam’s “bamboo diplomacy” (sturdy stems, wavy branches), a euphemism for trying to please everybody in a tricky neighbourhood. But the terms of the accord go beyond the pieties of “comrades and brothers”.
The closeness between Vietnam's Nguyen Phu Trong and Xi Jinping undermines any sense of the country's pivot toward the US - Nhac NGUYEN / POOL / AFP
“I think the Americans have been guilty of a lot of wishful thinking about how ‘pro-American’ the Vietnamese are really becoming,” said Bill Hayton, a Chatham House fellow and author of A Brief History of Vietnam: Colonialism, War and Renewal.
“The idea that Vietnam is going to break ties with Beijing and join some sort of anti-China coalition is pie in the sky. This is all about the Communist party staying in power. They see their Chinese sister party as a close friend, helping with the dark arts of social control,” he said.
The Xi-Trong agreement states that Vietnam commits to “relations with China as a top priority and strategic choice … and firmly opposes separatist activities of ‘Taiwan independence’ in any form”.
“As the world’s top two ruling Communist parties, the two parties of China and Vietnam must firmly support one another’s core interest,” it said. Furthermore, the “red flag of socialism” must prevail.
This revived solidarity follows a purge of the Vietnamese Communist party over the last year. A president and two politburo members have been sacked on corruption charges. They all came from the “pro-Western” or pragmatic wing of the party. No doubt corruption had reached toxic levels, just as it had in China before Xi launched his purges.
Officials stand accused of extorting millions of dollars from Vietnamese citizens returning home during Covid. Separately, a leaked video showed Vietnam’s security chief – not implicated in the scandal – tucking into a steak coated with gold leaf at Salt Bae’s London restaurant, reportedly costing £1,450.
But corruption charges are used selectively. M. K. Bhadrakumar, a veteran Indian diplomat, says the purge looks like cover for ideological cleansing by pro-China hardliners. The effect is to tilt the East Asian balance in favour of China and Russia at a perilous moment for the West.
Joe Biden is pressing ahead with his policy of deep rapprochement, either seeing only what he wishes to see or calculating that it is still worth pulling out all the stops to prevent Vietnam from falling back into the Chinese orbit.
He signed a Comprehensive Strategic Partnership with Vietnam’s leaders three months ago, including a deal to tap the country’s reserves of rare earth minerals. The US Geological Survey estimates that Vietnam holds a fifth of the world’s known deposits, the second largest after China.
Beijing has already restricted exports of gallium nitride, knowing that the US has no other viable source and no national stock. It is critical for advanced semiconductors, ultra-fast radar, and precision weapons. The Pentagon is now determined to stop China tightening its global lockhold on rare earth supply.
In a larger sense, Mr Biden has sponsored Vietnam as a premier offshore hub for America’s manufacturing nexus, with bilateral trade already exploding to $140bn – some of it illicit Chinese re-exports circumventing US tariffs, which Washington tolerates in pursuit of higher stakes.
Perhaps there is an element of expiation for past sins in Biden’s démarche. It was the Vietnam War, the Mai Lai massacre, and 390,000 tons of napalm that broke the (illusory) spell of American innocence, forging the political outlook of his student generation.
Vietnam’s ruling party is of course the same party that defeated half a million US troops in that terrible conflagration, all in the name of a discredited “domino theory”, or just saving face. That said, I once heard Margaret Thatcher tell a private dinner in Washington that the war had been a necessary sacrifice, buying time for the rest of Southeast Asia. This went down well. General Colin Powell (Mai Lai brigade major) smashed his fist on the table with rapture.
Beijing’s predatory policies in Vietnam’s East Sea or Biển Đông – the South China Sea to some – have gradually drawn the two enemies back into a tentative military hug.
Vietnam began to hedge its global bets when the Soviet Union collapsed. It pivoted sharply towards Washington when Russia cut off subsidies and shut its naval base at Cam Ranh Bay. Xi Jinping’s wolf warrior hubris has quickened the pace of détente.
It is taking on aspects of a military alliance. The commander of the US Pacific Fleet has met three times with his Vietnamese counterparts since August, even visiting the sanctum sanctorum of the Communist party. Except that it is not an alliance, and cannot be, under any plausible reading of the country’s history.
Vietnam in its various forms has been part of China’s Confucian sphere for two millennia, it is more “sinicised” than other parts of Southeast Asia. It has quarrelled incessantly with its regional master/protector, but has always returned to the fold.
Mr Hayton said the West is over-interpreting the apparent rift between the big and little siblings. “It is the narcissism of small differences, like the British and the French,” he said.
There is a school of thought that Xi finally realises that he blundered badly over the last five years with his iron-fist methods of coercive diplomacy – just as he blundered with his Maoist assault on China’s most dynamic companies – and is now trying to repair the damage with a charm offensive.
If so, this new subtler Xi could prove to be the real threat to the US strategic system in the Far East. America may wake up one day to find that it has diversified its technology supply lines to a manufacturing hub in Vietnam that is in reality a tributary province of the Chinese economic empire.
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