The Paradox of Sinophobia and Economic Ties in Vietnam

by Kien Pham

HANOI, VIETNAM — On April 4, 2018, Vietnam’s top political leaders—the General Secretary of the Vietnamese Communist Party (VCP), the President, and the Prime Minister—met with the Foreign Minister of China, who was on an official visit. The leaders congratulated one another on improving Vietnam-China relations, and pushed toward further bilateral cooperation. It was a historic occasion.

On June 11, 2018, anti-China demonstrations broke out across Vietnam. Crowds of thousands gathered in almost all major cities and towns, carrying signs and chanting slogans such as “No China!” and “No SEZs! Not even 1 day!” The protest was aimed at the National Assembly bill proposing 99-year leases on Vietnam’s three Special Economic Zones in Vietnam: Vân Đồn (north), Bắc Vân Phong (central), and Phú Quốc (south). SEZs are areas subjected to different economic regulations than the rest of the country, mostly established to attract foreign investment.

The Vietnamese government has always shown a strong desire to establish SEZs as a way to develop the country’s financial and trade capabilities. However, the protestors believe that the 99-year SEZ contracts would likely be bought out by Chinese contractors, leading a loss of national territories to foreign powers. Similar anti-China protests happened in 2014, after the PRC placed an oil rig off the coast of Vietnam, leading to the deaths of several Chinese workers. The government, faced with possible further public outcry, caved and delayed the legislation until the end of the year.

Đà Nẵng is a seaside city that recently experienced an economic and tourist boom, becoming the fourth-largest city in the country. However, the development comes with its own price.

“Fuck them,” says Anh, a restaurant owner in Đà Nẵng, “coming into our city, destroying our nature scene to build resorts and golf courses for their people. We don’t need Chinatown here.” The surrounding workers and customers sounded their agreement.

Anh’s seafood eatery lies across the beautiful T20 beach, which has now become a hotspot for Chinese-owned resorts and establishments. The locals have sounded fierce opposition to this intrusion on their land. According to them, these foreign companies acquired land illegally through Vietnamese “ghost companies,” pushing away small local businesses.

Their experience highlights the dilemma facing Vietnam as the Hanoi government looks to balance the contrast between the country’s geopolitical situation with China and its national identity. How is the VCP dealing with this conundrum?

Vietnam’s Unique Geopolitical Position

Vietnam is a small, S-shaped country situated in Southeast Asia. It borders China to the north, Laos and Cambodia to the west, and the South China Sea— known as East Sea by Vietnamese—to the south and east. With a population of 96 million, Vietnam is the 15th most populous country in the world. Its capital and political center is Hanoi, yet the economic and financial hub is Ho Chi Minh City (formerly known as Saigon).

As a small regional power, Vietnam’s geopolitical aims are more limited than, say, the United States, and revolve around three areas. First, Vietnam wants economic growth. After a switch from a centrally-planned into a market-based mixed economy in 1986, Vietnam has maintained its status as one of the fastest growing economies in the world. The country attracts large numbers of businesses and investors with its more capitalist economic model, as well as vast and cheap labor force and an  expanding middle class. Its distinct culture, historic sites, and long coastline and pristine beaches have also made Vietnam a popular tourist destination.

The Communist Party wishes to continue this trend through training programs aimed at improving the labor force quality, with special focus on the service and tech industries. Hanoi also seeks to capitalize upon the increasing global importance of the East Sea. It is the VCP’s vision to redirect international trade flowing through southeastern China and Singapore to Vietnam’s ports. The proposed SEZs are part of this development scheme, as Vietnam looks towards repeating China’s success with Shantou and Shenzhen and other SEZs.

Ho Chi Minh City in 2014. Photo by Kent MacElwee.

Vietnam’s leaders also seek to maintain national unity. The country’s peculiar shape essentially splits the country into two economic centers: Hanoi, heart of the northern Red River Delta, and HCM City, which is the nexus of the southern Me Kong River Delta. Between these two centers lies the long and narrow area of Central Vietnam. Since unification in 1975, the Vietnamese government has strived to maintain stability and unity among the populace, a goal achievable only through unity between north and south.

In order to achieve such unity, the VCP has poured funding into developing the economies of so-called “buffer cities,” cities along Central Vietnam such as Huế, Đà Nẵng, Quy Nhơn, and others. The presence of these medium-to-large urban areas serve to strengthen the economic and social link between Hanoi and HCM City.

Finally, it is in Vietnam’s interest to retain influence in the East Sea, despite Beijing’s assertiveness. Vietnam’s coastline, 3,260 kilometers in length, renders the country highly dependent on the East Sea. Besides fishery and tourism, the East Sea provides Vietnam with valuable trade links and profits from oil and natural gas reserves. In fact, much, if not all, of Vietnam’s economic boom is attributable to its oceanic activities, especially as the East Sea becomes more vital to global trade and security.

Hanoi is thus most worried about the ongoing territorial dispute between Vietnam, China, and four other nations regarding the demarcation of oceanic borders. As China is militarizing its East Sea islands and threatening Vietnamese fishermen, the VCP shall strive to retain its power in the region, especially in the context of the Vietnamese islands in the Spratly archipelago.

It is no hyperbole to say that China plays a crucial role in determining Vietnam’s future in the region. With Vietnam-China trade potentially reaching $100 billion in 2018, Beijing stands as one of Hanoi’s biggest economic partners, as well as its biggest exporter. In addition, mainland China makes up nearly 30 percent of Vietnam’s foreign arrivals, and Chinese companies have submitted their bids for top infrastructure projects in Vietnam.

With an estimated $102 billion more needed to complete its 2016-2040 development goal, Hanoi requires extra foreign investment, making it an attractive partner for China’s Belt and Road Initiative (BRI) – a massive infrastructure development project in the Eurasian area, funded by and centered around the PRC. Lastly, China’s increasingly assertive and militaristic stance at sea means Vietnam cannot bypass the giant neighbor in its South China Sea dealings.

As a result, China has a persistent and lingering presence in Vietnam’s present and future. In order to achieve its geopolitical goals, Hanoi must work alongside Beijing in the foreseeable future. This is a fact VCP’s top leaders understand as they have continuously pushed for better economic relations between the countries. The reality in Vietnam is, however, much more complex, one characterized by an extremely nationalistic identity.

Economic Integration meets Sinophobia

Sinophobia runs deep in Vietnam. As a boy, I was often told the popular folktale  “Thánh Gióng.” God Gióng, as it translates to, tells the story of a young baby growing into a giant to help the first Vietnamese state, Văn Lang, beat back “a northern enemy.” From third grade onwards, my classmates and I were taught our country’s history, and how Vietnam was invaded numerous times by Chinese dynasties. Most of Vietnamese national heroes are kings, queens, and generals who led their people against foreign occupiers.

After thousands of years of existence, the Vietnamese people have forged an identity of maintaining independence against all odds. Due to its complex, often conflictual history with Vietnam, China is often made into the scapegoat antagonist in any Vietnamese narrative. In fact, according to a 2017 Pew Research Poll, 80 percent of Vietnamese citizens view China’s power and influence as a “major threat.” Any Chinese involvement in Vietnamese affairs would, consequently, be interpreted by ordinary citizens as part of Beijing’s “expansionist agenda.” This anti-China identity runs deep among Vietnamese, and goes beyond the boundary of politics.

“What a travesty,” Đức, a high school student in Hanoi, said as he pointed toward the towering railway construction site on Hoang Cau Street. “Delay after delay, setback after setback. I wonder if it would turn out okay at all.”

The contract for Line 2A of the ambitious Hanoi Metro is held by China Railway Sixth Group. The line is set to operate in late 2018, the first of the Hanoi and HCM City railways. However, this is a far cry from the original 2016 deadline, and a number of accidents, including one of falling steel beams killing one biker, have soured public opinion to the project.

The case of Hanoi Metro is not unique. Chinese companies and contractors have received widespread criticism for their poor handling of other key Vietnamese infrastructure projects, from My Dinh National Stadium to the former Ministry of Defense building. This is not news among ordinary Vietnamese people, however, who have come to regard Chinese goods and services as inferior.

Outcry among Hanoians towards Line 2A has forced the government to turn to Japanese, French, and South Korean contractors for other railways. These unfavorable cooperations in the past, added with existing Sinophobia, has made Vietnam wary of becoming a BRI partner, despite the potential geopolitical benefits of such move.

Uncertain Regional Futures

On the East Sea front, Vietnam’s identification with its territorial sovereignty has nearly caused conflict with China. While having owned both the Spratly and Paracel archipelagos, the two main island clumps, in the past, Vietnam lost a military engagement against the PRC in 1974. This, along with another violent encounter a decade later, lost Vietnam its Paracel holding.

Nowadays, as the East Sea becomes a hotbed for both international trade and territorial dispute, Vietnam is determined to hold onto its island holdings. The country has been most vocal in condemning Beijing’s militarization of its islands, and supported the Philippines in its arbitration case against China.

SCS from Economist
Aside from China, many other countries in the region have overlapping claims. Map by The Economist.

This is where the U.S. comes into play. Ever since normalization of U.S.-Vietnam relations in 1995, the two nations have become important economic partners. Now, with Vietnam’s favorable position within Southeast Asia, the U.S., fearing the rise of China, is turning towards its past opponent as a valuable strategic partner. Past visits between important political figures from both countries, most notably President Obama’s.

However, with the Philippines turning pro-China under Duterte and a Malaysia-China friendship pact, Vietnam finds itself more isolated in the conflict. Having relied on ASEAN as a counterbalance in the past, the VCP first felt this backlash in 2016 when Cambodia, a close ally of China and then-chair of ASEAN, failed to deliver a joint resolution condemning China’s action out at sea. As the situation deteriorates, the VCP has also received criticism from the populace for failing to contain China’s aggression, having abandoned key oil projects in the East Sea due to threats from Beijing.

Vietnam’s geopolitical situation is perhaps the most difficult in the region, if not the world. The government has received much criticism from its people, entrenched in the Vietnamese identity, for failing to adequately respond to Chinese encroachment.

On the other hand, the country’s goals require it to have positive and interactive relations with its northern neighbor. Escalation of the South China Sea dispute and the rise of China into the number one world power shall further test the VCP’s ability to navigate between these two extremes.

Kien Pham is a sophomore from Bowdoin College studying international development and security. He recently returned from an internship in Vietnam, where he was born.

The views expressed in this article are those of the writer. The Contemporary takes no position on matters of policy or opinion.

The cover photo was taken by Ramon Boersbroek of Ho Chi Minh City.

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