There are two recent events linked to ASEAN that are rather significant. The first is ASEAN, and the United States convened the Special Summit in Washington D.C. from May 12 to 13 in 2022. The second is a high-profile delegation visit to the U.S. led by Vietnamese Prime Minister Pham Minh Chinh.
While these two major events are regional or bilateral issues, ANBOUND believes they are also closely related to China’s current situation and future development. This is the second time for the ASEAN-U.S. Special Summit to take place in the United States, following the one that was held at Sunnylands, California, during the Obama administration in 2016.
This summit still remains a meeting between both parties to gauge each other. The U.S. is still seeking ways to manage its relations with ASEAN countries. On the other hand, ASEAN countries are looking at what impact the U.S. intentions have and what ASEAN can get from the U.S.
According to the joint-vision statement issued after the meeting, the summit’s biggest achievement was to upgrade the two sides’ relationship to a “comprehensive strategic partnership.” This partnership, however, will take effect after a six-month wait. The U.S.-ASEAN relationship will be upgraded to a “meaningful, substantial, and mutually beneficial comprehensive strategic partnership” at the 10th ASEAN-U.S. Summit in November this year. An important concern for improving relations between the United States and ASEAN is to contain China.
More notable is the visit of the Vietnamese Prime Minister to the United States. Chinh was leading a delegation to visit the United States from May 11 to 17. During this trip, he met with leaders of various departments, international organizations, enterprises, experts, and scholars in the U.S. Besides that, he also visited American economic, cultural, and educational institutions, and delivered speeches at the Center for Strategic and International Studies (CSIS) and Harvard University.
Major corporations, such as Intel, Apple, and Google were on his list as well. In comparison to the ASEAN-U.S. Summit, which was more of a test for both parties, the Vietnamese leader’s visit to the United States and the improvement in the Vietnam-U.S. ties are more obvious. Vietnam has a clearly defined objective in mind, and wishes to keep a positive outlook on its future development.
Chinh’s Harvard University speech provides is crucial in observing Vietnam’s objective. He stated that Vietnam has long advocated for the development of an autonomous economic system. This does not mean that Vietnam is closed-door and self-sufficient, he stressed, nor that it is against an open-door policy and international integration. The Vietnamese Prime Minister stressed that what Vietnam pursues is economic independence and autonomy that is closely related to political and foreign policy independence and international integration. “Respecting differences in conditions, political, economic, historical, cultural and social characteristics will contribute to the diversity and richness of the global economy and national advantages”, said Chinh.
“By 2030, it shall be a developing country with modern industry and upper-middle-income. By 2045, it shall be a developed, high-income country,” Chinh said of Vietnam’s development aspirations. He went on to say that to do this, Vietnam has to construct a rational, efficient, and sustainable economic system, as well as improve its competitiveness and resilience. It would also be crucial for Vietnam to adapt flexibly and effectively to changes in international, regional, and domestic situations. Three of the most crucial factors for the country’s economic system to develop in this direction would be “socialist orientation market economy, rule of law, and democracy”. In this, people should be the central focus, subject, goal, and driving force of development.
Judging from the Vietnamese Prime Minister’s remarks in the United States, Vietnam’s demands on its relations with the U.S. are not high. These demands are largely limited to requesting the U.S. to respect some of its bottom-line requirements, mostly related to Vietnam’s role as a Communist country.
The rest is asking the U.S. to respect Vietnam’s independence, particularly its ties with China. Vietnam does not want to exacerbate tensions with its large neighbor. Instead, it wants to maintain a certain level of equilibrium and avoid offending China. Apart from ideology and Sino-Vietnamese relations, however, relations between Vietnam and the United States have been almost entirely open. This situation will improve the geopolitical and geo-economic environment for Vietnam’s future.
A very important source of Vietnam’s self-confidence is its reform and rapid economic development in recent years. Similar to China earlier, Vietnam used cheap labor to develop an export-oriented economy such as textiles, clothing, and footwear.
While transitioning from traditional industries to the electronic supply chain, Vietnam joined the WTO in 2007 and signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
From 2002 to 2021, Vietnam’s import and export volume increased from USD 36.45 billion to USD 668.54 billion in 20 years. This trade figure represented an increase of 17 times, and its trade scale ranked 20th in the world. Among developing countries, after China and India, Vietnam seems to achieve the embryonic form of the “world’s factory”.
In the first quarter of 2022, Vietnam had five commodities with an export value of more than USD 5 billion. Mobile phones and parts, computer electronics, mechanical equipment, textiles and clothes, and footwear accounted for 60% of international trade imports and exports, respectively. Its increased exports were linked to a surge in foreign investment. The foreign direct investment industry accounted for USD 65.31 billion of the country’s overall export of goods worth USD 88.58 billion in the first quarter. This amount accounted for 73.7%, and it has been around 70% for quite some time.
What does a Vietnamese government constantly opening up and growing at a high-speed pace mean to China? Vietnam’s rapid development indeed is a déjà vu to China, and the open environment facing Vietnam (mainly U.S.-Vietnam relations) is very different from China’s status quo. The reform, opening up, and rapid development of Vietnam is a fait accompli that China has to face.
When analyzing Vietnam many years ago, ANBOUND’s founder Chan Kung noted that Vietnam’s development potential deserves China’s attention. This relatively young country with a population of more than 90 million will form a strong competitive relationship with China. For now, Vietnam’s annual import and export trade volume has reached more than USD 668 billion (2021). This figure is not only a record high but also ranks among the top 20 in world trade. Vietnam’s foreign trade is growing rapidly, but what does this mean for China?
If such significant progress continues, Vietnam will have its versions of Lenovo and Huawei in the future. In a variety of industries and fields, Vietnam will also have more multinational corporations and industry leaders. There will also be numerous types of multinational companies that China has yet to build.
At that moment, Vietnam’s status in Asia may be similar to South Korea. Following this trajectory, it is possible that Chinese workers will work for the Vietnamese. Meanwhile, Chinese local governments may go to Vietnam to attract investment, hoping that Vietnamese investors can come to China to invest and set up factories.
Final analysis conclusion:
If Vietnam’s economy and industry continue to develop, it will be able to establish new geopolitical and geo-economic space and status. Undoubtedly, Vietnam is heading in the direction of an emerging market country with sustained and rapid development in ASEAN, Asia-Pacific, Indo-Pacific, and other different geographic areas.
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