Written by Ramses Amer.

Vietnam’s relationship with China is of paramount importance for its development and security. Although much outside attention is focused on the disputes between the two countries in the South China Sea, the relationship is much broader and multifaceted than these disputes alone. The long historical interaction between the two countries is a reference point for those who highlight long periods of collaboration as well as for those who focus on periods of China’s control and attacks against Vietnam. The close cultural and political links both historically and in modern times through the leading rule of the Communist Party of Vietnam (CPV) and the Communist Party of China (CPC) have cultivated stronger ties between the two countries. The complexities of this relationship can be formulated as follows for Vietnam: China is Vietnam’s major collaborative partner, while at the same time, its major geo-strategic challenge.

The current stage of the relationship with China began with the full normalisation of relations in November 1991, which put an end to over a decade of animosity following the dramatic deterioration of bilateral relations in the late 1970s, culminating in the 1979 border war.

The period up to 2000 was characterised by two contradictory trends. While positive contacts and co-operation were expanding in many fields, the negative aspect of differences relating primarily to the territorial disputes persisted. The positive trend was prevalent throughout this period but was at times slowed down by the fluctuating levels of tension relating to the territorial disputes. In this century, relations have deepened further, particularly in terms of expanding economic ties. The territorial disputes have caused less tension except for periodic increases in tension relating to developments in the South China Sea between 2009-2011.

Expanding political, cultural, economic, and military contacts between the two countries illustrate the positive trend in improving and expanding bilateral relations. On a regular basis, official delegations visit the other country to discuss ways of expanding co-operation in various fields. A strong political willingness to strengthen and expand the overall relationship between the two countries has been displayed. A number of bilateral agreements have been signed following the full normalisation of relations.

Expanding economic relations can be seen through the growth in bilateral trade from $32 million in 1991 to $36 billion in 2011 – making China Vietnam’s major trading partner. In terms of foreign direct investment (FDI) in Vietnam the projects listed as originating from China proper were few in the 1990s and with modest amounts of capital, but in recent years there has been a trend towards increased investment. Cumulative figures for the period 1988-2012 shows 893 projects with registered capital approaching $5 billion.

In the political field, the relationship between the CPV and the CPC has been expanded through exchange visits at various levels. The main issues have been included formally in the Joint Statements and Joint Communiqués issued in connection with high-level meetings: overall relations, economic relations, border issues, Taiwan and the one-China policy, and international and regional organisations. The contacts between the armed forces of the two countries have also been expanded through regular visits

Tension in bilateral relations has primarily been caused by differences relating to territorial disputes and to a lesser degree by problems relating to cross-border smuggling. It can be noted that since late 1991 sharp differences relating to all the territorial disputes, i.e. overlapping claims to the Paracel and Spratly archipelagos; to water and continental shelf areas in the South China Sea and in the Gulf of Tonkin; and to areas along the land border, were prevalent from May to November 1992. Differences relating to oil exploration in the South China Sea and the signing of contracts with foreign companies for exploration periodically caused tension up to 1998. In order to manage their territorial disputes China and Vietnam initiated an extensive system of talks and discussions structured as follows: Expert-level talks; Government-level talks, i.e. Deputy/Vice-Minister; Foreign Minister-level talks, and, High-level talks, i.e. Presidents, Prime Ministers, and Secretary-Generals of the CPC and CPV. These talks resulted in the signing of a Land Border Treaty on 30 December 1999 and in the signing of the Agreement on the Demarcation of Waters, Exclusive Economic Zones and Continental Shelves in the Gulf of Tonkin on 25 December 2000. During both years there was no noticeable tension relating to the disputes in the South China Sea. Developments from 2001-2008 showed that this pattern of interaction relating to the disputes in the South China Sea continued to prevail with continued dialogue and only limited periods of tension caused by the disputes in the area. In addition the Land Border Treaty was ratified in 2000 while the Tonkin Gulf agreement was ratified in 2004. The demarcation process of the land border was completed at the end of 2008. In response to periodic increases in the level of tensions relating to the disputes in the South China Sea in 2009-2011, the two sides have stepped up efforts to manage their maritime disputes.

There are two issues that could potentially become contentious. One in the context of the economic relationship relates to the trade deficit between the two countries. The increase in bilateral trade has resulted in a growing Vietnamese trade deficit with China. The trade deficit issue has been raised in high-level bilateral talks and the two sides seem to agree that the imbalance in bilateral trade needs to be addressed. The stated aim is to promote an economic relationship that is mutually beneficial and to achieve a “win-win” outcome.

The other issue relates to rivers, i.e. the Mekong River and the Red River. Chinese development projects upstream along primarily the Mekong River are a concern to Vietnam since its main rice-producing region is in the Mekong Delta and the constructions of dams along the Mekong River have possible impact on the water levels downstream. Thus, activities in China are of considerable interest to Vietnam and such activities could cause tension in bilateral relations if they would be perceived as having detrimental consequence on Vietnam.

The future development of the relationship will be determined by how successfully Vietnam and China handle their disputed issues. Deepening bilateral co-operation in different fields and expanding economic interaction has contributed to development of a more stable relationship. The progress in territorial disputes management has also positively contributed to the prospect of long-term stability in the bilateral relationship. There are challenges such as the disputes in the South China Sea that have to be managed properly so as to avoid negative repercussion of the broader relationship. The two sides must also address the potential future challenges such as economic competition and uneven trade relations as well as risks associated with developments affecting the Mekong River.

In conclusion, it can be observed that although the official relationship between the two countries is elite driven this does not imply that there is limited people-to-people contact. The land border between the two countries is the scene of extensive contact between the populations on both sides. There is also considerable Chinese tourism in particular into the northern part of Vietnam. The exchanges and interaction in education and cultural fields can also be noted.

Ramses Amer is Associate Professor in Peace and Conflict Research, is Associated Fellow, Institute for Security and Development Policy.