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    Southeast Asia
     Oct 22, '13

China-Vietnam: more carrot, less stick
By Brendan O'Reilly

Vietnam is once more the scene of superpower confrontation, as deep rifts continue to churn the waters of the South China Sea. However, Vietnam can now deal with ambitious global powers from a position of independence and relative geopolitical strength.

The escalating rivalry between China and United States offers both risks and rewards to the leaders in Hanoi, as the world's two most powerful countries seek deeper strategic and economic influence in Southeast Asia.

Chinese Premier Li Keqiang's high-profile visit last week to Hanoi highlights Vietnam's importance to China's regional ambitions. The visit was aimed at improving China's often-turbulent relationship with neighboring Vietnam.

Li returned to Beijing with an impressive set of economic and

political agreements, including an arrangement to begin joint exploration of natural resources in the Gulf of Tonkin, where the two countries dispute their maritime border. The cooperation could pave the way for joint development in other contested territories, including the Spratly and Paracel islands in the South China Sea.

As recently as March 20, Chinese naval vessels launched flares at a Vietnamese fishing boat in the contested area, causing significant damage to the craft and inspiring seemingly spontaneous anti-Chinese protests in Vietnam. In November 2012, a map in new Chinese passports that included disputed South China Sea islands triggered diplomatic protests from the Philippines and Vietnam.

Vietnam and China are now bidding to deepen their bilateral ties on an "easy-first, difficult-later" basis. First on the table are the relatively simple tasks of easing border crossings, improving transportation, and liberalizing the flow of investment. Later will come the tricky issue of sovereignty over the South China Sea.

Li's success in persuading the Vietnamese leadership to agree to jointly develop resources, including potentially rich stores of oil and gas, in the still-disputed waters is on the surface a significant achievement. The agreement may be the fruit of China's softer tone in recent months.

Before the Association of Southeast Asian Nations (ASEAN) summit in Brunei earlier this month, Beijing agreed to talks that would aim to establish a binding code of conduct in the South China Sea - though little progress has been made so far.

Divide and develop
China now appears to be pursuing a "divide and conquer" - perhaps more aptly called a "divide and develop" - strategy in the South China Sea.

During Li's visit at the ASEAN summit, the China National Offshore Oil Corporation and Brunei's national petroleum company signed an agreement for joint exploration and exploitation of fossil fuels in their contested waters.

China, Vietnam, the Philippines, Brunei, Malaysia, and the Taiwan all contest different islands, features and waters of the South China Sea. All of these countries have some degree of military presence in the disputed region.

There have been a series of armed clashes over the territories, most recently between Vietnam and China in the 1980s. Last year, Chinese and Philippine vessels were locked in a tense two-month stand-off at the contested Scarborough Shoal, known in China as Huangyan Island.

Now, Beijing may be hiding its stick and brandishing a carrot in hope of gaining access to the South China Sea's resources. Due to its relative power as a large country in relation to other smaller disputants, Beijing has so far sought to handle the territorial disputes on a one-on-one basis rather than through multilateral mechanisms.

New joint development plans with Brunei and Vietnam are part of this strategy. It's a gambit which aims to offer mutual economic benefits to cooperative states, while cutting out other claimants like the Philippines who have pressed for third party intervention in the disputes.

Manila has pressed its claims vis-a-vis China through an unprecedented international arbitration case filed under the United Nations' Convention on the Law of the Sea (UNCLOS). Beijing has strongly protested the move, despite the lack of a mechanism to enforce any decision.

Chinese state media have been adamant about the need to avoid "internationalizing" the South China Sea dispute. The People's Daily quoted Wu Shicun, president of the National Institute for South China Seas Studies, recently saying:

"The agreement reached by China and Vietnam, undoubtedly, sent a clear message to other claimants that putting aside bickering on sovereignty and sitting at the table for joint development is a pragmatic choice. The attempts to internationalize the South China Sea issue will result in the deterioration of bilateral ties and worsen the situation."

"Internationalization" is also a coded reference to American involvement in the disputes. Just before the ASEAN summit, US Secretary of State John Kerry called for ASEAN to push for "for enhanced coherence and unity" regarding the South China Sea. Japanese Prime Minister Abe also chimed in, reminding Beijing that the territorial row is of importance to the entire region.

It was against this rhetoric of multilateral unity that Li made his bilateral mission to Vietnam. Beijing is keen to woo Hanoi away from any regional alliance driven by Washington and Tokyo to contain China's regional influence. Li's diplomatic success in Hanoi reflects not only Beijing's ambitions in the region, but also Vietnam's astute leverage of its middle geopolitical position.

Diplomatic flirtations
Before Li's visit to Hanoi, Vietnamese Prime Minister Nguyen Tan Dung met with Kerry at the ASEAN summit. The two leaders signed the US-Vietnam Civil Nuclear Cooperation Agreement, which allows for the transfer of American civilian nuclear technology to Vietnam at a time Hanoi bids to build up nuclear power generating capacity. The deal represents the latest American effort at enhancing its position in Hanoi.

Vietnam is also party to negotiations to enlarge the Trans-Pacific Partnership (TPP), a proposed US-led free trade agreement that would liberalize commerce and investment between most major Pacific Rim economies - with the notable exception of China.

Washington is also eager to bring Vietnam more firmly into its strategic Asian orbit. Ironically, in light of the US-Vietnam war, Washington arguably has history on its side. For most of Vietnam's history, neighboring China has been its most fearsome enemy.

Traditional Vietnamese nationalism is largely defined by struggles for independence from Chinese rule. The last time Chinese troops fought a major military campaign was during the brief and bitter Sino-Vietnamese War of 1979. More recently, the two sides have exchanged fire at sea.

Over the centuries, Vietnam has suffered tremendously from the regional aspirations of major powers, including the Chinese, French, Imperial Japan, and the US. Now, however, Vietnam can utilize its hard-earned independence to its geopolitical advantage in the escalating competition for influence between China and the US.

Both superpowers must carefully consider Hanoi's interests, lest they push Vietnam into the open arms of their rival. Competition for Vietnam's affections is taking place simultaneously in the political, strategic, cultural and economic spheres. Given Vietnam's relative poverty, improving economic development may yet be the most fruitful method for currying Hanoi's favor. In this regard, Beijing appears to have a significant advantage over Washington.

Currently, China is Vietnam's largest trading partner by a substantial margin. In recent years, Beijing has also loaned over US$1 billion to Hanoi for badly needed infrastructure development. As wages rise in China, many Chinese businesses have moved their production to lower cost Vietnam. To pave the way for these relocations, both sides have agreed on reforms to ease cross-border investment.

Beijing's long game in Vietnam is reflective of China's general strategy for all of Southeast Asia. The "development" side of "divide and develop" relates not only to the resources beneath disputed maritime territories in the South China Sea, but also the wider regional economy. In that free trade direction, Beijing is now pushing for an enhanced China-ASEAN Free Trade Agreement.

China's push for stronger economic integration with Southeast Asia is driven by both commercial and strategic imperatives. As Southeast Asian nations become more dependent on China for trade and investment, it will be increasingly difficult for Washington to secure committed strategic allies.

Vietnam has benefited from its middle position between a powerful America and an increasingly prosperous China. Indeed, many ASEAN countries stand to benefit from occupying a middle ground between Washington and Beijing, so long as trade, not armaments, remain the primary means of superpower rivalry in the region.

Brendan P O'Reilly is a China-based writer and educator from Seattle. He is author of The Transcendent Harmony. He may be reached at oreillyasia@gmail.com

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