Vietnam and Washington’s „De-Risking” Strategy: It’s Economics, Stupid

The historical development in Vietnam-US relations has more to do with economics than security and defense.

In a historic development, in mid-September Vietnam and the United States upgraded their relations to the status of Comprehensive Strategic Partnership (CSP). It is the highest in the hierarchy of relations with Vietnam, which puts Washington on par with China, India, Russia and, most recently, South Korea. Observers are quick to note that while the CSP is aimed at China, the upgrade – at least for Vietnam – is more about economics than defense and security.

It would be naïve to assume that CSP has nothing to do with China. It is an open secret that the US and its allies are trying to counter China’s power and influence in the Indo-Pacific region. However, this upgrade does not mean that Vietnam will soon abandon its independent foreign policy to align with the US against China. Hanoi is averse to any confrontational stance with Beijing — something it aims to avoid by accepting the United States as its new comprehensive strategic partner. The United States, for its part, insisted on a border with Vietnam About „Global Stability, Without China”.

To borrow a phrase often used by former US President Bill Clinton, Vietnam-US relations are all about economics. Prior to Biden’s trip, a series of visits to Vietnam by senior US officials, including Trade Representative Catherine Dai in February, Secretary of State Anthony Blinken in March and Treasury Secretary Janet Yellen in July, all focused on deepening economic cooperation. In those cases, emphasis was placed on Vietnam’s attractiveness to America’s policy of „buddy-shoring”—the transfer of strategic businesses such as semiconductors to „friendly” countries. By upgrading, Washington hopes that Vietnam will become Important A partner in its „de-risking” strategy aimed at isolating the high-tech supply chain from China’s influence. In short, Washington sees the CSP as a double-edged sword: it increases ties and deepens economic ties with Vietnam as part of a broader effort to counter China; In Vietnam, it’s more about the former than the latter.

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Vietnam can play a significant role in these strategies and fill the void left by China. Vietnam has potential at every stage of the high-tech supply chain, thanks to its rich mineral reserves, prime logistics hub locations, growing technology industries and renowned STEM education system.

Vietnam’s fast-growing semiconductor industry has received significant interest in recent years; So, it’s understandable why it’s the focus of Biden’s visit. Vietnam’s proximity to the center of the global semiconductor supply chain makes it a favorable location for the U.S. effort to build a „more flexible semiconductor supply chain.” While Biden was in Hanoi, the two sides signed a cooperation agreement on semiconductor supply chains, workforce and environmental development. US companies Synapsys and Marvell have announced the development of semiconductor design centers in Ho Chi Minh City, while a US$1.6 billion factory set up by Arizona-based Amcor is set to go online this October near Hanoi.

The recent announcement of the Vietnam-US CSP does not represent a major shift in Vietnam’s foreign policy. However, based on the long-term path of economic development, it represents Vietnam’s attempt to seek deeper integration into the US-led economic ecosystem.

But Vietnam’s contribution to the semiconductor industry goes beyond new factories and projects. Vietnam can supply important minerals used for high-tech industries, which are currently under pressure from China. dominance. Vietnam’s rare earth reserves have been estimated 22 million tonnes, second in the world after China (44 million tons). During Biden’s visit, the two sides signed a memorandum of understanding that allows the United States to invest in the industry. In addition, Vietnam has the third largest reserves of tungsten (also known as wolfram), a Important mineral For high-tech and military applications, it is only behind America’s global competitors (Russia and China). Those important minerals were not widely exploited because of Vietnam’s lack of capacity. This leaves a huge opportunity for American businesses to exploit.

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Second, thanks to its position as a transportation hub, Vietnam could play a key role in the next phase of a US infrastructure initiative, which was recently launched at the G20 meetings in New Delhi. Vietnam, as a gateway to Northeast Asia via the South China Sea, provides an ideal point to connect the region. planned India-West Asia-Europe Corridor, which aims to challenge China’s Belt and Road Initiative. For Vietnam, U.S. support will help it avoid falling into the „infrastructure leverage trap” — concerns that Vietnam will be excluded from the Chinese-backed alliance framework in Asia. The US$6.7 billion Cai Mep Ha logistics center in southern Vietnam will be jointly developed by Seattle-based port operator SSA Marine and Vietnamese private company Gemadept.

Vietnam also has the potential to fill labor shortages in high-tech industries. Despite being a developing country, Vietnamese education – especially in STEM subjects – is there Exceptionally good In the Program for International Student Assessment (PISA), an OECD global survey of education systems, Vietnam’s science score ranked 4th.Th It ranks 19th in the world, ahead of the United StatesTh. Although Vietnam is struggling to meet the skilled labor demand of high-tech investors, the reason is its lack of training capacity rather than labor. As a result, various initiatives signed during Biden’s trip focused on „upgrading” the Vietnamese labor force should be welcomed. They will bring benefits to both parties in the medium and long term.

The recent announcement of the Vietnam-US CSP does not represent a major shift in Vietnam’s foreign policy. However, based on the long-term path of economic development, it represents Vietnam’s attempt to seek deeper integration into the US-led economic ecosystem. The US is counting on its new „friend and trusted partner” to fill a widening void in the world as it strives to „de-risk” China. Vietnam has such potential High expectationsBut it needs to attract more investment, especially in infrastructure and pursue much-needed structural reforms in its post-Covid economy.

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Meanwhile, Vietnam needs to guard against possible economic coercion from China as it moves closer to the US, even in the economic arena. The preventing Hundreds of Vietnamese fruit trucks at the Vietnam-China border serve as the first warning scene since the CSP was announced with the United States.

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