President Joe Biden is set to visit Vietnam on Sunday, as the country looks to strengthen its trade ties with the United States. This move highlights how the competition with China is reshaping relationships across Asia.
Vietnam has designated the United States as a comprehensive strategic partner, following its previous designations of China and Russia. By giving the U.S. the same status, Vietnam aims to diversify its friendships and explore alternatives to Chinese factories, as American and European companies seek new supply chain options.
During a fundraiser last month, Biden stated that Vietnam desires relationships with the United States to show China that they are not alone and have the freedom to choose their own alliances. The decision to visit Vietnam was added to Biden’s trip to India for the Group of 20 summit.
Biden sees an opportunity to bring more nations, including Vietnam and Cambodia, into America’s orbit, especially with China’s economic slowdown and President Xi Jinping’s consolidation of power. He believes that by leveraging these changes, the global dynamic can be shifted in America’s favor.
U.S. trade with Vietnam has already been accelerated since 2019. However, further progress is hindered by the country’s infrastructure, skills of its workers, and governance. Increased trade has not automatically resulted in a positive economic trajectory for Vietnam.
Commerce Secretary Gina Raimondo highlights that Vietnam is highly regarded by CEOs as a place to diversify supply chains, which were previously heavily reliant on China. Raimondo has been working on broadening supply chains through the Indo-Pacific Economic Framework, an initiative launched by Biden.
Vietnam’s economic growth has slowed in the first three months of 2023 due to increased costs and weaker demand caused by high global inflation. Nevertheless, U.S. imports of Vietnamese goods have almost doubled since 2019 to $127 billion annually. Vietnam’s population of 100 million is unlikely to match the scale of Chinese manufacturing, as China exported four times more goods to the U.S. in 2022.
A new analysis from the Peterson Institute of International Economics shows that many countries in the Indo-Pacific still depend on China economically. On average, these countries receive more than 30% of their imports from China and send nearly 20% of their exports to China. This dependence has grown significantly since 2010.
White House national security adviser Jake Sullivan saw an opportunity to strengthen the U.S. relationship with Vietnam when a top Vietnamese official visited Washington in June. Sullivan proposed elevating trade and diplomatic relations to the highest level with Vietnam. He discussed this further with Nguyễn Phú Trọng, the general secretary of the Communist Party of Vietnam.
During a subsequent fundraiser, Biden revealed the deal to a group of donors, highlighting Vietnam’s desire to elevate the U.S. to a major partner, alongside Russia and China. This move reflects Vietnam’s concerns about an expansive and assertive China, according to experts.
While the change in status may seem insignificant to some, it is a significant move by a communist country like Vietnam, which shares a border with China. This decision sends a powerful political message about Vietnam’s worries regarding Beijing, according to Gregory Poling, director of the Southeast Asia Program at the Center for Strategic and International Studies.
Overall, Biden’s visit to Vietnam signifies the importance of balancing and diversifying relationships in the face of growing competition with China. Vietnam’s decision to elevate the U.S. to a comprehensive strategic partner demonstrates its concerns about China and its desire to strengthen ties with the United States.