BRI & Vietnam and Emerging Geopolitical Trends in Indo-Pacific
THE Chinese One Belt & One Road Initiative (BRI) is “stimulating” massive infrastructural development in Vietnam, the centre of the ASEAN. It also facilitates qualitative education and an integrated transport system in the country.
However, the rapidly changing socio-economic, geopolitical and geostrategic scenarios in ASEAN and Indo-Pacific in the shape of Taiwan and ASIA-NATO demand a close liaison between China and Vietnam to mitigate spill over repercussions.
Vietnam is also offering diplomatic support to BRI. Thus Vietnam may be seen as a crucial part of the maritime component of China’s ambitious BRI.
Under BRI flagship, the Dau Tieng Solar Power Project invested by Power China, with a total investment capital of USD 310 million; and the Nam Dinh 1 Coal Power Project with a total investment capital of USD 2.16 billion.
In this regard, Kunming-Hanoi Highway and Vietnam Long Jiang Industrial Park are completed. However, Hanoi Light Rail and Vinh Tan 1 Coal-fired Power Plant are under construction. Moreover, Kunming-Hanoi Road and China-Laos-Vietnam Grid Connection are planned.
Another proposed project is a rail link from Phnom Penh to Ho Chi Minh City. The proposed Pan-Asia Railway Network extending from Kunming, China to Bangkok, Thailand passes through Vietnam and Cambodia. This rail line is the backbone of China-Indochina Peninsular Economic Corridor (CIPEC).
The Vietnam National High Speed Train is expected to connect Hanoi with Ho Chi Minh City. It was planned, halted and reconsidered.
The Vietnam economy has been developing rapidly since 1986 with the adoption of the “open door and integrating global market” policy and further rail cooperation between the two countries would provide a win-win situation.
Interestingly, for the past 30 years, Vietnam has maintained an annual economic growth of nearly 7% on average which has been termed as an economic miracle in the modern world by various international organizations like the IMF, World Bank and Asian Development Bank.
In 2018, Vietnam’s GDP was $US 224 billion, while the value of gross trade was $US 415 billion, accounting for 185% of GDP.
It suggests that Vietnam’s economy has been depending largely on production of export products and supply chain, logistics, and communications should be paid special attention by the Vietnamese government.
Thus BRI proposed projects will also play an important role in the further development of the Vietnam economy in the days to come.
Most recently, China and Vietnam agreed to further strengthen the development strategies and speed up cooperation under the BRI and the “Two Corridors and One Economic Circle” plan.
The China-Vietnam Initiative ”two corridors, one economic belt” (TCOB) had been proposed between the two countries’ border provinces and localities along the Tonkin Gulf in a series of areas such as trade, agriculture, industry, tourism, transport and communication.
The TCOB is around Vietnam’s Red River Delta and Tonkin Gulf, connecting North Vietnam and three Chinese provinces (Yunnan, Guangxi and Hainan). TCOB directly links MSR while it connects SREB through Yunnan Province.
Thus the “Two Corridors and One Economic Circle” plan is an initiative to boost regional economic cooperation between China and Vietnam.
It involves a number of areas in southern and south-western China and northern Vietnam.
The agreement was reached at the 14th Meeting of the China-Vietnam Steering Committee for Bilateral Cooperation in Nanning.
The Chinese State Councillor and Foreign Minister Wang Yi and Vietnamese Standing Deputy Prime Minister Pham Binh Minh co-chaired the meeting.
BRI was proposed by China in 2013, it comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
It aims to build trade and infrastructure networks connecting Asia with Europe and Africa along and beyond the ancient Silk Road routes.
The Chinese Foreign Minister Wang said China and Vietnam should carry on their special friendship, consolidate solidarity and mutual trust, and deepen mutually beneficial cooperation, so as to serve the development of the two countries and make greater contribution to peace, stability and prosperity in the region.
He suggested that the two countries should upgrade economic and trade cooperation and strengthen cooperation in fields such as climate change, green development, photovoltaics and clean energy.
The Vietnam Foreign Minister Minh said the two countries are socialist brothers and friendly neighbours, adding that they are also comprehensive strategic cooperative partners.
Vietnam regards its relations with China as a top priority in its foreign policy. He assured that Vietnam stands ready to enhance high-level exchanges between the two countries, consolidate their strategic mutual trust and promote bilateral cooperation in various fields.
The Chinese Foreign Minister Wang called on the two sides to be committed to the path of socialism and the development of China-Vietnam friendship, safeguard the common strategic interests of the two countries, and jointly address regional and global challenges.
The two sides agreed to properly handle sensitive issues at sea and strive for more tangible outcomes in maritime cooperation.
The two countries also agreed to strengthen solidarity and coordination in regional and international affairs and uphold true multilateralism.
The two sides signed an agreement on economic and technological cooperation as well as documents on agricultural, marine environmental and maritime cooperation.
World Bank economic update (2022) indicated that Vietnam’s economic recovery accelerated over the last six months because of resilient manufacturing and a robust rebound in services.
Its GDP growth is estimated to surge from an estimated 2.6% in 2021 to 7.5% in 2022, while inflation is projected to average 3.8% over the year.
To conclude, the policy makers of Vietnam need to increase productivity by 2-3% every year. Thus investment in higher education may be fruitful. It would be an X-factor to boost Vietnam’s productivity and help achieve its goal of becoming an upper-middle-income country by 2035 and high-income country by 2045.
Moreover, critical analysis confirms that Vietnam stands to benefit from China’s BRI due to its growing demand for infrastructure investments to fuel the country’s growth.
On the other hand, Vietnam is facing challenges in meeting this demand because of the decreased inflow of official development assistance following its attainment of the middle-income country status in 2009, difficulties in promoting Public-Private Partnership projects due to tightening financial and legal regulations, and limited state funded investment due to budgetary constraints.
Based on one estimate, Vietnam’s infrastructure needs (in terms of road, rail, airports, ports, telecoms, electricity and water) would reach a staggering US$605 billion from 2016 to 2040. It will need to actively seek different sources of funding including from the BRI.
Vietnamese President Tran Dai Quang welcomed the BRI when he attended the Belt and Road Forum in Beijing in May 2017 also emphasized that cooperation under the initiative must ensure “sustainability, effectiveness and inclusiveness, openness, mutual respect and benefits, and compliance with the UN Charter and international law”.
For the strengthening of bilateral relations and expanding of the BRI orbit both countries should cooperate in the development of renewables, green energies, maritime trade, logistics, transportation system and last but not least, higher education, health capacity building.
Sensitive issues pertaining to regional security, South China Sea, Oil Rigging and One China Principle should be mutually settled because Hanoi has already endorsed One China Principle in case of Taiwan.