As President Joe Biden visits Hanoi in a week, the United States plans to upgrade its diplomatic ties with its erstwhile enemy Vietnam, a decision that may irritate China and have uncertain commercial ramifications. Vietnam had initially expressed hesitation over the upgrade out of concern for the possible response from its much larger neighbor.
The Biden administration increased its attempts to persuade the country of Southeast Asia as a result, including through numerous visits by senior U.S. government officials in recent months. Washington anticipates being promoted from two notches below Vietnam’s current diplomatic rating to the first tier, alongside China and Russia, as a result of the unprecedented drive.
Biden stated it in a public forum in July, and since then, officials from both nations have formally voiced hope about the two-step upgrade, though neither government has made an official announcement.
Vietnam is talking about high-level visits to Hanoi following or even before Biden’s arrival on September 10, maybe in an effort to appease Beijing. According to officials, Chinese President Xi Jinping and Prime Minister Li Qiang may meet with Vietnamese leaders in the upcoming days or weeks.
Although there is still a chance that a double upgrade with Washington won’t be well received in Beijing, Le Hong Hiep, a senior fellow at Singapore’s Iseas-Yusof Ishak Institute, suggested that Vietnam’s communist leaders may have decided that this is the best time to make the move because U.S. relations with China are “likely to get worse in the future,”
US-Vietnam Trade Relations
According to Alexander Vuving of the Hawaii-based Inouye Asia-Pacific Center for Security Studies, “Vietnam’s economy badly needs a boost in capital, technology, and market access,” suggesting that this may have been a major factor in the potential upgrade.
Although an increase in U.S. military aid to Hanoi has long been contemplated, Hiep added that since these negotiations take time, no imminent agreement is anticipated.
In the meantime, Vietnam has recently had numerous high-level defense discussions with top Russian officials while also negotiating with a number of other nations to improve and extend its arsenal, which is primarily built in Russia.
Washington also offers incentives to encourage Vietnam to develop into a centre for the semiconductor industry, although the public monies made so far under the CHIPS Act are quite small.
Although administrative and finance delays are dampening the atmosphere, collaboration in the energy industry may expand as Vietnam gets ready to participate in offshore wind and LNG. The improvement in relations is anticipated to support U.S. companies’ objectives in Vietnam. According to persons familiar with the planning, announcements from Boeing and AES, an energy company, may be made during Biden’s visit.
The businesses did not immediately respond. According to Thanh from the US-ASEAN Business Council, the US is already Vietnam’s biggest export market, and US customs procedures might be streamlined to increase trade.