Vietnam is on the Upswing, but Needs to Keep the Momentum

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Vietnam's reform process will be slow, but it needs to keep moving.


As the Communist Party of Vietnam prepared for its five-year national congress, suspense built over who would take over the party’s helm. When the curtain was finally lifted on 25 January 2016, supporters of populist Prime Minister Nguyen Tan Dung were disappointed to find that conservative incumbent Nguyen Phu Trong had won a second term.

However, the sidelining of Dung, who has been accused of nepotism, cronyism and economic mismanagement, is unlikely to change the course of the party in the medium term. Reforms will continue, albeit at a slower pace, as will increasingly closer ties with the US.

The reason for the pro-Dung public sentiment is not hard to fathom. In a country where the masses have not ceased railing against China’s growing assertiveness in the South China Sea, leaders who explicitly confront Beijing are likely to win the public heart. When China dragged its oilrig into an area that Vietnam considers part of its exclusive economic zone in May 2014, Dung was outspoken against China’s territorial ambitions. He was also a visible champion of economic reforms and strategic alliances with other regional powers, particularly the US. These moves were apparently aimed at countering China’s economic clout.

Economically, Vietnam is on the upswing and remains a darling of the international business community. Economic growth notched a five-year high of 6.7 percent in 2015 with foreign investment peaking at US$14.5 billion. This is the context for Vietnam to grasp an incredible window of opportunity. First, it must deepen its commitment to reforms. Many seem to believe that if Dung could cling to power, reforms would move at a faster pace. Those in the pro-Dung camp also claim that Vietnam under the leadership of Trong, who is not only ideologically conservative but also cautious, is less poised to capitalise on of such opportunities.

But as Vietnam has taken the leadership-by-consensus approach to bread-and-butter issues, its economic and foreign policies will not fundamentally change. Dung being sidelined does not mean the new leadership will either shun reforms or kowtow to China. Dung’s critics have dismissed his anti-China rhetoric as political manoeuvring aimed at currying public favour, and they blame him for compounding Vietnam’s entrenched economic dependence on China. On the contrary, Trong’s sympathisers say he is not as soft on China as he may appear to be.

The bottom line is that Dung’s public support epitomises the desire of the masses to see Vietnam escape the Chinese orbit, paving the way for rapprochement with the US.

More than a thousand years of occupation and three deadly wars in the 1970s and 1980s provide the historic context for the deep-seeded anti-China sentiment in Vietnam. Given the longer periods of French colonialism and Chinese aggression against Vietnam, and given the US’s strategic importance in the world after 1975, it should come as no surprise that the Vietnamese people are ready to put the past behind them more quickly with the US.

Regardless of who is in power, Vietnamese leaders must take stock of increased political, economic and military ties with the US, possibly at the expense of relations with China. This poses major questions for both Vietnam and the US over the nature, and depth, of Vietnam–US ties.

Even though it has been 20 years since the normalisation of Vietnam-US diplomatic relations, lingering mistrust, disputes over human rights, and the US wartime legacy have all hampered bilateral ties. However, when President Barack Obama met Trong in July 2015, he spoke of moving beyond the ‘difficult history’ of the Vietnam War and joining forces to deter China, which is increasingly flexing its political and economic muscles in the region.

A week before the Communist Party Congress opened, Ted Osius, US ambassador to Vietnam, said that two events in 2015 demonstrated the relationship’s transformation — the landmark visit of Trong to Washington and the conclusion of negotiations for the Trans-Pacific Partnership (TPP), an ambitious US-led regional free trade agreement.

Vietnam has been gung-ho to join the TPP, and when the nation expressed interest several years ago, few thought they were serious or capable of making the necessary reforms. However, the trade agreement crystallises how far Vietnam’s leaders are willing to go to secure a deeper economic relationship with the US. No country had to do more to enter the TPP than Vietnam. Like the US, Vietnam sees the TPP as a strategic political instrument, not just a trade agreement.

A few in Vietnam still hold a grudge against the US and some feel that the US at least has an obligation to make war reparations. However, the vast majority believes that Vietnam will benefit from improved relations, in particular through trade and investment. This sentiment is amplified by the relative youth of the population, with most being born after the war.

Vietnam’s leadership, while authoritarian, can no longer ignore such public sentiment. The one-party state is increasingly accountable to the public and, through monitoring of social media, very aware of public sentiment.

Despite the jockeying for power that may have happened behind closed doors, Vietnam’s new leadership eventually appeared as a united front to the public. As the country’s reigning top leader, it would be unwise for Trong to dwell on savouring his ability to dispose of Dung. Instead, he should ponder on how his once archrival won the public heart: by standing up to China.

A window of opportunity for reforms in Vietnam is republished with permission from East Asia Forum

See also: Vietnam Hoping Function Follows Form