CONFIDENTIAL

VIETNAM’S RELATIONS WITH CHINA AND NORTH KOREA:

THE NEXT FIVE YEARS (2010-2015)

Carlyle A. Thayer∗

This report presents a forward-looking analysis of likely Vietnamese foreign policy

initiatives towards China and North Korea over the next five years. It explores two major
questions. What is Hanoi seeking to gain from diplomatic, military and economic
exchanges with Beijing and Pyongyang? What sort of influence does China and North
Korea assert over Vietnam?

Background
In January 1950, both the People’s Republic of China and the Democratic People’s

Republic of Korea extended diplomatic recognition to Vietnam’s fledgling communist

regime, the Democratic Republic of Vietnam (later renamed the Socialist Republic of

Vietnam). China supported the Vietnamese communists in their successful resistance to

French colonialism. Relations were described “as close as lips and teeth.” Both China

and North Korea provided material and personnel support to North Vietnam during the

Vietnam War (1965-73).

Hanoi’s relations with Beijing, and to a lesser extent Pyongyang, deteriorated during the

Cambodian conflict (1979-91). When Vietnam invaded Cambodia China retaliated by

attacking Vietnam and providing military support to the Khmer Rouge. North Korea

provided a sanctuary to Cambodia’s Prince Norodom Sihanouk.

∗ Completed March 23, 2010 for anonymous client.

CONFIDENTIAL

Vietnam and China normalized diplomatic relations in 1991 after an international

conference in Paris reached a comprehensive political settlement in Cambodia. In March

1999, a summit meeting of the leaders of the Chinese Communist Party and the

Communist Party of Vietnam (CPV) adopted a fourteen-character guideline calling for

“long-term, stable, future-orientated, good-neighborly and all-round cooperative

relations.” The following year at a summit meeting of state presidents, China and

Vietnam codified bilateral relations in a Joint Statement for Comprehensive Cooperation

in the New Century. This document served as a framework for long-term state-to-state

relations.

In 2006, Vietnam and China agreed to coordinate all aspects of their bilateral

relationship through a Joint Steering Committee on Bilateral Cooperation that meets on

an annual basis at deputy prime minister level. In June 2008, following another summit

of party leaders in Beijing, bilateral relations were raised to that of “strategic partners,”

and a year later this was upgraded to a “strategic cooperative partnership.” At the third

meeting of the Joint Steering Committee in March 2009, Vietnam and China set up a hot

line to deal with urgent issues (particularly clashes in the South China Sea).

In sum, Sino-Vietnamese relations have been structured through the framework of a

long-term cooperation agreement, a Joint Steering Committee on Bilateral Cooperation,

and regular high-level summit meetings between party and state leaders. This has

resulted in a dense network of agreements between party, state, military and mass
 3

organizations at all levels. In 2009, Vietnam and China exchanged 267 delegations of

which 108 were at deputy minister level or higher.

Vietnam’s relations with North Korea pale by comparison. In 1958, Ho Chi Minh and Kim

Il Sung paid reciprocal visits marking the high-point in bilateral relations. In 1989, the

two countries set up an Intergovernmental Committee on Economic, Scientific and

Technological Cooperation. It met annually for the first three years and then went into

hibernation for a decade as North Korea reacted negatively to the warming of Vietnam’s

relations with South Korea and the establishment of diplomatic relations in 1992. No

high-level delegations between Vietnam and North Korea were exchanged for eight

years.

In 2000, North Korea resumed high-level diplomatic contacts with Vietnam by sending

its foreign minister to Hanoi. The Intergovernmental Committee was revived and held its

fourth meeting in October 2001. The following year Vietnam’s state president, Tran Duc

Luong, visited Pyongyang and signed six cooperation agreements. The fifth, and most

recent, meeting of the Intergovernmental Committee was held in November 2003.

Bilateral relations have continued their slow upward trajectory; in 2007 Vietnam’s party

Secretary General, Nong Duc Manh, and Deputy Prime Minister/Foreign Minister, Pham

Gia Khiem, visited North Korea. North Korea’s Deputy Prime Minister journeyed to

Hanoi. In 2008 it was anticipated that Kim Jong Il would visit Vietnam to mark the 50th

anniversary of his father’s first trip to Hanoi. But no such visit eventuated.
 4

Vietnam and China

The relationship between Vietnam and China is a highly asymmetric one in all

dimensions of power. Vietnam, with a population of 89 million, ranks as the world’s

thirteenth most populous country, yet it is only a middle sized Chinese province by

comparison. The major strategic preoccupation of the Vietnamese leadership is how to

use the levers of diplomacy, military ties and economic relations to maintain their

autonomy and independence and prevent from being pulled into China’s orbit.

Vietnam uses high-level party and state visits as a diplomatic tool to codify its relations

with China. Vietnam has negotiated a web of joint statements, agreements, and

treaties in order to make Chinese behavior more predictable and less likely to harm

Vietnam’s national interests.

Vietnam has built on the normalization of political relations through a diplomatic

strategy that stresses the legacy of past close relations and mutual benefit over

contemporary differences. A prime example may be found in Vietnam’s approach to

managing territorial disputes with China. Vietnam obtained Chinese agreement to

detach these issues from high-level consideration and to relegate them to technical

working groups, and to solve the easier problems before the more difficult. Vietnam’s

diplomatic strategy emphasized common interests, such as making the land border safe

and secure so that both sides could benefit from cross-border trade. As a result a treaty

on the land border and agreement demarcating the Gulf of Tonkin were reached.
 5

Over the next five years Vietnam will set a priority on ensuring that its territorial

conflicts with China in the South China Sea are kept peaceful and that a modus vivendi is

worked out to jointly exploit the resources of the Gulf of Tonkin and the South China

Sea. Vietnam will rely primarily on diplomacy, but it will also back this up with enhanced

maritime defense capabilities.

Vietnam will pursue three strategies. First, it will continue bilateral negotiations with

China to conclude an agreement on the principles to govern their actions in contested

waters. Discussions are already in train. Once agreement is reached Vietnam will

explore with China the possibilities of joint development in less sensitive areas.

Vietnam’s second strategy will be to promote multilateral efforts to maintain peace and

stability in the South China Sea. Vietnam will seek to involve other foreign companies in

joint development in order to ensure that their home governments have a continuing

interest in stability in this region. The challenge for Vietnam will be to work out how

much foreign involvement China will tolerate. Vietnam will also seek to upgrade

ASEAN’s 2002 Declaration on Conduct of Parties in the South China Sea into a more

binding Code of Conduct. As ASEAN Chair in 2010 Vietnam has a window of opportunity

to promote an ASEAN-China Code of Conduct in the South China Sea.

Vietnam’s third strategy will be to develop sufficient military capacity to deter China

from using force. For example, Vietnam will take delivery of six Kilo-class submarines

from Russia over a six-year period. Vietnam will also develop integrated or joint air naval

forces and command headquarters. This is a defensive strategy aimed at area denial.
 6

Vietnam’s military relations with China are at a nascent stage. Over the next five years

Vietnam will seek to gradually expand defense cooperation for political and practical

reasons. Vietnam will seek enhanced military ties with China as a form of confidence

building, but also as a means to develop influence with the People’s Liberation Army, an

important actor in China’s political system. Confidence building measures will take the

form of border security cooperation in remote areas, increased naval port visits,1 search

and rescue exercises and stepped up joint naval patrols to protect fisheries in the Gulf of

Tonkin and later the South China Sea.

On the practical side, Vietnam will seek to build on recent agreements to expand

training exchanges at all levels and to promote cooperation by national defense

industries in military technology, light arms and ammunition production. Vietnam will

seek material benefits from defense cooperation; but will use military relations with

China as “political cover” for enhanced military ties with the United States. Vietnam will

also seek to shape its defense relations with China through multilateral channels such as

the Association of Southeast Asian Nations (ASEAN) Regional Forum and the ASEAN

Defense Ministers Meeting with dialogue partners. This process has just got off the

ground and Vietnam, as ASEAN Chair for 2010, is planning to host its first meeting.

When Vietnam normalized relations with China smuggling became a major issue as

Chinese goods flooded into Vietnam’s domestic market. The opening of the land frontier

quickly led to increased cross-border trade and greater autonomy for local government

1Since normalization in 1991, the People’s Liberation Army-Navy has made only three port calls to
Vietnam, and the Vietnamese navy has visited China only once.
 7

authorities. Regularizing trade with China has served to reinforce Hanoi’s authority over

the localities. Since 1991, trade between China and Vietnam has grown astronomically.

China is now Vietnam’s largest trading partner. China supplies Vietnam with machinery,

refined oil and steel. In return, Vietnam supplies China with unrefined oil, coal and

rubber. The single most important issue in the trade relationship is the imbalance in

China’s favor ($11.1 billion in 2008). In 2008, China exported $15.7 billion worth of

goods to Vietnam, while Vietnam managed to export only $4.6 billion to China.

China’s trade surplus has figured at every high-level summit in recent years. Party and

state leaders agree that efforts should be make to make it more balanced; but how?

Restricting Chinese imports is not on the cards. The structure of Vietnamese exports has

changed little over the years and no major change is expected in the coming years.

Vietnamese domestic manufacturers cannot produce quality goods that are competitive

in the Chinese market place. Vietnamese leaders have called for increased Chinese

investment; although China has responded the total amount of investment ($3 billion) is

modest when compared to other foreign investors.

Future trade between China and Vietnam will be influenced by the ASEAN-China Free

Trade Agreement that took effect in January 2010. Chinese tariffs will be lowered

making it easier for Vietnam to sell its goods in China. And Vietnam will also be able to

take part in a regional division of labor by producing components for assembly

elsewhere within the free trade area. For Vietnam to fully take advantage of these trade
 8

opportunities it will have to get its domestic house in order and make Vietnamese

businesses more competitive in the Chinese market.

Vietnam’s massive trade deficit with China must be placed in the context of Vietnam’s

current trade deficit of $19 billion with the rest of the world (2009). Vietnam needs

continued access to markets in the United States where it has a $9 billion surplus (2009).

In addition to the economic benefits of trade, there are also geo-strategic

considerations at play. The growth of trade has been accompanied by a massive

upgrading and construction of infrastructure – roads, bridges, railways – much of it

funded by the Asian Development Bank and World Bank as part of the Greater Mekong

Sub-region. Increasingly mainland Southeast Asia is being linked to southwestern China.

In addition, Vietnam and China are promoting the development of the “two corridors

and one economic beltway” linking southern China, Hainan island and northern

Vietnam. From Hanoi’s point of view, this not only serves Vietnam’s development

needs, but also enmeshes China and provides Beijing incentives for cooperative

behavior.

Vietnam utilizes diplomatic, military and economic means to achieve the strategic

objective of obtaining China’s acknowledgment of Vietnam’s independence and

autonomy in return for which Vietnam recognizes China’s regional primacy.

Vietnam and North Korea

Vietnam’s diplomacy towards North Korea is guided by its foreign policy principle of

becoming a “friend and credible partner of all nations in the international community.”
 9

North Korea’s failed economy and status as a rogue nation presents opportunities for

Vietnamese diplomacy. Vietnam supported North Korea’s membership in the ASEAN

Regional Forum and later sponsored North Korean-Japanese reconciliation talks. Over

the next five years, when the occasion arises, Vietnam can be expected to play a

constructive role in encouraging North Korea to come out of its self-imposed isolation.

Hanoi will quietly counsel Pyongyang and will also consider sympathetically third party

requests to use its good offices as a diplomatic go between.

In the 1990s North Korea’s famine conditions presented Vietnam with the opportunity

to engage in barter trade. In 1996 this resulted in a rice-for-weapons swap. Vietnam

acquired Igla (SA-16 Gimlet) portable air defense missiles, two Yugo-class mini

submarines and a small number of Scud C ballistic missiles. Defense relations then went

into the doldrums for six years before they were renewed. Currently the development

of certain defense ties is restricted by UN sanctions against North Korea. Vietnam

supported these sanctions and can be expected to fully observe them. While future rice-

for-weapons barter agreements cannot be ruled out, Vietnam will be extraordinarily

circumspect and attentive to international reactions before proceeding.

Vietnam and North Korea have never had a robust trade relationship. Two-way trade

has probably never exceeded $30 million in value in any one year. Vietnam has sold rice

in the past but the relationship soured in 1997 in a dispute over terms of payment.

North Korea even rejected emergency aid from Vietnam in response to domestic

famine. Because North Korea lacks hard currency barter agreements are likely. The
 10

most promising avenue for future relations lies in Vietnam’s status as a role model for

economic development under a one-party system. In past years North Korea has sent

study missions to Vietnam to see how Vietnam’s economic success was achieved.

Vietnam will definitely be opened to similar approaches in the future, but progress is

contingent on North Korea’s willingness.

China and Vietnam

China asserts considerable direct and indirect influence on Vietnam. Probably no major

decision of any nature is made in Hanoi without taking Chinese interests and likely

responses into account. China exerts direct pressure through high-level meetings by

national leaders. Party-to-party relations represent a special conduit for Chinese

influence. Vietnam’s model of economic development borrows heavily but not

exclusively from Chinese experience. Vietnamese foreign policy also mimics Chinese

formulations, such as the general strategic trend in Asia Pacific is one of “peace,

cooperation and development.” Hanoi also adapts Chinese ideology to its own needs,

such as “the threat of peaceful evolution.” Entire Chinese books on the subject have

been translated into Vietnamese and made compulsory reading for Central Committee

members and delegates to national party congresses. The slow pace of U.S.-Vietnam

military-to-military relations can be attributed in part to concerns about China’s

reaction. The 2009 Defense White paper makes no mention of the 1979 border war with

China so as not to offend Beijing. The Chinese Embassy regularly intervenes to protest

any publication or action that is seen as infringing Chinese sovereignty, especially in the

South China Sea. No other foreign state is as assertive or influential in Hanoi as China.
 11

North Korea and Vietnam

In contrast, North Korea asserts what might be termed “negative influence” in its

relations with Vietnam. It can oppose and block bilateral cooperation but little else.

Vietnam is privately disdainful of North Korea’s cult of personality and failed model of

juche. North Korea must play the role of suitor for the relationship to advance.

Vietnam-North Korea Relations

 12

‘Guns for Rice’ 1990s

Top right: Igla (SA-16

Gimlet) portable air
defence missile,
Yugo-class mini-
submarnie and Scud
C ballistic missile

DPRK Foreign Minister

 13

North Korean Refugee Issue

In July 2004, 468 North Korean refugees were airlifted to South Korea in the single
largest mass defection; Vietnam initially tried to keep their role in the airlift secret, and
in advance of the deal, even anonymous sources in the South Korean government would
only tell reporters that the defectors came from "an unidentified Asian country".[19]
Following the airlift, Vietnam tightened border controls and deported several safehouse
operators.[