Forging a Response

Oil Rig
Chinese warships arrive to guard the 981  oil rig in the South China Sea, adding more fuel to the fire. Source: wantchinatimes.org via Xinhua, June 2014

Home to strategic military bases, vital trade routes, and valuable natural resources, the South China Sea represents some of the most sought after territory in the world. In terms of trade, about a third of global crude oil traffic and half of global natural gas exports travel through the South China Sea each year [1]. In comparison, the annual tanker traffic of the Suez Canal, which is bordered by Egypt, Yemen, Somalia and Saudi Arabia, carries only a third of that volume. Given the South China Sea’s strategic value, the countries around it—which include China, Taiwan, Vietnam, The Philippines, Malaysia, Brunei, and Indonesia—all lay large and competing claims to it. China’s economic rise has further complicated this territorial dispute because as they look to increasingly assert themselves in the region, their actions draw in unwanted attention from outside powers like India, Russia, and the United States.

In the midst of this international quarrel, Vietnam has found itself trying to oppose China’s claims to the South China Sea without overly antagonizing Beijing—a hard balancing act to maintain. This summer, Vietnam’s resolve to resist China was tested when Beijing deployed an oilrig 130 miles off of Vietnam’s coast in disputed territory. This move triggered massive public unrest in Vietnam and reignited tensions between the two nations, which have simmered since the late 1970s when the two nations last went to war. Despite Vietnam’s attempts to resolve this issue through diplomatic channels, China refused to budge. As General Fang Fenghui, Chief of Staff of the People’s Liberation Army, stated, China “cannot afford to lose an inch” when it comes to territorial issues [2]. China’s response drew contempt in Vietnam and pushed Hanoi to file a suit against China’s actions at the United Nations. The dispute abated when China removed the exploratory oilrig, but future conflicts may not be as easy to resolve.

Given the strategic value of the South China Sea, another conflict over economic resources and sovereignty is bound to arise and the time has come for Vietnam to craft a response. There are two approaches that a country in Vietnam’s position can take: either actively try to restrain Beijing’s expansion into the South China Sea or acquiesce to China’s claims of sovereignty. Under the first scenario, Vietnam risks escalating tensions with a nation they have extensive trade with and are militarily inferior to. In the second, they would lose valuable energy resources, cede control of key trade routes, and would have to swallow a significant amount of national pride. Given these possibilities, Vietnam has chosen to actively deter Chinese expansion in the South China Sea by creating strategic economic and military partnerships with countries like Russia and India.

On the economic front, Vietnam has witnessed tremendous economic growth since it started adopting market based reforms in the late 1980s. Since then, the percentage of its population living in extreme poverty, as calculated by the World Bank, has fallen from about 60% to 20% [3]. Over that same period, Vietnam’s per capita GDP has more than tripled [4]. Vietnam has achieved such rapid growth by creating extensive trade relationships with other nations. In fact, exports account for 80% of the country’s GDP [5]. Vietnam has also become more integrated in the world economy, joining the Association of Southeast Asian Nations (ASEAN) in 1995 and the World Trade Organization (WTO) in 2007. Vietnam’s economic growth has made it more willing and more capable of asserting its interests against a nation like China.

However, Vietnam must consider the economic risks of escalating future tensions with China. If increased tension between the two nations arose, China would likely sever critical exports to Vietnam and decrease their imports from the country. Some fear Vietnam could not afford these losses, but these worries seem overblown. As David Brown writes for Foreign Affairs, most of the trade between the two countries “is not only roughly balanced, but both countries can also readily find other markets” for the goods they are trading. The only real harm Vietnam may experience could be in the areas of electronic parts, textiles and shoe parts, which they import from China. It could take Vietnam a year or two to find new markets to import these goods, if China completely cut off the pre-existing supply lines. Nonetheless, these economic risks are not without their remedies. The Trans Pacific Partnership, between the United States, Vietnam and ten other countries, offers the potential to increase Vietnam’s exports by a third if the pact goes through [6]. Thus, Vietnam’s other economic ties may be enough to offset any potential losses from severed trade with China.

Perhaps even more significantly, Vietnam’s economic partnerships with other nations have in some cases turned into comprehensive partnerships – namely with Russia and India. Through these relationships, Vietnam has gained access to advanced military equipment, which they plan to use as part of an anti-access/area denial (A2/AD) strategy against China. At the center of Vietnam’s strategy are six Kilo-Class Submarines that the nation purchased from Russia in 2009. If deployed successfully, these submarines would help deny Chinese control of waters Vietnam also lays claim to. While it may seem hard to believe a country like Vietnam could deter a military giant like China, this strategy may actually be very effective at countering China’s current naval policy. Right now, Beijing’s primary naval force is built to defend against countries like Japan and the United States. This means they are actually rather ill suited to conducting offensive maneuvers against a country that employs a submarine enforced anti-access/area denial strategy [7]. Therefore, this strategy may allow Vietnam to deter future Chinese incursions, like the one last summer.

Vietnam has also looked to India in its attempts to bolster its military and economic growth. In 2013, India extended a $100 million (USD) line of credit to Vietnam for the purchase of patrol vessels from India [8]. Vietnam will likely use these vessels in conjunction with its new submarine armada to assert its own territorial claims in the South China Sea over China’s. The only issue with Vietnam’s relationship with India is that in the past, India has been loath to provoke China given the extensive trade relationship between the two. However, India’s desire to increase its economic engagement with ASEAN nations and China’s increasingly friendly relationship with Pakistan might open the door for stronger relations between Vietnam and India.

In the face of a perceived maritime threat from China, Vietnam has greatly expanded its military capacity and forged strategic partnerships with powerful nations. This raises many questions for China and other regional and international actors. The South China Sea could easily become the stage of a major clash between some of the most powerful nations of the 21st century. Whether this clash will escalate militarily or manifest itself through a series of smaller diplomatic disputes remains unclear, but in the middle of this clash sits countries like Vietnam. How these relatively small Southeast Asian nations react to China’s economic and military rise thus has major implications for the rest of the world. Who these countries will eventually align themselves with is unclear, but for Vietnam, the choice appears to have been made and its resistance to China’s rise has only just begun.