Transcript Dan Lemon -- Vietnam

Vietnam-Sino Relations
Dan Lemon
Overview
• China Rise on World Stage
– Political, Economic, and Military
• 20th Century—Vietnam fought wars with 3 of 5 Permanent
Members of United Nations Security Council
• Question: What is Vietnam’s Foreign Policy with respect to
China’s rise?
• History
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Over 2,000 year history
Chinese “ruled” Vietnam for over 1,000 years
Vietnam independence tenth Century
Fluctuates; eras of peace to conflict w/China
• Vietnam’s Economic Strategy 1970s to 2000
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Vietnam Economy 1970s
• Relied on the People’s Republic of China for economic
aid
– Weapons, infrastructure support & humanitarian assistance
– 1976 Launched Five Year Plan, China provided $1.3 billion
– Sino-Vietnam split over territorial disputes/Cambodia Issue
• Vietnam leans toward Soviet Union and Eastern Block
– $800 million in aid, adopted centrally planned economy
– Imported steel, oil, cotton, and fertilizer
• Economic Crises at the end of 1979
– Five Year Plan launched in 1976 goal was 14% Growth only .4%
– Wide-Spread Famine even though gov’t imported thousands of
tons of food
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Vietnam Economy 1980s
• Dependent of Soviet Union
– Over $2.5 billion
– Infrastructure Development, Oil and Coal for electricity
– State Owned Enterprises produce less 1980 - 1986
• Mid 1980s
– Garrison Force in Cambodia and Troops Station in North
Vietnam due to border tensions w/China drains resources
– Inflation in triple digits…700%, Unemployment 20%
– Economic aid 38% of state revenue—Soviet Union signs of
retrenchment diminish economic aid
• 1986 Doi Moi (Renovation Launched)
– Transition to market economy…took notice of Asian Tigers
– At the time internationally isolated, “Pariah” State
– Integrate with world economy, access to capital and markets
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Vietnam-Sino Economic Relations 1990s
• Re-established Diplomatic ties w/Beijing
– Adopt “Signal Left, but Turn Right” economic concept
– Trade w/China increases throughout 1990s
– $32 million in 1991 to $1.25 billion in 1999
• Problems: Chinese products saturate Vietnam markets
– China’s low cost products effects Vietnam’s infantile industries
– Trade embargo/smuggling
• Leads to a trade Imbalance of 4.7 to 1 (favor of China)
– “Economic Colonialism”
– Vietnam (similar to most ASEAN) exports primary products to
China and imports manufactured goods
– Need to diversify, too dependent on China
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Foreign Policy Relations 1990s
(con’t)
• Hanoi: What to do with Beijing’s Economic Clout?
• Omni directional foreign policy, economically motivated
– Tie itself into regional and global institutions to improve its
economy
– ASEAN membership, relations with U.S. and European Union
– U.S. drops trade embargo (in place since 1964), Vietnam access
to IMF and World Bank
– Trade with ASEAN and East Asia
• Adopt Laws to attract Foreign Direct Investment (1987)
– 1991, FDI from ASEAN $173 M
– 1994, FDI from ASEAN $1.4 B
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Vietnam Economic Diversification
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Vietnam Economic Diversification
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Vietnam FDI by Region
Source: World Bank, Vietnam Business Development Report 2006
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Vietnam Economic Diversification
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Vietnam Economic Diversification
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Vietnam Economic Diversification
Export Markets (2004)
Rank
Country/territory
Import Markets (2004)
Amount
Country/territory
Amount
1
United States
4,992.3
China
4,456.5
2
Japan
3,502.4
Taiwan
3,698.0
3
China
2,735.5
Singapore
3,618.5
4
Australia
1,821.7
Japan
3,552.6
5
Singapore
1,370.0
Korea
3,328.4
6
Germany
1,066.2
Thailand
1,858.1
7
Britain
1,011.4
Malaysia
1,214.7
8
Taiwan
905.9
United States
1,127.4
9
Korea
603.5
Hong Kong
1,074.7
10
Malaysia
601.1
Germany
694.3
11
Holland
581.8
Russia
671.2
12
France
557.0
Indonesia
662.7
13
Philippines
498.6
Switzerland
661.9
14
Thailand
491.0
France
617.0
15
Indonesia
446.6
India
593.5
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Vietnam Economic Diversification
Export Market Structure 2004
20.40%
49.40%
22%
7.00%
Asia
Africa
1.60%
Oceania
Am erica
Europe
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Vietnam Economic Future Outlook
• Alternative to China
– Cheaper wages…
– Japan FDI to Vietnam due to tensions w/China
• R&D for software and Outsourcing
– Japan, Europe and U.S.
– Panasonic, Cannon, and Intel
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Conclusion
• Vietnam Multi-Lateral Approach to Foreign
Policy is working
• Economic engagement with regional and
external powers strengthens its position vis a
vis China
• GDP Growth since 1990…8%
• Per Capital from $68.00 (1990) to $627 (2005)
• Problems: Corruption and Environmental
• Remains a poor country
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