Oct. 14 – Chinese Premier Li Keqiang, holding a press conference with Vietnamese Premier Nguyen Tan Dung, said that “the relationship between China and Vietnam has made substantial progress.” He further noted that the two sides have “made a breakthrough in bilateral cooperation” after pledging to set up three joint work groups to advance maritime, onshore and financial cooperation.
In China’s most recent tour of Southeast Asia, the Vietnam trip has always been the most awkward as both nations are enmeshed in a serious dispute concerning sovereignty issues in the South China Sea. Additionally, China did not include the Philippines in its recent tour due to similar territorial issues. The Philippines has taken China to a United Nations Maritime Arbitration Panel, with China responding by uninviting the Philippines President to a China-ASEAN event held in Nanning last month. Both the Philippines and Vietnam are members of ASEAN, while China is not.
Most recently in Hanoi, however, Chinese Premier Li stated that he and Prime Minister Dung had reached broad consensus and achieved fruitful results on deepening China-Vietnam cooperation in various areas, seeking to “continue to enhance political mutual trust, maintain high-level exchanges, maximize common interests and minimize divergences, and safeguard peace and stability of the South China Sea.”
Li also suggested for China and Vietnam to look at achieving “substantial maritime progress” within the year in their joint development in waters close to the Beibu Bay, calling for both countries to study the possibilities of joint development of a wider area of the sea. Li suggested that this would demonstrate that both China and Vietnam are able to surpass their disputes to safeguard peace within the South China Sea and to expand their bilateral interests.
However, the Vietnam visit has not yet yielded the significant infrastructure investment benefits that China was part of in Malaysia, Indonesia and Thailand. This may indicate that in order to increase investment from China into Asia, ASEAN nations need to give up claims on areas of the South China Sea or risk financial isolation.
The Philippines share of investment into the country from China is about 30 percent of the amount that Malaysia receives in relation to the size of their economies. China is Vietnam’s second largest trading partner after the United States, while bilateral trade still remains relatively modest at about US$25 billion. Vietnam has a key geographical advantage over China as the border between the two countries remains China’s easiest access point to markets elsewhere in Southeast Asia and ASEAN. China needs Vietnam’s cooperation over the development of high speed rail links from Yunnan down into Southeast Asia, and it remains unlikely Vietnam will countenance this unless disputes over the South China Sea are settled.
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