Artyom Lukin

January 12, 2015

"In 2014 Vietnam has expanded and deepened its col­laboration with major powers such as India, Japan, and the United States. Vietnam has also continued its active participation in the Association of Southeast Asian Na­tions (ASEAN). Also notable is Vietnam's engagement in the Asia-Europe Meeting (ASEM). The only prominent relationship in which Vietnam encountered significant problems was with China. In fact, the tension relating to China's dispatch of a drilling rig to areas to the west of the contested Paracel archipelago in the beginning of May this year was the deepest and also longest period of tension in their bilateral relations since the 1990s. The crisis and related tension only subsided after China announced the withdrawal of the rig in mid-July.

Drilling Rig Incident and its Aftermath

The crisis and tensions related to the drilling rig attracted regional and international attention with the United States and Japan criticizing China. Regionally Vietnam turned to ASEAN, but did not request or expect ASEAN to publicly criticize China. This was reflected in the official ASEAN position on the matter. Among individual ASEAN mem­bers the Philippines-with its own problems with China in the South China Sea-was the most vocal in support­ing Vietnam. Vietnam both presented and interpreted the international reaction as largely sympathetic to its stand in the dispute with China. Less positive for Vietnam were the riots targeting foreign companies in central and southern Vietnam; they were widely presented as anti-China, but mainly affected factories operated by Japanese, Singapo­rean, South Korean, and Taiwanese investors. The riots not only had a further negative impact on relations with China, but also created negative reactions from other af­fected counties such as Singapore. The longer-term impact on Vietnam's capacity to attract foreign direct investment (FDI) from other countries in East and Southeast Asia remains uncertain. Given that the main countries of ori­gin for FDI in Vietnam are from these regions, a decline in FDI would be a worrisome development for Vietnam. Interestingly, despite the riots, investment from China to Vietnam increased in 2014 according to figures released in early December."

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