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| World Marketplace |
Forever Red
Tuong Vu
12/01/2005
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Last January, in a brutal and diplomatically inflammatory incident largely
overlooked by the Western media, members of the Chinese coast guard operating in
the Gulf of Tonkin shot nine Vietnamese fishermen to death and took eight others
into custody. Initially, the governments of both Vietnam and China were
strangely silent on this matter. Only after a Vietnamese newspaper broke the
story, which resulted in angry denunciations of China and fiery, nationalistic
calls for protest, did Hanoi lodge a formal diplomatic complaint—a full six days
after the incident occurred. Beijing responded by claiming the fishermen were
pirates.
Arrests of foreign fishermen for violating territorial waters are
fairly common in this fiercely contested maritime region, but for many years
actual bloodshed has been rare. Despite a history of animosity that dates back
to the first century, Vietnam and China have recently cooperated on numerous
fronts. What really happened on that January day may never be known, but this
violent clash between two communist nations indicates that their
relationship—which has evolved from one of historic bellicosity to one of
regional, if competitive, economic promise—is still fraught with danger.
Despite Vietnam’s desire to share in its northern neighbor’s meteoric
economic growth, this incident revived among some Vietnamese a long-held
pessimism about prospects for lasting peace and prosperity in the region in
general, and in Vietnam in particular. They increasingly question their
country’s future in China’s growing sphere of economic influence. Still others
optimistically believe that the ruling Vietnamese Communist Party (VCP) may now
be forced to push for closer ties with another traditional foe (and Vietnam’s
largest trading partner)—the United States—in the hope that America’s markets
and military could serve as a buffer against Beijing’s unpredictability.
TOP VIEW
Widely considered the next Asian economic tiger, Vietnam has undergone a
remarkable transformation since the mid-1980s. Each year, its low-wage,
export-driven economy attracts large amounts of foreign investment. Yet, despite
its tremendous potential, progress is dampened by a communist government that
puts its political survival ahead of much-needed reform. |
Yet
the leadership of this war-weary nation, like that of China, remains communist,
and almost reflexively suspicious of America and its global economic and
political agendas. Though it has instituted far-reaching economic reforms that
have transformed the nation, the VCP remains fundamentally true to its socialist
origins. Consequently, today Vietnam—widely regarded as the next Asian economic
tiger—finds itself in the odd position of limiting its own economic potential to
ensure the political survival of its rulers.
For their part, the Vietnamese
people have shown they are much more interested in making money than playing
politics. Since the mid-1980s, Vietnam has achieved remarkable success in
reforming its socialistic economy. Annual economic growth has averaged more than
7 percent since the mid-1990s, and its gross domestic product has reached $227
billion. Annual exports have risen from a few hundred million in the early 1990s
to $24 billion. Foreign direct investment since 1988 has exceeded $45 billion
with companies from Singapore, Taiwan, Japan and South Korea topping the list of
investors.
Within a few years of dismantling agricultural collectivization,
Vietnam had become the world’s second largest exporter of rice and coffee. The
country has a large domestic market of more than 83 million people; its
population is relatively young and its literacy rate tops 90 percent. Labor
costs are among the lowest in the world. Furthermore, Vietnam holds a distinct
geographic advantage over many other developing nations: It is surrounded by the
fast-growing economies of China, Taiwan, Singapore, Thailand, Malaysia and
India.
While these economic statistics are impressive, they cannot obscure
the fact that Vietnam’s economy also bears many typical features of an
underdeveloped country. While export growth has been impressive, crude oil, textile and footwear
products account for only about half of all exports. The rest are mostly
unprocessed, low-quality agricultural products subject to unpredictable weather
changes and fluctuations in the global markets. And though cheap labor has
attracted armies of foreign investors to Vietnam, it remains to be seen if the
country can produce more technologically complex or value-added goods.
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