In the image
Bamboo trunks and the flag of the Socialist Republic of Vietnam
EXECUTIVE SUMMARY
As tensions increase in the Indo-Pacific region, Vietnam navigates between an assertive China and a strategically engaged US to safeguard its stability, independence and ensure its own economic development. Leveraging its strategic location and economic potential, Vietnam plays a key role in shaping regional dynamics and spearheading the ASEAN way.
Regarding its foreign policy, Vietnam's most probable course of action remains walking a fine line between the two powers, maintaining strategic autonomy while benefiting from both relations. Despite rising US-China tensions, an overt shift toward one side remains impractical. Its Bamboo Diplomacy and Four No's policy will guide its hedging strategy, allowing deeper defense ties without fundamentally changing its policy stance. Regarding Taiwan, Vietnam is likely to maintain its independent stance -cooperating in trade, education and healthcare- while adhering to the One-China Policy. In a Taiwan crisis, Vietnam is likely to take a cautious and balanced approach that seeks to protect its national interests while maintaining its long-held policy positions.
Moreover, Vietnamese leaders view political stability as an essential precondition for economic development, and they are unwilling to accept any changes that could put the stability of the political system at risk. Thus, politically, certain reforms may be explored, but mainly to streamline economic openness and increase the efficiency of the political system, not to democratize it. In the coming decades, Hanoi will likely become a further liberalized economy, but, politically, it is unlikely to undergo a significant transformation.
Internationally, Vietnam is very likely to maintain close ties with Russia while diversifying its arms suppliers and ensuring its relations with Moscow do not jeopardize its partnership with the US. However, Russia's growing ties with China, reinforced by Western sanctions, limit its role as a strategic counterweight to Beijing for Vietnam. On the other hand, Vietnam-India strategic cooperation is likely to grow due to shared concerns over Chinese expansionism, but may be limited by India's regional security priorities.
Furthermore, Vietnam will not replace China as a manufacturing and technology hub in the short term due to its underdeveloped infrastructure, unskilled labor force and lack of established business practices. Instead, Vietnam is more likely to complement China, benefiting from the China-plus-one strategy, while it seeks to strengthen its underdeveloped sectors. However, sustainable development will allow Vietnam to eventually replace China in industries like textiles, electronics, and high-tech manufacturing.
Regarding its non-traditional security concerns in the Mekong Delta, Vietnam is unlikely to directly challenge China. Instead, Hanoi is likely to pursue a multifaceted strategy. In one scenario, Vietnam would intensify its engagement in multilateral frameworks to foster information sharing and equitable distribution of resources. Alternatively, Vietnam may turn away from a rice-centered agricultural model towards an adaptive approach.
Within a 2035-2040 time-frame, the dispute between China and Vietnam over the Spratly islands will continue to shape regional dynamics. The construction and prospective analysis of scenarios reveals that the dispute is not the cause but the consequence of tensions. For Vietnam, access to resources is crucial, making the continuation of the dispute strategically beneficial despite occasional but impactful skirmishes with China.
Regarding regional dynamics, whereas Vietnam did not enter ASEAN seeking to become a leader, its flexibility and pragmatism embody the values of the organization. The figure of Vietnam is expected to obtain an unsearched-for leadership in the short term thanks to the role it has undertaken as a hinge, seeking internal cohesion and representing ASEAN interests on the territorial disputes of the South China Sea as a direct claimant. These circumstances have allowed Vietnam to exert greater regional influence.
In the long term, Vietnamese borders are likely to be modified, be it by the tensions in the South China Sea, the incomplete borders' demarcation with Cambodia or the internationalization of an internal conflict. The first two are the most likely to occur, though only implying border modifications. The third one is rather a black swan that would stem from the aggravation of human rights violations leading to the disruption of national unity.
The CSPs with South Korea and Japan are recent frameworks for cooperation, deepening ties is still plausible in the medium term, particularly because of China's assertiveness. This is not the case with North Korea, with whom, despite holding ideological similarities, little would be gained in power terms. In sum, it is unlikely that Hanoi will abide by a formal alliance given that it could be interpreted as the establishment of a united front to counter China. This decision would imply losing the very well worked years of Bamboo Diplomacy and Four No's policy that have positioned Vietnam as a reliable partner and a potential Asian Tiger.