Vietnam sits at a crossroad as China expands power and influence

Southeast Asian countries are striving to develop beneficial policies with China, but non-strategic relations could have serious implications.

Tuyen Tran
November 1, 2022
Vietnam sits at a crossroad as China expands power and influence
A motorist rides past a container truck along a road leading to the Vietnam-China border in Lang Son province. Photo: STR/AFP

In Vietnam, there’s a well known saying which goes, “Better a neighbour near, than a brother far off.” If a house caught on fire, neighbours could gather to provide assistance, but a distant brother would be too far away to help.

This expression is widely used to highlight the importance of fostering good relations with neighbours and to maintain peace. And when looking at Vietnam and China’s strained relations, the proverb holds wisdom.

China has become increasingly aggressive towards Vietnam in recent years, economically and militarily. Despite a common political ideology, China is using its financial prowess and economic might to compete with Vietnam in gaining influence with Cambodia and Laos. For China, it’s all about taking steps leading to more control over the Mekong River Basin.

As China continues to extend its influence on Laos and Cambodia with projects such as the Belt Road Forum, an international political and economic cooperation that provides an attractive financial support tool, the Asian superpower’s increasing influence is causing concerns for Vietnam.

If its neighbours side with China, Vietnam will be isolated around its land border, and vulnerable from a geopolitical perspective. The powerful communist country is also unafraid to signal to the international community that its military presence is increasing in strength.

Observers only need to look to the South China Sea dispute to understand China is an active military threat. Vietnam and China have long-standing commercial ties, but the territorial dispute has strained their complex relationship.

There are steps Vietnam could take to avoid further conflict with China, yet this would require some new diplomatic and policy changes with neighbouring Laos and Cambodia. 


Vietnam’s President Nguyen Xuan Phuc (left) shaking hands with Cambodia’s Prime Minister Hun Sen during a meeting at the Peace Palace in Phnom Penh. Photo: National Television of Cambodia (TVK)/An Khoun SamAun

Vietnam is currently the fifth largest foreign investor in Cambodia. Following a $25 million investment towards building the Kingdom’s National Assembly in 2021, the two countries marked the 55th anniversary of diplomatic relations in June with a $3 million investment from Vietnam into a Cambodian rehabilitation centre. 

The relationship between the two nations has been growing in areas including trade, culture, and most recently, pandemic aid. In addition to medical equipment, the Vietnamese state provided around $300,000 to the Kingdom in Covid-19 financial aid.

But Cambodia has become closer to China after receiving huge development investments. 

Cambodian Prime Minister Hun Sen opposed ASEAN’s support for The Hague’s Permanent Court of Arbitration on South China Sea in June because he was afraid it might cause friction between the bloc and China.

The decision to allow China to build facilities at Cambodia’s Ream Naval Base on the Gulf of Thailand concerned other countries in the region. 

Some see this as the further step in a Chinese strategic expansion of the Indo-Pacific where countries like Laos and Cambodia are supporting China’s ambitions to build a network of military facilities and business infrastructure around the world through its Belt and Road Initiative.


Laos’ Minister of Public Works and Transport Viengsavath Siphandone (right) and China’s Ambassador to Laos Jiang Zaidong unveiling a sign for the Lane Xang bullet train in Vientiane. Photo: STR/AFP

In contrast, Laos is playing a careful game of balancing powers through its reliance on Chinese funds.  Laos’ foreign debt is currently over $14 billion, 88% of the country’s GDP, and half of this amount is owed to China from previous loans. 

As one of the poorest countries in Southeast Asia, turning to Asia’s largest economy is understandable. However, Laos should be careful to avoid falling into a trap of over-reliance. 

Many Belt and Road Initiative loans are agreed at commercial interest rates and carry conditions such as proceeds from natural resource sales. 

Laos’s vision for increased infrastructure amidst a backdrop of rising inflation and economic uncertainty risks creating an unpayable cycle of debt to China. 

Vietnam could potentially dilute China’s influence by stepping in with increased aid to Cambodia and Laos, which could also help build their respective infrastructures and further common beneficial interests. 

Vietnam, Laos and Cambodia could participate in shared schemes to invest in infrastructure, human development, food supply and data sharing to build resilience against natural hazards, including floods, droughts and typhoons. 

Cambodian Prime Minister Hun Sen (3rd right), Chinese Prime Minister Li Keqiang (3rd left), Vietnam’s Prime Minister Nguyen Xuan Phuc (2nd left), Thai Prime Minister Prayuth Chan-O-Cha (left), Laos’ Prime Minister Thongloun Sisoulith (2nd right) and Myanmar Vice President Myint Swe (right) link arms during the 2nd Mekong-Lancang cooperation Leaders’ meeting at the Peace Palace in Phnom Penh on 10 January, 2018. Photo: Tang Chhin Sothy/AFP

Soft power cooperation with China can also play an important part in the Mekong region’s development. 

Scholars and researchers can be sent to China to deepen and develop expertise to bring back to their home countries. China’s involvement creates codependent interests in the stability of the Mekong region, which is also crucial for China’s development. 

People diplomacy is another area in which Vietnam can deepen cooperation with Laos and Cambodia.

Vietnam offers hundreds of scholarships annually for Cambodian students. In return, Cambodia gives 35 scholarships to Vietnamese students to study the Khmer language and culture in Cambodia. After graduation, these students are likely to continue cultural exchanges and events, strengthening the ties between the countries. 

These cultural ambassadors are examples of how people can build bridges and enhance the relationships between Vietnam, Laos and Cambodia. 

Its long history of relations with China has also built a foundation of diplomacy and an understanding of the factors needed to maintain the peace. If there is not any provation with China in the South China Sea region, Vietnam is unlikely to side with other major powers.

Creating more codependent interests will help bind the countries in the region together, preventing the possibility of degraded business ties, reduced diplomacy,  or worse.

Every family has its differences. But if Vietnam is looking for the “nearby brothers” of that well-cited proverb, adopting a unified approach over individual and sometimes competing power dynamics can help strengthen not just Vietnam, but ASEAN as a whole.

Tuyen Tran is a visiting scholar at National Taiwan University and non-resident Fellow at Pacific Forum. Her research interests focus on maritime security, geopolitics in Indo-Pacific and the EU’s integration.

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