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Maintaining relations

Released at: 16:20, 11/01/2017

Maintaining relations

Photo: Embassy of China in Hanoi

Ambassador of China to Vietnam, H.E Hong Xiaoyong, shares his thoughts with VET’s Ha Nguyen about the partnership between the two countries.

by Ha Nguyen

What is your view of relations between China and Vietnam over the last three years? 

Overall, relations between China and Vietnam have been constantly growing in the last three years, being particularly marked by mutual visits by high ranking leaders of the Parties and States of the two countries, including those by Chinese Party General Secretary Xi Jinping, Member of the Politburo Standing Committee and Chairman of the National People’s Congress of China, Mr. Zhang Dejiang, Vietnamese Party General Secretary Nguyen Phu Trong, and Vietnam’s Prime Minister Nguyen Xuan Phuc.

From a cooperation perspective, Vietnam overtook Malaysia to become the largest trading partner of China among ASEAN countries, with bilateral trade of $100 billion. Many Chinese enterprises have come to Vietnam for investment, with China being ranked the eighth-highest investor. 

The development of economics, investment and trade between the two countries was faster in the past than its political and security relations. Do you agree?

The bilateral comprehensive strategic cooperative partnership has seen solid performance and can’t be separated from the political guidance of the leaders of the two Parties and States, which express the political will to deepen beneficial cooperation towards common development. China is the largest trading partner of Vietnam and the largest import source and the third-largest recipient of Vietnamese exports. In 2016 Vietnam became the eighth-largest exporter to China and its tenth-largest trading partner. The two sides are discussing long-term cooperation, such as combining the “One Belt, One Road” initiative with the development planning for the “Two Corridors, One Economic Belt”, to improve practical cooperation to new heights.

In terms of economics, investment and trade, Vietnam incurs a trade deficit with China. What are your thoughts on this?

China has repeatedly underlined that it doesn’t pursue trade surpluses. We hope that along with promoting the development of bilateral trade, China and Vietnam will have a balanced trade position. Trade remains unbalanced, however, and there are many reasons for this. The most basic reason is the difference in the structure of manufacturing and the stage of economic development between the two countries. In recent years, China has implemented many solutions to bridge its trade surplus with Vietnam and has gained positive results. 

Some have said that Chinese ODA support has been problematic. What is your view?

Chinese enterprises and Chinese loans are important contributors to the progress of industrialization and socioeconomic development in Vietnam. Based on relevant figures, 80 per cent of electricity, 70 per cent of cement production, and 60 per cent of chemical fertilizer production see participation by Chinese enterprises. Figures from the Export-Import Bank of China show that it approved 21 loan categories worth $2 billion, including preferential government loans and preferential export buyers credit for Vietnam in industry, electrical power, transportation, and energy. The majority of Chinese enterprises using loans for construction projects in Vietnam are of good quality, operate stably, and earn high profits. 

The two countries’ governments think that problematic categories are few and concrete analysis is needed on specific issues. For instance, Vietnam paid attention to the construction of Hanoi’s No. 2 metro line project, with a preferential government loan of $169 million and preferential export buyers credit of $250 million, together with an additional loan of $250 million. Construction has had problems, such as the change and adjustment of total investment capital and delayed construction. The reason for adjustments to total investment capital is changes from the second floor to the third floor of a metro line station, changes to the route, and the problems dealing with soft foundations. The reasons for the delays in construction are many, with site clearance and relocation taking more than five years. Since 2016, under the efforts of the two governments, Chinese-contracted companies and Vietnamese companies have stepped up the level of cooperation and construction returned to normal.

I can say that, firstly, conditions on the loans include Chinese enterprises being responsible for general contractors and choosing to buy Chinese equipment, as per the international practice for bilateral loans from other countries. In fact, a local enterprise with capital and experience can use suppliers and subcontractors to participate in the construction implemented in Vietnam, while the majority of materials, such as steel and cement, are purchased in Vietnam. Secondly, the two preferences from China relate to financial support to helping developing countries, including Vietnam, as a matter of Chinese goodwill. Conditions in the two preferences show that China is willing to negotiate with ministries and departments on loan conditions for specific categories, and the two sides are free to choose.

What issues in bilateral relations do you think have not been fully resolved? How should the two countries resolve these fairly? 

The biggest issue remaining unresolved is the maritime issue. The dispute over territorial borders has made bilateral relations difficult for some time. After protracted negotiations between the two sides, the land bolder issue in the northern region has been fully resolved and laid a solid platform for resolving issues at sea. China and Vietnam signed and implemented three legal instruments, changing the 1,450 km border from being a “frontline” border to being a “golden” border and a “friendship” border for friendly cooperation between the two countries and peoples. 
The maritime issue is difficult, but leaders from the two Parties and States have an important understanding and have signed an agreement on the basic principles guiding the settlement of the issue, providing favourable conditions for identifying basic and long-term solutions that both sides can accept. The current priority is to properly handle the dispute and improve mutual political trust between the two sides through implementing the important consensus reached by the two Parties and State leaders.

What factors will affect bilateral relations, from both a positive and negative perspective, in 2017 and beyond?

2017 will be an important year for China and Vietnam. The Communist Party of China will conduct its 19th Congress and Vietnam will host the APEC Summit. China and Vietnam are socialist countries led by Communist Parties, which have common goals, ideals, and beliefs. We believe that relations between the two countries are not synonymous with normal relations between countries and this is our strategic destiny. During the reconstruction process, we need to learn from each other and set the same development path, which will create a broad space to constantly push practical cooperation in all respects. I believe that together with connecting the “One Belt, One Road” initiative and the development planning for the “Two Corridors, One Economic Belt”, while promoting more cooperation in energy production, bilateral investment and trade will continue to grow quickly and more Chinese tourists will visit Vietnam. The practical cooperation between China and Vietnam will be constantly raised to new heights. 

The two countries still have disagreements on maritime issues but their leaders have affirmed that the common interests are greater than any disagreements. The two sides are fully able to manage and effectively control disagreements through friendship trade agreements and pushing maritime cooperation. 

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