China-Vietnam Community of Common Destiny Unveiled

By Pan Jin'e， Qin Lifang



China-Vietnam Community of Common Destiny Unveiled

By Pan Jin'e， Qin Lifang

On November 5，2015， President Xi Jinping， General Secretary of Communist Party of China， held talks with Nguyen Phu Trong， General Secretary of Communist Party of Vietnam， in Hanoi.

Community of Common Destiny Proposed

On Nov 5-6， 2015， Xi Jinping， in his capacity as Chinese President and General Secretary of the CPC Central Committee， paid a state visit to Vietnam， during which he attached great signifcance to the future development of bilateral relations.

He met with Nguyen Phu Trong， General Secretary of the Communist Party of Vietnam（CPV）， and emphasized that China and Vietnam are close neighbors who should work closely to build a Community of Common Destiny of strategic signifcance.

The “China-Vietnam Community of Common Destiny” represents the continuation of the initiative President Xi proposed in 2013 in a speech in Indonesia to build a China-ASEAN Community of Common Destiny. At the same time， it indicates the importance China attaches to the relationship with Vietnam， and thus has profound connotations.

As a matter of fact， China and Vietnam have been following the same beliefs and development path. Tey are faced with similar issues and have history and culture in common. It is the common desire of both peoples to expand and strengthen their economic cooperation to assist reform and development. To this end， the two countries share a broad range of interests.

China and Vietnam signed agreements in 1999 and 2000 to resolve the issues related to land border and the demarcation of the Beibu Gulf. Te two face disputes related to maritime sovereignty， but they are committed to defuse the issue through positive negotiations. They have announced a mutual on-site investigation on ofshore oil drilling operations outside the entrance of the Beibu Gulf in mid-December 2015. It is believed to be a crucial start to their bilateral maritime cooperation.

Xi's visit is expected to help remove the concerns and enhance mutual strategic trust. Te two countries have clarifed the orientation of developments in their relationship， providing strong impetus to economic cooperation in an all-round way involving a new pattern.

Booming Economic Cooperation

Since the normalization of Sino-Vietnamese relations in 1990， the two countries have enjoyed rapid development in economy and trade. From 1991 to 2014， their trade volume rose from $32 billion to $83.6 billion （statistics from Chinese Customs； from the Vietnamese side， this fgure was approximately $60 billion）. In 2014， China became the largest foreign trade partner of Vietnam for 11 straight years，and Vietnam the second largest partner to China among its ASEAN counterparts. Trade has enjoyed rising infuence in the overall pattern of their respective foreign trade dealings. China-Vietnam trade accounted for about 20 percent of Vietnam's total in 2014. Although still only a small proportion of China's massive foreign trade， the percentage rose from 0.5 to 1 percent of the volume between 2006 and 2012. Now， it is over 2 percent. It is expected that the trade volume in 2015 will exceed $90 billion. According to the statistics from the Chinese Customs， China-Vietnam trade enjoyed the fastest growth in China's foreign trade over the past 10 years. In 2003， their trade value was a mere $4.63 billion， but it experienced an 18-fold increase in 2014. The annual growth surpassed 30 percent， compared to 18 percent annual growth of China's foreign trade.

One of the reasons for that growth is that，though at different development stages， with differing geographical and climatic conditions， the trade structures of the two countries complement each other. Vietnam's exports to China mainly involve primary products，such as tropical farm produces and mineral products， while imports from China include machine， equipment， iron， steel， refined oil，raw materials of textile， electronic materials and fertilizers. Chinese products meet the needs of industrialization of Vietnam， while Vietnam makes up the shortage in farm produce and mineral products of China. The rapid economic development benefits from a similar preference of consumption due to cultural similarity， and from the fact that the cost-performance of Chinese products fts the Vietnamese market.

Over the past few years， the proportion of trade in electronics saw a quick rise. In 2014，the electronics trade became Vietnam's biggest export to China， and it was true the other way round.

Regarding investment， as of 2014， Chinese mainland enterprises have invested a total of over $8 billion in Vietnam， ranking the ninth among all foreign investors to Vietnam. Apart from that， Chinese enterprises dominated project contracting in Vietnam， claiming more than half of Vietnam's outsourcing projects.

Embracing New Opportunities

Nowadays， China and Vietnam have entered the phase of comprehensively deepening reform and innovation. They have proposed new strategic programs of development， which brought opportunities for the economic cooperation.

In 2013， China proposed the Belt and Road Initiative as an active measure to develop economic partnerships with countries along the Belt and Road and mutually build a community of interests， destiny and responsibility featuring mutual political trust， economic integration and cultural inclusiveness. The initiative established the plan for policy coordination， facilities connectivity，unimpeded trade，fnancial integration and people-to-people bonding as five major goals. Its eight priorities include accelerating interconnection of infrastructure，promoting trade facilitation， expanding industrial investment and cooperation， deepening cooperation in energy， exploring financial cooperation， building closer people-to-people exchanges， reinforcing cooperation in ecological and environment construction， promoting maritime cooperation and driving China to integrate its development strategy with countries along the Belt and Road. By sharing resources，mutual beneft will fnally be achieved.

China and Vietnam， close neighbors， are building a community of common destiny of strategic significance.

In the meantime， under Chinese sponsorship， on October 24， 2014， 21 countries，including China and Vietnam， signed an agreement in Beijing to establish the Asian Infrastructure Investment Bank （AIIB） with the authorized capital of $100 billion. Tis provides the fund guarantee for the Belt and Road infrastructure projects.

Reality check of Vietnam again. Vietnam has carried out reform and gained remarkable achievements for nearly 30 years since 1986. Before that， its GDP per capita was less than $100. Tis fgure soared to $2，000 in 2014， lifing Vietnam into the ranks of middle-income countries. In 2014， Vietnam's leaders stated their intention to join hands with China to build two corridors and one economic circle，which refers to the Kunming-Lao Cai-Hanoi-Haiphong-Quang Ninh corridor， the Nanning-Lang Son-Hanoi-Haiphong-Quang Ninh corridor and the Beibu Gulf Rim Economic Circle. Since 2008， however， Vietnam experienced an economic slowdown with the annual average GDP growth rate falling from 7.5 percent to 5-6 percent over the past two decades. It remained stagnant in introducing foreign investment， which didn't exceed $10 billion in 2008-2014. In Vietnam's 11th Communist Party Congress in 2011， infrastructure was taken as one of the breakthroughs for future development， leading to redoubled investment. As the AIIB has been established， Vietnam can link its two corridors and its program of two corridors and one economic circle with the Belt and Road Initiative. Besides， it channels the resources， equipment， fund and experience in operation in infrastructural construction in China to assist itself to build and upgrade its infrastructure. This is a move to break bottlenecks in economic development and， at the same time， seek more bilateral economic cooperation.

On November 20， 2015， Chinese citizens cross the border at Dongxing， Guangxi Zhuang Autonomous Region to Vietnam for business or travel.

Judging from external infuences， Vietnam follows the diplomatic route to proactively integrate into the international community，and take an active part in various bilateral and multilateral economic cooperative agreements. In addition to joining hands with its ASEAN counterparts to promote the construction of the economic， political， social and cultural community， Vietnam has also participated in the RCEP negotiations， and signed FTAs with South Korea， Belarus and the EU. In October 2015， the country had access to the Trans-Pacific Partnership （TPP）. These free trade arrangements provide favorable conditions for Vietnam to attract foreign investment and facilitate export. Tey brought about challenges，too. As Vietnam has a lower development level and different social system from other TPP members， it faces with huge pressure to implement the TPP high-standard market access system， labor and environmental standard，and intellectual property protection.

Chinese and Vietnamese enterprises can register more cooperation in industry and productivity. For instance， Chinese enterprises can invest and set up factories in Vietnam in such felds as textiles， footwear， electronics and automobiles to help enterprises avoid the adverse effects resulting from the TPP rules of origin and， at the same time， assist Vietnam to make up the gap in the industrial chain （e.g. lack of competence in the production of raw materials for textiles） and shrink the trade defcit due to large import of intermediate products from China. This will definitely benefit for the balance in trade between the two countries. China and Vietnam can also build a cross-border economic cooperative zone in the border area，and discuss new modes of cooperation under the new terms of trade. Besides， the financial cooperation will be helpful to facilitate cooperation in economy and trade， while signing an agreement on currency swap will eliminate the risks from opening the financial market afer Vietnam joined in the TPP and increase the flexibility and resistance against financial shocks.

During President Xi's recent visit， China and Vietnam signed agreements on economic cooperation and trade. Leaders of both countries reached unanimous consent on efforts made to play the most of the role of their own economic cooperation commissions. Tey signed a 2016-2020 scheme on the economic cooperation and trade， and agreed on accelerating the revision of the border trade agreement and strengthening cooperation under the framework of the MOU on cooperation in agricultural trade. China and Vietnam will enhance the cooperation in their development strategy to promote the cooperation in implementing the Belt and Road Initiative and construction of two corridors and one economic circle. The two sides will endeavor to boost more cooperation in such fields as production of building materials， auxiliary industries， manufacturing， electricity， and renewable energy. For this purpose， China and Vietnam agreed on the establishment of a working group to reach an agreement through negotiation on the general scheme on the construction of cross-border economic cooperation zones， and promote the development of industrial parks of Long Giang in Tien Giang and Yen Duong in Haiphong， and proactively attracted investment.

Indeed， in November 2015， days after President Xi's visit， the two countries signed an agreement on major cross-border trade with a total investment of 60 billion Yuan （$9.4 billion） in the Longbang-Tra Linh port in Jingxi，a border area in Guangxi. Also， other projects promptly entered the stage of detailed discussion. It can be expected that， in a short term，China and Vietnam will come up to a new phase in their economic cooperative relationship.

Facilitating Cooperation

Vietnam joined in ASEAN in 1995. With its quickened pace in reform and integration in the international community， it has played an increasingly important role in the regional and international afairs. Today， Vietnam has a population of some 90 million， the second largest populous country in ASEAN. In 2013，its GDP， total export-import volume and foreign fund introduced accounted for 8 percent，11 percent and 9 percent， respectively， among the 10 ASEAN countries. Although Vietnam has not played a leading role among ASEAN economies， it actively participates in the construction of the ASEAN Community. The ASEAN Socio-Cultural Community is based on a Vietnamese proposition. At present，Vietnam is one of the major sources of foreign investment in Laos， Cambodia and Myanmar，building on the close traditional friendship with Laos and Cambodia. Meanwhile， over the past years， Vietnam has tried to reconcile the contradictions between Myanmar and the West.

As an important ASEAN member，Vietnam is also an important country along the Belt and Road. Strengthened economic cooperation has significant meaning to the Belt and Road Initiative， especially to the 21st Century Maritime Silk Road. Meanwhile， the success and the demonstration effect of the cooperation and construction of the economic cooperative region are undoubtedly the boon for promoting the upgrading of ACFTA and RCEP. Closer cooperation between China and ASEAN will benefit regional peace and development so everyone can share the fruits of development and build the China-ASEAN community of common destiny.

About the authors:

Dr. Pan Jin'e， Professor of the Research Institute of Marxism of the Chinese Academy of Social Sciences；Dr. Qin Lifang， Associate Professor of the College

of ASEAN Studies of Nanning Academy of Social Sciences.