Why Vietnam wouldn’t mind if Trump loses to Biden

Vietnam has benefitted from Trump’s trade war but his currency fixing sanction threats make Biden the safer bet

While Democratic candidate Joe Biden seems poised to win the US election on November 3, Vietnam is leaving nothing to chance.

On Monday (October 26), Prime Minister Nguyen Xuan Phuc beseeched incumbent US president Donald Trump not to punish Vietnam for alleged currency manipulation, an accusation Trump has made against the Southeast Asian country for years.

Imploring Trump to have “a more objective assessment of the reality in Vietnam,” Phuc sought to intervene in an issue that could see Vietnam get hit with sanctions if the Trump administration presses ahead with its threat.

Phuc’s plea came after the US Trade Representative said earlier this month – reportedly on Trump’s orders – that Vietnam will be investigated for currency manipulation.

Vietnam’s currency is known as the dong and currently trades at 23,177 to the US dollar. Most of the accusations against Vietnam stem from its large trade surplus with the US, which widened to US$44.3 billion in the first nine months of this year, compared with $33.96 billion last year.

That surplus is in part a reflection of the supply chain gains Vietnam has accrued from Trump’s trade war with China, in which many multinational manufacturers have fled China for low-cost Vietnam to eschew Washington’s higher tariffs on Chinese-made goods.  

Clearly, Phuc was preparing the ground for a fresh set of talks with Washington if Trump wins a second-term or seeks to punish Vietnam before he leaves office in January. Phuc may also have been signaling to Biden’s camp that Hanoi wants to end the back-and-forth over its alleged currency manipulation that has now dragged on since 2017.

Even if Phuc reckons Trump needs a better grasp of reality, Hanoi has naturally remained tight-lipped about whom it is privately rooting for on November 3.

In many ways, Hanoi has less reason to worry about America’s electoral result than most other countries in Asia. There is reason to believe that a Biden presidency would not fundamentally divert from current US policy in the region. That includes a tough stance on China and a commitment to securing its alliances with friendly nations, both strategies that suit Hanoi.   

Indeed, Trump largely continued with the Vietnam policy established by his predecessor, Barack Obama, who considered Hanoi one of America’s main allies in the region, a rising economic power from which US businesses could benefit from and a possible security partner with which the US military needed to form closer ties.

Under Trump, US-Vietnam trade has surged, two US navy vessels historically docked in Vietnamese harbors, and the two sides have explored upgrading their formal relations to a “strategic partnership.” Indeed, Phuc was the first Southeast Asian leader Trump spoke to after his election victory in 2016.

Vietnam’s close ties with the US also remain sacrosanct in Washington because Hanoi is the loudest rival claimant to China for territory in the South China Sea, thereby providing the US with a means to challenge Beijing’s expansionist moves and to present itself as protecting smaller nations in the region.

A survey conducted last month of Vietnamese-Americans found that 48% favored Trump, compared with 36% for Biden. However, a similar tally by the same pollsters in 2018 put Trump’s approval rating amongst Vietnamese-Americans at 64%.

No such survey has been conducted of Vietnamese nationals, but Vietnam’s loyalties to the US have hardly wavered during the Trump presidency, according to the findings of the latest State of Southeast Asia report by the ISEAS-Yusof Ishak Institute in Singapore.

Some 33% of Vietnamese respondents had strong confidence in the US providing leadership in championing global free trade, compared with a regional average of just 14.5%, the report found. The Vietnamese were also almost twice as confident as the rest of the region in thinking the US will maintain a rules-based, international order.

When asked to choose between alignment with the US or China, 85% of Vietnamese respondents said America, while the regional average was almost split 50-50%.

“For obvious reasons, it is exceedingly difficult to know what Vietnam really thinks about the upcoming election, but I think Trump might have a slight edge because, in Hanoi’s eyes, he has stood up to China quite assertively,” said Derek Grossman, a senior defense analyst at the RAND Corporation, a Washington-based think tank.

However, if Trump wins a second-term he could push even harder against Beijing and exacerbate tensions between China and Vietnam, Grossman says, including a possible conflict between the two nations.

Alternatively, many analysts suspect that Biden may seek to remake America’s China policy and seek greater rapprochement with Beijing, neither of which would suit Vietnam’s geopolitical interests.

Barring these two extremes, Grossman reckons that Trump and Biden’s Asia policies will be “nearly identical” in maintaining an anti-China agenda – which now appears to be a bilateral consensus in Washington – and strengthening its alliance with Hanoi, even if Biden make some cosmetic changes to the Trump administration’s Indo-Pacific Strategy.

If Biden keeps US policy on a steady course, Hanoi would no doubt consider him the preferred candidate when it comes to day-to-day diplomacy; he is widely expected to be a competent and predictable president compared to the more erratic and mercurial Trump.  

In June 2019, officials in Hanoi were taken by surprise when during an interview with Fox News Trump claimed that Vietnam is the “single worst abuser” on trade with the US, an accusation he followed with: “A lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China.”

As such, Hanoi may find a more reliable, stable leader in Biden at the helm of its most important ally. However, it’s widely predicted that he will be less keen than Trump in “decoupling” US trade from China, something that Vietnam’s economy has greatly benefited from in recent years.

By slapping hefty tariffs on imports from China during the US-China trade war, it prompted many American, Korean and Japanese firms to move their factories from China to Vietnam, which enjoys far lower tariffs with the US.

This shift of production from China to countries in Southeast Asia, mainly Vietnam, has continued since the Trump administration announced its plan to “decouple” from China.

If a Biden administration were to walk back on decoupling and restore tariffs on Chinese imports to their 2016 levels, Vietnam could see a slowdown in foreign investment. However, some analysts see the shift of supply chains away from China, especially by Japan, more of a natural development than one simply enforced by a US administration.

Another question is whether a Biden administration would seek to press Hanoi harder on its woeful human rights record, which has worsened during Trump’s time in office. Within the first months of Trump taking office in 2017, it was clear that his administration would de-emphasize human rights promotion and democracy-building in Southeast Asia.

However, even if a Biden administration were to make human rights more of a priority for US foreign policy, most analysts expect Vietnam to escape the worst of Washington’s wrath.

Under Obama and George W. Bush, as well as Trump, US administrations have overlooked Hanoi’s domestic abuses, raising the issue in front of the cameras but tacitly accepting the Vietnamese Communist Party’s severe repression.

In 2015, in fact, Obama hosted Nguyen Phu Trong, the Communist Party chief, to the White House, a controversial step as the US typically only welcomes heads of state or heads of government for formal visits, and not heads of repressive communist parties.

“US policy has failed the Vietnamese people,” commented Representative Christopher Smith (R-Hamilton) at a hearing of the House Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations in July 2018.

“This is a bipartisan criticism. We have enriched Vietnam’s Communist leaders and coddled their interests at the expense of the hope and desires of the Vietnamese people for liberty and human rights.”

Often overlooked but equally important for US-Vietnam relations as who wins in Washington next week is who comes out on top at Vietnam’s upcoming National Congress early next year, a quinquennial event where Communist Party delegates decide how to reshuffle national leaders including the government’s top four posts.

Prime Minister Phuc, seen by some as a non-ideological reformer, seems set to become the next Communist Party chief. If so, the incumbent Trong, a resolute ideologue who is firmly set against social and political reforms, won’t be able to anoint his own protégé as his successor.

Many analysts now also suspect that if Phuc takes the Party’s top post, one of his reformist protégées will succeed him as prime minister, a potential resounding loss for more conservative factions in the Party but a potential victory for those who see more eye-to-eye with Washington on political and economic matters.

By David Hutt – Asia Times – October 29, 2020