South Korea, Vietnam join forces amid US-China rivalry with US$150 billion trade target

The two nations have pledged to nearly double bilateral trade and explore closer military ties, with expanded arms sales on the cards.

Vietnamese leader To Lam’s state visit to South Korea this week has offered a first glimpse of President Lee Jae-myung’s new foreign policy direction for Southeast Asia, as both countries seek to navigate US-China rivalry and Washington’s economic upheaval.

The four-day visit began on Monday, with the two leaders pledging to deepen economic cooperation and expand bilateral trade to US$150 billion by 2030 – a big boost from the current US$86.8 billion.

Lee noted South Korea’s heavy investment in Vietnam’s economic growth over the years, with about 10,000 Korean companies now operating in the Southeast Asian nation.

These companies not only contributed to economic development but fostered “mutually beneficial cooperation between the two countries”, Lee said in a televised address on Monday, stressing that developing the semiconductor industry would be a joint priority.

Lam, the general secretary of Vietnam’s Communist Party, led a high-level delegation to Seoul, including ministers of industry, trade, foreign affairs and technology. He called on South Korea to continue nurturing Vietnamese talent in advanced fields such as artificial intelligence, biotechnology and shipbuilding.

The visit yielded 10 memorandums of understanding, spanning cooperation in nuclear and renewable energy, financial policy, and scientific innovation, according to Lee’s office.

It also heralded the “beginning of the Lee administration’s Asean policy”, said Lee Jae-hyon, principal research fellow at the Asan Institute for Policy Studies in Seoul who specialises in studying the Association of Southeast Asian Nations.

“What really matters for strategic cooperation between the two countries is how to deal with superpower competition, the potential China threat and the weakening commitment of the US to the region and tariff imposition,” he told This Week in Asia.

What really matters for strategic cooperation … is how to deal with superpower competition, the potential China threat and the weakening commitment of the US

Lee Jae-hyon, Asean researcher

Washington recently imposed a 15 per cent tariff on South Korean goods and a 20 per cent levy on Vietnamese exports, injecting fresh urgency into the region’s search for economic security.

Vietnam – already South Korea’s third-largest trading partner with US$86.7 billion in two-year trade last year – lies at the heart of Seoul’s strategy to reinforce its economic resilience. The Southeast Asian nation is also a major recipient of Korean investment, accumulating an estimated US$92.5 billion over the years.

Lee, the researcher, said a deepening of defence cooperation was also on the cards.

The two countries could explore deeper military ties and expand arms sales, particularly as Vietnam looks to diversify its defence suppliers, said Huynh Tam Sang, a lecturer at Ho Chi Minh City University of Social Sciences and Humanities.

Hanoi was keen to “strengthen defence-industrial collaboration with like-minded partners amid growing geopolitical uncertainty,” Huynh said.

“But such efforts would require careful calibration, as the new administration in Seoul has little interest in provoking Beijing and Hanoi remains cautious about any move that could undermine its relations with its northern neighbour.”

‘Actionable road map’

South Korea’s new president has pledged closer economic cooperation with China, in contrast to his conservative predecessor, the disgraced former leader Yoon Suk-yeol.

Vietnam, meanwhile, is renowned for its “bamboo diplomacy” – a delicate balancing act that seeks both engagement with Beijing and resistance towards its actions, particularly in the contested South China Sea.

Hanoi has been seeking to reduce its dependence on Russian arms in recent years, turning increasingly to Israel, South Korea and the United States for military procurement.

On Tuesday, South Korean Defence Minister Ahn Gyu-back and his Vietnamese counterpart, Phan Van Giang, pledged to further strengthen bilateral cooperation in defence and the arms industry, with plans reportedly under way to revise existing agreements and potentially finalise a US$300 million deal to export Korean K9 self-propelled howitzers to Vietnam.

Huynh urged both sides to develop an “actionable road map for cooperation” with clearly defined outcomes. “Leveraging each side’s strengths and addressing existing challenges should remain priorities in the coming time,” he said.

A technology transfer agreement enabling Vietnam to manufacture Korean howitzers and related equipment was still pending, noted Carlyle Thayer, a Southeast Asia specialist and emeritus professor at the University of New South Wales, Canberra.

Thayer emphasised the growing role of science and technology in the bilateral partnership, with South Korean firms encouraged to invest in hi-tech sectors, digital industries, renewable energy and smart cities.

“The joint declaration mentioned that South Korea and Vietnam would expand cooperation in maritime security and training, demining operations, UN peacekeeping and information on strategic issues of shared concern,” Thayer added.

One thing is for sure: this week’s summit sets the stage for a deeper, more resilient partnership – one that will be closely watched in capitals across Asia and beyond.

By Maria Siow – The South China Morning Post – August 13, 2025