Post-Abe, Vietnam-Japan relations have nowhere to go but up

Whoever succeeds Abe Shinzo, the two nations have ample reasons to widen and deepen their cooperation across a host of domains.

The sudden announced resignation of Prime Minister Abe Shinzo for health reasons has left many unanswered questions regarding his legacy, from concerns over Japan returning to the days of a revolving door premiership, to worries about the future of the U.S.-Japan alliance, to the fate of his signature initiative, the Free and Open Indo-Pacific. In Southeast Asia, a region that lies at the center of the Indo-Pacific, Abe’s efforts to expand and deepen Japan’s presence will be sorely missed. In particular, his departure raises questions about the future direction of Japan’s relations with Vietnam, which has benefited significantly from Japan’s renewed diplomatic activism and currently enjoys a robust partnership with the world’s third-largest economy.

There are good reasons to believe that Japan-Vietnam relations will continue on their present upward trajectory. To a large extent, the strong bilateral partnership has been born out of a shared concern about China’s waxing power and influence. Both Japan and Vietnam have territorial and maritime disputes with China in the East China Sea and South China Sea, respectively. But their concerns also run deeper. Both nations have had complex interactions with China through history, absorbing large amounts of influences from China while resisting its encroachments. As a result, neither wishes to assume a subordinate position in a new Sino-centric order.

The common risks and challenges of living under China’s shadow have thus driven Japan and Vietnam to strengthen their relations. For Hanoi, Tokyo provides a counterweight against Beijing’s rising power through its increased economic cooperation and development aid. For Japan, a stronger Vietnam helps resist Chinese domination of the South China Sea, thus relieving Chinese pressure on Japan in the East China Sea.

Above all, the robust partnership between Japan and Vietnam is underpinned by economic calculations. As a “super-aged” society, with more than 20 percent of its population over the age of 65, as well as a shrinking population, Japan faces an uncertain economic future. A shrinking population means a smaller domestic market and declining labor force, which will have critical implications for economic growth over the long term. In contrast, Vietnam’s population is relatively young, which promises not only an abundant supply of labor, but also a promising new market for Japanese products and technology. As a developing country fixed on becoming an industrialized nation, Vietnam can benefit from investment and technology flows from Japan, especially in the realm of vital infrastructure. Therefore, strong cooperation between Japan and Vietnam is likely to continue due to complementary characteristics in both countries’ economies.

While a continuation of past cooperation is reassuring for both sides, Japan and Vietnam can capitalize on their robust cooperation to promote greater intra-ASEAN integration. Whether it is enhancing ASEAN connectivity, which is already singled out as an area of cooperation in the two nations’ Joint Statement on deepening the Vietnam-Japan Extensive Strategic Partnership, or increasing intra-ASEAN trade, a higher level of ASEAN integration will bring more benefits for Japan and contribute to the strengthening of ASEAN’s centrality.

Quality infrastructure projects connecting ASEAN members, supported by Japanese funding and technology, will not only underpin and secure Japan’s continued economic engagement in the region in the years to come; they will also boost the prospect for increased intra-ASEAN trade, thus ameliorating the bloc’s heavy reliance on trade with China. By becoming much less dependent on trade with one particular external partner, ASEAN will be able to function more cohesively and enhance its resilience against external influence. Japan has already established a prominent footprint in Vietnam, in terms of economic cooperation and infrastructure development. The task for the new Japanese prime minister is to widen this robust cooperation to include other ASEAN members.

The shift toward greater intra-ASEAN integration is given added urgency by Japan’s likely economic trajectory in the years to come. Given its demographic challenges and other domestic conditions, Japan’s future economic growth is set to lag further behind China’s, making it difficult for Japan to rise to the challenge of competing with China’s economic and military influence in Southeast Asia. While Southeast Asian nations, wary of a rising China, are banking on Japan increasing its activism in the region, they ultimately care far more about economic growth and development than they do about defense cooperation. Despite future constraints on its capacity and capability, Tokyo will want to maintain its engagement with the region. And it also does not want to see a weak, divided, and subservient Southeast Asia, languishing under Beijing’s shadow.

Vietnam, too, stands to benefit greatly from a more integrated ASEAN. Regarding the South China Sea disputes, Vietnam has encountered significant challenges in developing a unified ASEAN stance, partly due to China’s economic leverage over other ASEAN members. Vietnam’s economy also relies heavily on China for materials and equipment that are needed in its manufacturing sector, which has helped contribute to its staggering $31 billion trade deficit with China. Facing a pandemic-induced recession and increasing Chinese pressure in the South China Sea, a diversification of economic ties to ASEAN and other external partners will only serve Vietnam’s strategic interests over the long term.

During his eight-year stint as prime minister, Abe significantly raised Japan’s profile in Southeast Asia in general and Vietnam in particular. With trust in China and the United States under President Donald Trump falling across Southeast Asia, the region now views Japan as the most attractive external partner and hope for a continuation and deepening of Japanese activities in the region. Filling Abe’s shoes is not an easy task, let alone amid a global pandemic, economic uncertainty, and increasing superpower competition. That said, the next Japanese prime minister should continue the country’s engagement with Vietnam. While it is tempting to think a continuation of past policies will be enough, the new regional environment suggests that Japan and Vietnam can and should do more to direct the trajectory of bilateral relations towards the enhancement of ASEAN integration.

By Hanh Nguyen – The Diplomat – September 11, 2020