HANOI: On Monday, Chinese President Xi Jinping emphasized the need for enhanced relations with Vietnam regarding trade and supply chains, particularly in light of disruptions caused by U.S. tariffs. He made this statement during his visit to Hanoi, where he witnessed the signing of numerous cooperation agreements between the two nations, both governed by Communist parties.
This visit, which was in the works for several weeks, forms part of a larger itinerary across Southeast Asia. The context is significant, as China is contending with punitive tariffs from the U.S. that have reached 145%, and Vietnam is currently negotiating a reduction of its own threatened U.S. tariffs, which could be as high as 46% starting in July after a global moratorium comes to an end.
"The two countries should bolster their collaboration in production and supply chains," Xi remarked in an article featured in Nhandan, the official publication of Vietnam’s Communist Party, which was shared prior to his landing on Monday. He also advocated for increased trade and stronger partnerships with Hanoi in areas like artificial intelligence and the green economy. "There are no winners in trade wars and tariff disputes," he added, without directly mentioning the U.S.
Following a meeting with Vietnam’s top leader, To Lam, both nations formalized dozens of cooperation agreements. Video footage reviewed by Reuters showed the signing of these documents, which included accords focused on enhancing supply chains and collaborating on railway initiatives. Details about the agreements have not been made public, and it remains uncertain whether they entail any financial or binding obligations.
Vietnam’s Deputy Prime Minister, Bui Thanh Son, previously mentioned that around 40 agreements were expected to be signed. Moreover, a separate aviation business arrangement was concluded on Sunday.
Under pressure from the U.S., Vietnam is tightening regulations on specific trade practices with China to ensure that goods exported under a "Made in Vietnam" label possess sufficient local value addition. One of the agreements signed on Monday aims to enhance cooperation between the China Council for the Promotion of International Trade and the Vietnam Chamber of Commerce and Industry, which is responsible for issuing certificates on goods’ origins.
Vietnam serves as a key industrial and assembly hub in Southeast Asia, with most of its imports originating from China. In contrast, the United States represents its primary export market, making Vietnam a pivotal supplier of electronics, footwear, and apparel.
In the first quarter of this year alone, Hanoi imported approximately $30 billion worth of goods from China, while exports to the U.S. reached around $31.4 billion, according to Vietnam’s customs data. This trend highlights a long-standing pattern where imports from China closely mirror the value and fluctuations of Vietnamese exports to the U.S.
Rail Links and Aviation
After his two-day stop in Hanoi, Xi is set to continue his Southeast Asian journey with visits to Malaysia and Cambodia from April 15 to 18. This marks his return to Cambodia and Malaysia after a gap of nine and twelve years, respectively.
Xi’s current trip to Hanoi is his second in less than eighteen months and aims to solidify relationships with Vietnam, which has attracted significant Chinese investments in recent years. Many Chinese manufacturers have relocated south to Vietnam to evade tariffs imposed by the previous Trump administration.
In an article published on Monday, Vietnam’s Lam expressed the country’s desire to enhance cooperation in defense, security, and infrastructure, particularly concerning rail connectivity.
Vietnam has agreed to utilize Chinese financing for constructing new rail links between the two nations, a significant step towards bolstering bilateral trade and transportation connections. However, no specific loan agreement has been made public yet.
Under prolonged negotiations, China succeeded in obtaining Vietnam’s endorsement for aircraft approved by the Chinese aviation regulator. This allows the operation of China-made COMAC passenger jets in Vietnam. According to a government decree approved just before Xi’s arrival, Hanoi recognized China’s aviation standards as equivalent to those in the United States and the European Union.
Currently, several Chinese companies are operating COMAC planes, though international acceptance and foreign sales of these aircraft have been challenging to secure.
On Sunday, Vietnam’s budget airline VietJet and COMAC signed a memorandum of understanding in Hanoi. Reportedly, VietJet plans to lease two COMAC C909 planes, with crews supplied by Chengdu Airlines, to service two domestic routes.
Despite the strong economic partnership, maritime territorial disputes in the South China Sea often lead to tensions between the two nations.
Vietnam’s concessions to the U.S. to circumvent tariffs may also cause discontent in Beijing, especially given the deployment of Elon Musk’s Starlink satellite communication service in Vietnam, as well as more stringent regulations on trade with China aimed at preventing origin fraud.
In recent months, Vietnam has implemented anti-dumping duties on various Chinese steel products and discontinued tax exemptions for low-value imports, actions the government claims are designed to diminish the influx of cheap Chinese products.
The other countries on Xi’s Southeast Asian agenda, Cambodia and Malaysia, are currently grappling with U.S. tariffs of 49% and 24%, respectively, both of which have initiated outreach to the U.S. to seek relief from these levies.
Reporting by Francesco Guarascio, Khanh Vu, Phuong Nguyen, Thinh Nguyen, and Athit Perawongmetha in Hanoi, with contributions from Liz Lee in Beijing; writing by Francesco Guarascio; editing by Himani Sarkar, Lincoln Feast, and Hugh Lawson.
