6. The Economic Determinants of Vietnam’s South China Sea Disputes with China

Abstract

Introduction Despite significant developments in bilateral relations since normalization, a number of problems still threaten to unsettle Vietnam's relations with China in the long term. The South China Sea1 disputes stand out as the single most challenging issue. Resurfacing since the 1970s, the disputes not only remain the most serious sticking point in bilateral relations but have even pitted the two countries against each other in deadly armed confrontation on a number of occasions as well. The management and resolution (if ever) of the disputes therefore bear significant implications for the future evolution of bilateral relations. Since 1991, South China Sea disputes between Vietnam and China have witnessed both positive and negative developments. While the two countries successfully signed a treaty on the maritime delimitation of the Gulf of Tonkin in 2000,2 thereby removing part of the disputes, other disputes over the sovereignty of the Paracels and the Spratlys as well as maritime boundaries in the sea remain intractable. In recent years, as both countries step up their military modernization and China pursues more assertive measures in pressing its claims, the disputes tend to become even more intense and threaten to undo hitherto positive developments in other fields of the bilateral relations. Contributing to the dynamics of the disputes is a wide range of drivers, in which geo-strategic and economic ones are the most important. While both geo-strategic and economic factors driving China's moves in the South China Sea have been extensively studied (see, for example, Buszynski 2012; Buszynski and Sazlan 2007; Fravel 2011; Garrison 2009; Leifer, 1995; Lo 1989; N.A. Owen and Schofield 2012; Storey 1999; Zhao 2008), they have not been equally examined on the part of Vietnam. So far, most of the studies on the dynamics of Vietnam's South China Sea disputes with China have focused on the geo-strategic aspect (see, for example, Butterfield 1996; Storey and Thayer 2001; Thayer 2011 b ; Tonnesson 2000), leaving the economic aspect largely under-examined. Specifically, there has been no major study that exclusively and comprehensively examines the role of economic factors in Vietnam's disputes with China. This gap in the literature makes it difficult to fully appreciate the dynamics of the disputes at a time when economic factors, following Vietnam's launch of economic reforms under Doi Moi , have been playing an increasingly important role in shaping the country's foreign policy in general and South China Sea strategy in particular.