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Biden finds a new friend in Vietnam as US CEOs look for alternatives to Chinese factories

NEW DELHI (AP) — President Joe Biden will visit on Sunday Vietnam that wants to dramatically increase trade with the United States — a sign of how competition with China is reshaping relationships across Asia. Is.

The President called it a matter of pride that Vietnam is elevating the United States to the status of a comprehensive strategic partner. Other countries to which Vietnam has given this designation include China and Russia. Giving equal status to the US shows that Vietnam wants to save its friendship as US and European companies are looking for alternatives to Chinese factories.

Biden said at a fundraiser in Salt Lake City last month that Vietnam does not want a defense alliance with the US, “but they want the relationship because they want China to know they are not alone” and choose their own relationships. Can. The President decided to combine his visit to Vietnam with his visit to India for the Group 20 summit that ends on Sunday.

With China’s own economic slowdown and the consolidation of Chinese President Xi Jinping’s political power, Biden sees an opportunity to bring more countries into America’s orbit, including Vietnam and Cambodia.

“We find ourselves in a situation where all these changes are happening around the world,” Biden said during a visit to Vietnam last month. “If we are smart we have an opportunity to change the dynamics.”

US trade with Vietnam has already accelerated in 2019. But there are limits to how far it can go without improving the country’s infrastructure, the skills of its workers, and its governance. Nor has increased trade automatically boosted the Vietnamese economy.

Commerce Secretary Gina Raimondo said the CEOs she spoke with rated Vietnam highly as a place to diversify supply chains, which were highly dependent on China before the pandemic. Raimondo is trying to broaden those supply chains through the Indo-Pacific Economic Framework, an initiative that Biden launched last year.

“Whether it’s Vietnam or Malaysia, Indonesia, India, companies are really taking a hard look at those countries as places to do more business,” Raimondo said. “It is also true that they need to improve their workforce, housing, infrastructure and, I would say, transparency in government operations.”

Vietnam’s economic growth declined during the first three months of 2023. Its exporters faced higher costs and weak demand as high inflation around the world hurt the consumer goods market.

Yet, U.S. imports of Vietnamese goods have nearly doubled since 2019 to $127 billion annually, according to the Census Bureau. It is unlikely that Vietnam, with its population of 100 million, can match the scale of Chinese manufacturing. In 2022, China, with 1.4 billion people, will export four times more goods to the US than Vietnam.

There is also evidence that China is still the center of the economies of many countries in the Indo-Pacific region. A new analysis from the Peterson Institute of International Economics found that countries included in IPEF receive, on average, more than 30% of their imports from China and send about 20% of their exports to China. This dependence has increased rapidly since 2010.

White House national security adviser Jake Sullivan saw an opportunity to broaden U.S. ties with Vietnam when one of its top officials, Le Hoi Trung, visited Washington on June 29.

According to an administration official, after speaking with Trung, Sullivan went back to his office and after consulting with his team decided to issue a letter to the Vietnamese government, proposing that the two countries open their trade And take diplomatic relations to the highest possible level. Remain anonymous to discuss details.

Sullivan raised the issue again on July 13 while traveling with Biden in Helsinki, speaking by phone with Nguyen Phu Trong, general secretary of Vietnam’s Communist Party.

At a fundraiser in Maine a few weeks later, Biden made the deal public before a group of donors gathered in a barn.

Biden said, “I got a call from the head of Vietnam, who wants to meet with me when I go to the G20.” “He wants to elevate us as a major partner with Russia and China. What do you think it’s about?”

To answer Biden’s question, it’s all about a broad and vocal China-related concerns, according to Gregory Poling, director of the Southeast Asia Program and Asia Maritime Transparency Initiative at the Center for Strategic and International Studies, a Washington-based think tank. .

“Vietnam is sending a strong political message that they are very concerned about Beijing and that they are willing to formally elevate U.S. relations to the highest level in their system,” Poling said in a call with reporters about the visit.

While a simple change in status may seem minor to many American voters, polling said it was a significant move by a communist country that shares a border with China.

He said, “For Vietnam, a communist state with a fairly rigid sort of Leninist hierarchy of diplomatic relations, these things really matter.”


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