Geoeconomic and foreign policy implications of Vietnam’s economic dependency on China

• Published in: Fulbright Review of Economics and Policy Vol. 4; no. 1; pp. 18 - 44
• Main Author: Nguyen-Vo, Trinh
• Format: Journal Article
• Language: English
• Published: Bingley Emerald Group Publishing Limited 16.08.2024; Emerald Publishing
• Subjects: Agricultural products; Coercion; Development finance; Diplomacy; Economic dependency; Economic development; Economic interdependence; Economic statecraft; Foreign investment; Foreign policy; Frame analysis; Geoeconomic risk; Global economy; Infrastructure; Interdependence; International economic relations; International relations; Policy making; Risk assessment; Risk assessment framework; Trade disputes; Vietnam-China economic relations; Vietnam
• ISSN: 2635-0173; 2635-0181
• DOI: 10.1108/FREP-04-2024-0013

Purpose This research aims to offers a new method for assessing geoeconomic risks in bilateral relations and evaluate the level of such risks from Vietnam’s economic dependency on China. Design/methodology/approach I apply descriptive analysis to identify asymmetrical dependency in Vietnam–China economic relations and propose a geoeconomic risk assessment framework to evaluate risk levels in bilateral economic linkages. Findings The proposed geoeconomic risk framework assesses risk levels, which are positively influenced by the degree of asymmetrical relations (vulnerabilities), the net impacts on the receiving economy (impacts) and the sending state’s ability to control economic tools (threats). In contrast, risk levels are negatively affected by the effectiveness of existing mitigation efforts. The framework employs ordinal likelihood scales to rank various risk levels. In the context of Vietnam–China relations, market access for agricultural products and control of the Mekong water emerge as the most risky areas for economic coercion, followed by Chinese official development finance in infrastructure and critical input imports. On the other hand, debt dependency and foreign direct investment in the energy sector are considered more secure areas—less likely targets for economic coercion. Hence, risk mitigation strategies should prioritize reducing asymmetry in vulnerable dependence areas while maintaining current practices in more secure areas. Originality/value Methodologically, it introduces a new approach for assessing bilateral geoeconomic risk. Empirically, it provides Vietnam’s policymakers with a comprehensive evaluation of the implications of economic interdependence with China.