Vietnam's newly inaugurated President Tran Lam traveled to China this week, marking his first overseas trip since succeeding the late President Nguyen Phu Trong.
Mainstream media coverage of his visit focused primarily on Vietnam’s close ideological and economic ties with China and Vietnam’s flexible “bamboo diplomacy” approach to foreign affairs.
Indeed, Lam has indicated that the main purpose of her visit is to discuss key issues with Chinese President Xi Jinping, such as railway development, managing tensions in the South China Sea, and strengthening overall cooperation.
But Lam's first stop in China was not the northern capital Beijing. Instead, she stopped off in the southern city of Guangzhou, where she met with the party secretary of Guangdong province and encouraged Guangdong businesses to invest more in Vietnam.
Although Guangdong does not share a border with Vietnam, it accounts for about a fifth of China's trade with Vietnam, mainly due to the dynamism of its businesses.
The ministry's economic influence in Vietnam is set to grow as Chinese companies relocate production to the country and become more reliant on nearby suppliers across the border.
A survey by the Vietnam Chamber of Commerce and Industry of Chinese companies invested in Vietnam found that 59 percent of Chinese companies rely on home-grown suppliers, 15 percentage points higher than other types of companies.
Source: Vietnam Chamber of Commerce and Industry
Once overshadowed in national development policy due to the long-simmering Sino-Vietnamese border dispute, these provinces are now taking on new importance due to the growth of Vietnam's manufacturing sector.
Chinese suppliers along the border supply Vietnamese factories and producers with raw materials and intermediate goods, forming a tight-knit network of goods moving across the border every day.
And provincial leaders are not sitting idly by, engaging in a series of local diplomatic activities that leverage the strength of China's current commercial ties with Vietnam.
Across the border, in the northern mountainous province of Lao Cai, traditionally a farming region, Vietnamese provincial authorities have been lobbying both Hanoi and China to develop the area as a trade hub.
Lao Cai proposed a cross-border e-commerce pilot zone to link the Vietnamese and Chinese markets, and announced he would meet with authorities across the border in Yunnan this year to help build an industrial park.
Meanwhile, China’s Guangxi Zhuang Autonomous Region is actively negotiating with Vietnam’s northern border provinces of Ha Giang, Quang Ninh, Lang Son and Cao Bang through regular talks.
These efforts borne fruit in the form of Quang Ninh province purchasing electricity from the Guangxi Zhuang Autonomous Region's power grid last year and the reopening of the border gate between Lang Son province and Guangxi that was closed during the pandemic and did not reopen until recently.
Lam's visit brings Beijing and Hanoi closer to concrete plans to build two high-speed railway lines. If completed as scheduled by 2030, these lines will link the border provinces with the major ports of Hai Phong and Hanoi, significantly improving Vietnam's infrastructure and logistics capabilities.
While border communities applaud and encourage these trade facilitation efforts, closer economic ties need to be considered in the context of rising geopolitical tensions in the region.
Further U.S. trade restrictions on Vietnamese products may come as the United States increasingly scrutinizes and cracks down on Chinese trade diversion through Southeast Asia to circumvent sanctions and other blockages.
The deepening infrastructure ties between China and Vietnam, both in terms of logistics and energy, are also at odds with the friction between the two countries in the South China Sea.
While managed well so far, these tensions could easily erupt, as happened in the Philippines, exposing Vietnam's China-linked production networks to potential collateral risks.
While regional diplomacy is an important feature of Sino-Vietnamese relations, it is not immune to broader geopolitical risks that threaten to reverse recent joint development successes along the Sino-Vietnamese border.
Olivia Tan Jia Yi is a senior analyst at Onyx Strategic Insights in Singapore. The opinions expressed here are her own.
