Sunday 26 February 2023 marked 50 years since Canberra and Hanoi established diplomatic relations. Since the beginning, the bilateral relationship has been shaped by geopolitics. Today, the Asia-Pacific region is coming under pressure from growing competition between the two major regional powers, China and the United States (US). In this contested geopolitical context, Australia needs strong bilateral connections with Vietnam more than ever.
To grow these connections, Australia needs to understand how Vietnam sees the world, so we can continue to build an effective, reciprocal and sustainable relationship.
The background to where we are today
The early 1970s marked a turning point in world history. The Cold War was waning as the US and Soviet Union committed to arms limitations. President Richard Nixon visited Beijing. In Australia, the newly-elected Prime Minister Gough Whitlam opened relations with China and East Germany. In this geopolitical climate of détente, even recent wartime adversaries were burying their differences. In 1973, the Paris Peace Accords marked the beginning of the end of the Vietnam war.
Hanoi was seeking international recognition, which the new Australian government was one of the first Western countries to provide. Gough Whitlam advocated an “intelligent anticipation of change" in the global power balance, for Australia to look beyond “like-minded allies”. If Australia was to survive and thrive in this geopolitical climate, Whitlam believed that links with Asia were crucial.
Engagement between Australia and Vietnam was limited in the early years of the diplomatic relationship. In 1976-77, two-way trade with Australia totalled just AU$11 million, compared to AU$18 billion in 2021. Positive personal and cultural ties between the two nations have built steadily over the decades, and significantly increased once Vietnamese migrants began arriving in Australia from 1975 onwards. Australia’s vibrant Vietnamese diaspora now numbers over 270,000, making it the sixth largest migrant group.
If the 1970s was a time of growing integration between former ideological adversaries, the 2020s is a period of pulling back from global interdependence. The US and China are seeking to decouple in a number of strategic sectors. Australia and Vietnam are two mid-sized economies juggling links with both superpowers.
The two nations have developed significant ties over the past 50 years, and in 2018 upgraded their bilateral relationship to a Strategic Partnership. Both governments share the view that open rules-based trade settings should underpin global economic growth, and both are active members of the Asia-Pacific Economic Cooperation (APEC), the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP). Both nations are committed to free navigation in the South China Sea. Vietnam is Australia’s tenth biggest export destination, with two-way trade valued at AU$17.9 billion in 2021.
There are also some challenges that the two countries face. The Australia United Kingdom United States (AUKUS) security agreement may be a source of some wariness, although Vietnam has so far greeted the agreement in a neutral fashion, in contrast with some ASEAN members. Another challenge has been what analysts have referred to as Australia’s shifting foreign policy focus from Southeast Asia to the Pacific.
There are economic and strategic reasons for Australia to pursue closer relations with Vietnam. Vietnam is a rare bright spot in the global economic outlook, with the Asian Development Bank projecting GDP growth of over 5 percent for the next few years, and a population that will reach 100 million this year.
They are complementary economic partners – a 2020 Asia Society report identified multiple areas for increased collaboration, including agriculture, resources, education, renewable energy, and digital services. Australia is an attractive destination for Vietnamese private and commercial investors in a range of industries including real estate, electric vehicles, financial services and the dairy sector, as outlined in a 2022 report from Asia Society.
Australian education is also seeing recovering Vietnamese demand following the impacts of the pandemic. In addition, decoupling global markets for strategic goods and growing geostrategic tensions in the South China Sea will provide greater and greater geopolitical impetus for cooperation. Interdependencies can help both countries diversify markets and supply sources and reduce vulnerability to great power competition. Other geopolitical benefits could include more secure access to contested sea-lanes and mutual support in multilateral negotiations.
If Australia’s partnership with Vietnam is to achieve a meaningful level of geopolitical cooperation, Australian policy makers require a nuanced understanding of how Vietnam sees the world. Establishing bilateral mechanisms to address concerns around security, foreign investment, movement of people and trade would help develop this shared understanding, as would engaging directly and respectfully on the topic of AUKUS and the Quadrilateral Security Dialogue (the Quad).
Australia could also seek to better understand Vietnam’s complex relationship with direct neighbour, China. Despite territorial concerns, Vietnam seeks to maximise the opportunities that China represents, in contrast with Australia’s recent efforts to reduce reliance.
Comprehensive bilateral engagement is a complex proposition, even between countries that have never been at war. The benefits of getting it right are significant, including export and investment opportunities for firms in both countries, professional and cultural opportunities for individuals, and shared values, goals and greater security and prosperity for the nations as a whole.