Elements provoke the urge to hedge for Vietnam:

Given China’s re-emergence in military and economic ability with aggressive and assertive behaviors, Vietnam and other states attempt to find long-term policies to thwart Chinese ambitions which may damage their sovereignty, territorial integrity, and political and economic autonomy. Indeed, the adoption of hedging as Vietnamese grand strategy vis-à-vis China - the giant neighbour – was “a rational choice” (Le, 2013b). Yet, what influence its choice?

The three motivations are mentioned below based on an article of Professor Le Hong Hiep (Le, 2013b), the last two are the author’s perceptions:

3.2.1. Historical experiences

Prior to normalization, the policies of bandwagoning and balancing had been considered as its key strategies towards China by Vietnamese government. For example, Thayer (2002) mentioned that, from the early 1950s to the mid-1970s, Vietnam pursued a bandwagoning strategy in the form of an informal alliance with China that was described as close as “lips and teeth” by both Chinese and Vietnamese officials. Since then, Vietnam received many benefits and was no longer concerned about the dangers that China posed to the country due to its significant economic and military aid during this period (Luu, 1995).

From the mid-1970s, however, this approach had been proved as a wrong decision as the Chinese authorities threatened the Socialist Republic of Vietnam by creating the military pressure: rallying more troops into Vietnam-China border areas from the North, increasing the military provocations encroachments upon Vietnamese territory and the sovereignty of Vietnam, making more tension in the border area. The wars against Vietnam that the Chinese authorities caused were the highest escalation in a process of criminal acts against the independence, sovereignty, and territorial

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integrity of Vietnam ever to weaken, annex, and subdue Vietnam. Moreover, China’s re-emergence as a great source of threat therefore provoked Vietnam to apply a new policy – balancing - as its key China strategy. The strategy was included both hard and soft balancing, and emphasized by Vietnam’s 1978 treaty of alliance with the Soviet Union. Accordingly, Moscow provided Vietnam with the security assurance and moral support in a limited form. Importantly, Moscow agreed to increase a large amount of economic and military aid to the country aiming to maintain its intervention in Cambodia and resist Chinese military attacks along the border during the 1980s. Unfortunately, the balancing strategy yielded unexpected results that impact the national security and economic accountability of Vietnam until the two countries normalized their relations in late 1991 (H. H. Le, 2013a). Therefore, Vietnamese leader argued that neither bandwagoning nor balancing could help Vietnam ensure its security in the face of a more powerful China. Moreover, such strategies also sabotaged Vietnam’s economic autonomy as they required a certain dependence on external power. Consequently, Vietnam’s historical experience encouraged its leaders to explore hedging strategy vis-à-vis China, particularly after their normalisation of relations in 1991.

3.2.2. Political factors

Le (2013b) argues that bilateral relationship is one of the most important factors that shape Vietnam’s hedging strategy. This can be explained by the current nature of bilateral relationship between Vietnam and China. In fact, after the year of 1991 both countries are in a normalized relation. With the flexible nature of hedging strategy, therefore, Le (2013b) considered it as “a rational choice”, that could facilitate the Vietnam’s attainment of minimizing potential threats posed by China and managing the bilateral relationship with China.

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In addition, “the dynamics of Vietnam’s domestic politics” has also made Vietnamese decision of hedging strategy (Le, 2013b). As explained in his article, Le argues that owing to the homogeneous communist system and similar political thought, Vietnam is increasingly separated from “the bandwagoning-balancing continuum”. It is interpreted that because “a segment of the Vietnamese leadership to form a de facto alliance with China to safeguard socialism in both countries following the collapse of communist regimes in Eastern Europe in the late 1980s and early 1990s” (Le, 2013a). Meanwhile, Le (2013b) also pointed out nationalist conceptions that emerged from the desire of Chinese domination and highlighted by the ongoing bilateral disputes in the South China Sea may force the country towards the balancing option. Undoubtedly, the South China Sea issue certainly influences Vietnam’s standpoint on China as well as its policy toward this northern neighbor. It can change Vietnam’s traditional perception of China from a friendly neighbor to an aggressive power that pursues expansionism. In addition, it indicates the asymmetric relations between Vietnam and China that provoke Vietnam to conduct balancing method which may incite bellicose responses from China and destabilize the bilateral relationship of two countries. Furthermore, because the disputes in the South China Sea are also fundamental to the rise of anti-China nationalism in Vietnam, it might reduce any undeniable influence that the ideological and cultural affinity as well as the growing economic interdependence may control in bilateral relations. It could be said that the disputes are intricate Vietnam’s endeavors in relation to deal with the rise of China, and control its China strategy. In the case that the disputes cannot be controlled, Vietnam is likely to fortify its balancing strategies. In the case that the disputes are well controlled, a benign China will exhort Vietnam to uphold an indulgent attitude that tilts towards the era of bandwagoning.

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3.2.3. Developments in Vietnam’s foreign relations and international context

Besides the above two factors, the reason for hedging becomes a rational strategy of Vietnam in order to manage China is the new directions in Vietnam’s foreign policy in the late 1980s as well as transformations that the regional strategic outlook set after the end of the Cold War (Le, 2013b). Once Vietnam adopts hedging strategy, it needs to diversify its interrelationships with foreign partners. As a result, any change in Vietnam’s foreign policy plays an essential role in building and running its hedging policy. Meanwhile, international strategic environment increasingly changes over the time, especially since the end of Cold War, such as the rise of China, regional concerns about the American era is coming to an end, the collapse of ASEAN consensus as the key mediator of security arrangements in the South China Sea, the U.S.’s pivot to Asia in the era of President Trump, a possibility of strategic rivalry between the United States and China and a new Philippine tilting toward China, have all facilitated Vietnam’s hedging strategy vis-à-vis China.

3.2.4. Economic characteristics

Another element can be considered as one of the main pushes for the selection of Vietnam’s hedging strategy is economic interdependence. Since 1991, Vietnam increasingly looked to the achievements of the People’s Republic of China as its economic model of development. By the end of the decade, Vietnamese leaders started their visits to Beijing to pay their respects and to take Chinese advice for Vietnam’s economic reform. Since then, Vietnam has been increasingly deepening ties with China in most economic sectors. It could be said that the relationship between the two countries has grown closer and closer and is becoming an important part of Vietnamese foreign policy (Tuyen, 2015). For example, foreign trade volume

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between the two countries increased from more than $30 million in 1991 to $22.5 billion in 2009, up nearly 700 times (Tong Cuc Thong Ke Viet Nam, 2010). From 2011 to 2013, China ranked the third after the United States and Japan in the top 10 importers from Vietnam, but it is the first of the 10 largest exporters to Vietnam. Most recently, in 2016, the economic and trade cooperation between Vietnam and China achieved very encouraging results. In general, in 2016, the total import and export turnover of the whole country reached over $350.7 billion, an increase of 7.1% over the same period. In particular, over the same period, exports reached over $176.63 billion, up 9% and imports were more than $174.1 billion, up 5.2%. With $21.8 billion import volume, China was the third largest export market for Vietnam, accounting for 12.4% of the country's export turnover, up 28.4%. Meanwhile, China is the largest importer of Vietnam’s products with an export turnover of $49.9 billion, equals to 28.7% of the country's total imports, up 0.9% (Bach Hue, 2017).

China's direct investment in Vietnam in recent years has seen marked improvement over the first nine years after the normalization of relations between the two countries. During the nine years since normalization (from November 1991 to December 1999), China had 76 projects with a total investment capital of $120 million, then for the 10 years until December 2009 there were 657 projects with a total registered capital of $2,673,941,942. Thus, in 10 years, the number of Chinese projects in Vietnam has increased more than eight times, while the registered capital increased 22 times over the first nine years after normalization, putting China at 11th out of 43 countries and territories investing directly in Vietnam at that time (Institute of Chinese Studies, 2010). In the first two months of 2017, foreign direct investment (FDI) in Vietnam marks a record in number of new project approvals and in both registered capital and disbursed capital, with China as the second largest foreign

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investor in Vietnam after Korea. According to data from the Foreign Investment Agency (Ministry of Planning and Investment), China's foreign direct investment (excluding Taiwan and Hong Kong) in Vietnam has increased sharply. In the first quarter of 2017, China ranked third with a total new registered capital and capital increase of nearly $824 million, accounting for 10.7% of total investment, just behind South Korea, Singapore (Cam Tu, 2017, April 8). However, China is in second place for getting project approvals. Meanwhile, in 2016, China's foreign direct investment in Vietnam was only $1.8 billion. Thus, only in the past three months, Chinese capital has been being pouring into Vietnam as much as total investment from six months last year (Cam Tu, 2017, April 8).

Clearly, China has become the largest trading partner and has had an enormous impact on Vietnam economy. For this reason, hedging strategy rightly shapes the country’s grand strategy towards China.

3.2.5. Strategic culture

Strategic culture is also one of main motivations for Vietnam’s hedging choice.

According to Kenneth Booth, strategic culture is a combination of various attitudes and patterns of behaviour of the most influential nations (Booth, 1990). As synthesized from the nation’s historical lessons, these attitudes and behaviour patterns will significantly shape national strategies towards other countries. Because of the persistence of strategic culture, understanding strategic culture can help leaders to realize or predict enemy’s action (Booth, 1990). With a long historical culture side by side with China, regardless being hostile or allied, Vietnam had learnt experiences in its relationship with this big neighbour. As a result, the understanding of a nation’s strategic culture may help leaders anticipate other leaders’ decisions in a particular

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situation, and then they can build a rational strategy or a suitable foreign policy for their country (Butterfield, 1996).