As Southeast Asia becomes one of the central theaters of great power competition, few countries face as complex a balancing act as Vietnam. Geographically tethered to China yet strategically drawn to US partnerships, Vietnam has crafted a uniquely pragmatic strategy in navigating the US-China rivalry—one informed by historical memory, economic opportunity, and geopolitical caution.
Vietnam’s choices matter far beyond its borders. As the Indo-Pacific region fragments into competing blocs, Vietnam is emerging as a swing state—one whose alignment (or persistent non-alignment) will shape the region’s trajectory. With global supply chains shifting, new security architectures evolving, and AI and digital governance becoming contested spaces, Vietnam’s carefully balanced diplomacy is being tested as never before.
In this article, we explore how Vietnam is positioning itself amid the deepening US-China rivalry, the core pillars of its foreign policy approach, and the potential implications for regional stability and global alliances.
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Strategic Balancing: Hedging Without Aligning
At the heart of Vietnam’s foreign policy is a principle often summarized as “diversify, multilateralize.” Rather than aligning fully with any great power, Vietnam pursues a multi-vector strategy that maximizes autonomy and flexibility.
China remains a crucial partner—Vietnam’s second-largest trade partner and a major source of both imports and tourists. Economic ties are deep and unavoidable given geographic proximity and supply chain integration. But beneath this economic interdependence lies a complex history marked by centuries of conflict and more recent territorial disputes in the South China Sea.
To hedge against potential coercion, Vietnam has expanded defense cooperation with the United States—including high-profile naval visits, port calls in Cam Ranh Bay, and growing dialogues on maritime security. Yet Hanoi resists any formal alliance structure, wary of provoking Beijing or surrendering its strategic autonomy.
Beyond the US-China binary, Vietnam’s most sophisticated hedging is visible in its cultivation of multiple strategic partnerships. Deepening ties with Japan and India bring both economic and security dividends, while relations with Australia add another layer of balancing. This networked approach helps Vietnam counterbalance Chinese influence without being drawn into a rigid US-aligned bloc.
In a region where smaller states face increasing pressure to “choose sides,” Vietnam’s hedge-without-aligning strategy remains a case study in geopolitical agility.
Leveraging Economic Integration
Vietnam’s strategic balancing is reinforced by an economic transformation that has made it one of Southeast Asia’s fastest-growing economies.
Supply chain diversification—driven in large part by US-China decoupling pressures—has been a boon for Vietnam. As global firms seek “China+1” strategies to reduce reliance on Chinese manufacturing, Vietnam has emerged as a top destination for foreign direct investment.
Global tech companies, from Apple to Intel, have expanded production in Vietnam. US tech, EU manufacturers, and Japanese firms are all channeling new capital into Vietnam’s industrial base—spurring job creation and technology transfer.
Vietnam’s participation in both US-aligned and China-influenced trade frameworks reflects its pragmatic economic diplomacy. As a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam engages with advanced liberal trade norms. Simultaneously, its participation in the Regional Comprehensive Economic Partnership (RCEP)—the largest trade bloc in the world, heavily shaped by China—maintains its economic integration with East Asia.
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This dual-track trade strategy enables Vietnam to attract investment from both sides of the geopolitical divide—giving it valuable leverage to resist pressures for hard alignment.
Just as importantly, economic strength underpins Vietnam’s foreign policy autonomy. A prosperous, globally integrated Vietnam has more space to chart an independent path in an increasingly polarized Indo-Pacific.
Defense Modernization and Quiet Partnerships
While Vietnam’s economic diplomacy has drawn headlines, its quiet yet significant defense modernization efforts are equally consequential.
Vietnam is systematically upgrading its naval capabilities—a priority given persistent tensions in the South China Sea. Though starting from a relatively modest base, Vietnam has invested in modern frigates, submarines, and coastal defense systems, with procurement from a diverse mix of partners.
US and European defense cooperation is growing, particularly in maritime domain awareness and non-lethal defense technologies. But Vietnam also maintains significant arms deals with Russia, preserving a diversified sourcing strategy that ensures it does not become overly dependent on any single partner.
Vietnam participates in joint military exercises with several US allies, including Japan and Australia, though carefully avoids formal alliances. Its growing intelligence cooperation with select partners further supports its balancing posture, enhancing regional situational awareness without triggering open confrontation.
This layered defense approach aligns with Vietnam’s broader foreign policy philosophy: build credible deterrence, strengthen regional partnerships, and avoid steps that might be perceived as hostile escalation.
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The Road Ahead: Vietnam’s Role in a Fragmenting Indo-Pacific
As the Indo-Pacific region becomes more fragmented—with overlapping economic and security architectures emerging—Vietnam is increasingly viewed as a swing state in the US-China competition.
The risks of this position are real. Overdependence on US security assurances could provoke greater economic retaliation from China. Conversely, deeper economic integration with China carries strategic vulnerabilities—particularly in sectors such as critical infrastructure and telecom.
Yet the opportunities are also significant. Vietnam’s diplomatic credibility, born of its independent foreign policy and balanced engagement, positions it as an emerging regional leader. Within ASEAN, Vietnam is playing an increasingly assertive role in shaping regional norms—particularly in maritime security and digital governance.
Watchpoints ahead include leadership transitions within Vietnam’s Communist Party, shifts in ASEAN cohesion, and broader Indo-Pacific realignments. The choices Hanoi makes in navigating these dynamics will not only shape its own strategic trajectory, but also influence the future balance of power in one of the world’s most critical regions.