President Joe Biden’s recent visit to Vietnam signifies a concerted effort to strengthen economic ties between Washington and Hanoi, aimed at reducing America’s dependence on China. The two nations have elevated their diplomatic relations to a “comprehensive strategic partnership,” a symbolic yet crucial move that experts believe will reinforce trust between them. This strategic partnership is seen as a pivotal step as the United States seeks a reliable ally in Asia to address political tensions with China and advance its goals in crucial sectors like semiconductor manufacturing.
Major corporations such as Apple and Intel have already expanded their operations in Vietnam to diversify their supply chains, leading to a robust economic expansion that defies global economic challenges.
Biden’s visit, following the G20 summit in India, marks the first visit by a U.S. president to Vietnam since Donald Trump’s trip in 2019. During his visit, President Biden met with Vietnamese General Secretary Nguyen Phu Trong and other leaders to promote the growth of a technology-focused Vietnamese economy and discuss regional stability. It is worth noting that trade between the two nations has been steadily increasing under an existing partnership established in 2013.
In 2022, the United States imported nearly $127.5 billion worth of goods from Vietnam, a significant increase compared to $101.9 billion in 2021 and $79.6 billion in 2020. This has propelled Vietnam to become America’s eighth-largest trading partner.
The move towards strengthening ties between the U.S. and Vietnam is part of a broader strategy called “friend-shoring,” which involves shifting supply chains toward allied nations to reduce reliance on countries with political tensions. This approach gained traction during the U.S.-China trade war, as companies of all sizes started moving manufacturing to emerging markets like Vietnam and India to mitigate tariff-related risks.
Vietnam has emerged as an attractive destination for businesses due to lower labor costs, a youthful workforce, and a growing consumer base. However, the surge in demand for manufacturing in Vietnam has outpaced supply in some cases, leading to concerns of overheating.
Notably, the semiconductor industry has become a key point of contention in U.S.-China relations, with both countries vying to enhance their capabilities in this sector. The United States recognizes Vietnam’s potential to play a critical role in building resilient semiconductor supply chains, making it an attractive partner in this crucial field.
Intel, for example, has invested $1.5 billion in a large campus near Ho Chi Minh City, aiming to establish its largest single assembly and test facility in the world. Experts anticipate further investments in technology-related industries as the U.S. strengthens its collaboration with Vietnam.
Despite the challenges, Vietnam’s economic growth is projected to outpace many major economies, making it an appealing prospect for corporations seeking opportunities in a globally challenging environment.
In conclusion, the United States’ efforts to deepen economic ties with Vietnam represent a strategic move to diversify supply chains, strengthen technology partnerships, and reduce reliance on China. This development reflects the evolving dynamics of global trade and geopolitics.