China's manufacturing spillover has become a major trend in the global economic landscape, and Vietnam, as China's neighbor, has been one of the biggest beneficiaries in the process. Chinese companies saw Vietnam as an important opportunity for manufacturing spillovers and relocated factories to Vietnam to circumvent regulations and avoid high tariffs. Not only Vietnam, but the entire Southeast Asian region has quickly become the center of China's manufacturing and entrepot **, becoming a part of Made in China. This dynamic is of concern to the United States.
In the past few years, the United States has been pursuing a decoupling and disconnection strategy, trying to transfer the ** chain from China to other countries. However, Chinese companies have smartly taken advantage of this opportunity by increasing their investment in countries such as Vietnam and India, driving their economies to grow rapidly. The U.S. has recognised that decoupling and chain disruption are practically unrealistic, and has turned to a de-risking strategy. This strategy aims to strengthen security screening in nearshoring countries by strengthening investment and security screening, in addition to cutting-edge technology blockades and homegrown screening. The U.S.-Mexico cooperation is a model of strengthening foreign investment vetting by working with Mexico to address the risks that may arise. This has also raised concerns about Vietnam.
In order to consolidate its influence in Vietnam, the United States has made frequent visits to Vietnam this year. In April, U.S. Secretary of State Antony Blinken visited Vietnam, and in September, U.S.** Biden personally visited Vietnam and elevated U.S.-Vietnam relations to a comprehensive strategic partnership. After the U.S. formally partnered with Mexico to strengthen foreign investment scrutiny, it turned its attention to Vietnam. While there has been no substantial progress in U.S.-Vietnam cooperation, this is just a foreshadowing for the U.S. to follow up. The U.S. mindset has always been to exert maximum pressure, and once they succeed in implementing security review cooperation in Mexico, they are likely to extend this model to other friendly offshore outsourcing countries, including Vietnam. However, it will not be easy for the United States to replicate Mexico's model in Vietnam.
Despite the U.S. interest and visit to Vietnam, it is difficult for the U.S. to cooperate in security review in Vietnam due to China's deep relationship with Vietnam. In addition, if there is a shift in U.S. policy, relations with Vietnam may also be difficult to sustain. It doesn't take too long to verify this question, maybe a year or two to get to the bottom of it.
The U.S. is pursuing a de-risking strategy in an attempt to weaken China's influence through increased investment and security scrutiny. Mexico has become a U.S. nearshoring country and has partnered with it, and Vietnam could be the next target. However, due to the close ties between China and Vietnam and other uncertainties, the U.S. will face challenges in implementing security review cooperation in Vietnam. Vietnam's geographical location and its importance in China's manufacturing spillover make it a focal point for the US-China contention. In addition, the stability of US policy is also a key factor in the implementation of this strategy. For China, this change needs to be closely watched and continuously addressed.