Since the beginning of this year, the United States has been promoting "de-risking" in its economic policy, trying to "cut off the course" in economic ties with China. However, they have found that Chinese companies are clever enough to circumvent regulations and high tariffs by setting up factories in Southeast Asian countries such as Vietnam. This made the United States realize that decoupling and breaking the chain is not realistic, so they began to explore new methods, emphasizing increased investment in nearshoring countries and security vetting. Vietnam is a major U.S. contention because of its geographical location and role as a processing and re-export center for China. However, will the United States be able to replicate the measures taken in Mexico?The next year or two will be key.
Vietnam, as the gateway to southern China, has seized the opportunity of manufacturing spillover in recent years and has become an important part of China's processing and manufacturing and re-export. Chinese companies have seen the potential of Southeast Asian countries and are relocating factories to countries such as Vietnam and India to circumvent regulations and high tariffs. Manufactured goods from these countries have obtained certificates of origin in the Chinese market, thus effectively circumventing the restrictions of high tariffs. In the process, Vietnam and the entire Southeast Asian region quickly became an important part of China's manufacturing industry. However, the decoupling and chain disconnection strategy pursued by the United States in recent years has accelerated Chinese investment in countries such as Vietnam. In the face of this phenomenon, Biden had to admit the unreality of decoupling and breaking the chain, and began to turn to a "de-risking" policy.
In order to deal with the risks that foreign investment may bring, the United States has worked with Mexico to strengthen the foreign investment screening mechanism. Although China is not explicitly mentioned in the agreement, it is clear that the United States is helping Mexico strengthen security screening of foreign investments. This marks the beginning of the U.S. "de-risking" strategy: in addition to blocking cutting-edge technology and vetting homegrown**, it has also strengthened investment in nearshoring countries and security vetting**. So, will the U.S. promote security reviews in friendly offshore outsourcing countries next?Vietnam has a good chance of becoming their next target.
In April this year, U.S. Secretary of State Antony Blinken visited Vietnam, and in September, Biden personally visited Vietnam and elevated the relationship between the two countries to a comprehensive strategic partnership. This move is puzzling because, apart from this adjustment, there has been no substantive cooperation between the United States and Vietnam. However, we ignore that this is exactly the foreshadowing of the U.S. layout in Mexico. They first invest in nearshoring countries and conduct security reviews, and once this model matures, they will promote it to friendly offshoring countries, which is consistent with the usual pressure of the United States. Vietnam has become a focal point in the U.S.-China relationship because of its geographical location and economic ties with China.
However, will the U.S. be able to replicate their successful model in Mexico in Vietnam?Vietnam and other Southeast Asian countries share different cultural backgrounds and political environments than Mexico, making it difficult for the United States to achieve the same degree of control. In addition, U.S. policy is subject to change after a transition, so it remains to be seen whether U.S. strategy in Vietnam will be sustainable. However, in the long run, the economic ties between China and Vietnam will be a factor that cannot be ignored, which may pose some resistance to the "de-risking" strategy of the United States.
By looking at U.S. policy adjustments and focus on Vietnam, we can see the shift in U.S. economic policy. From the initial decoupling and chain breaking to the current de-risking, the essence is not much different, it is all the United States trying to reduce economic ties with China and protect its own national interests. In practice, however, the United States may face some challenges and unknown dilemmas, especially when working with countries like Vietnam with different political environments and cultural backgrounds. Whether or not the U.S. succeeds in replicating the Mexican model, the U.S.-China rivalry is bound to affect the economic landscape of Southeast Asia. For China, it will become an important strategic measure to continue to strengthen cooperation with Vietnam and other Southeast Asian countries and enhance its competitive advantage.