In recent years, the United States has emphasized that it does not seek to decouple from China, but to adopt a "de-risking" economic policy. De-risking is to reduce dependence on China and diversify economic risks by finding other countries to replace China's position in the ** chain. Recent U.S. actions show that Vietnam is becoming a key country in their contention.
Vietnam has seized the major historical opportunity brought about by the spillover of manufacturing and has become increasingly economically connected with China. With the growing investment of Chinese companies in countries such as Vietnam and India, Southeast Asia has quickly become a part of Made in China, becoming a hub for processing manufacturing and entrepots. After Biden took office, the United States turned to "nearshoring" mainly in Mexico and Canada, thus replacing China's position in the United States. However, the U.S. underestimated the ingenuity and determination of Chinese companies, which they did not expect to relocate from Southeast Asia to Mexico. In fact, many Chinese companies have already taken this step. For several years, the United States has had to admit that decoupling is unrealistic and has begun to turn to a "de-risking" strategy.
In order to implement the de-risking strategy, the United States and Mexico signed an agreement to strengthen cooperation in foreign investment screening. Although the agreement does not explicitly mention China, it is clear that the United States is working with Mexico to increase scrutiny of foreign investment and deal with foreign investment that could pose a risk to the country. This has led to the emergence of a "de-risking" strategy, in addition to blocking China's cutting-edge technology and censoring its own country, the United States has also stepped up investment and security vetting in nearshoring countries.
The United States is turning its attention to Vietnam, trying to replicate Mexico's model in Vietnam. In April this year, U.S. Secretary of State Antony Blinken visited Vietnam, and in September, Biden personally visited Vietnam and elevated the U.S.-Vietnam relationship to a comprehensive strategic partnership. This puts U.S.-Vietnam relations on the same level as China's relations with Vietnam. Next, will the U.S. implement a Mexico-like model in Vietnam?Will they be able to succeed?
Although Biden did not achieve substantial cooperation during his visit to Vietnam, it laid the foundation for the future layout. The U.S. will first invest and conduct security reviews in nearshoring countries in Mexico and will try to extend this model to friendly sourcing countries. The U.S. has always adopted a strategy of maximum pressure, so once they take the first step, they will continue to push the bottom line. However, we need to understand that there is no essential difference between decoupling and de-risking, only a slight difference in degree, and this is just a play on words by the United States.
Vietnam's geographical location is very important, coupled with the fact that it has undertaken the largest number of processing and manufacturing and entrepot exports from China in recent years, making it a focus of competition between China and the United States. However, there are some difficulties for the United States to successfully implement its de-risking strategy in Vietnam. In addition, if the United States changes its **, the continuity of policy will also face challenges. The answer to this question may be available in a year or two.
In recent years, the United States has adopted a "de-risking" strategy, looking for other countries to replace China's position in order to reduce its dependence on China and economic risks. Mexico and Canada became U.S. nearshoring countries and replaced China as the top two U.S. partners. However, the U.S. underestimated the ingenuity and determination of Chinese companies, and did not expect Chinese companies to move their factories to Mexico. Faced with the actual situation, the United States began to realize that decoupling was unrealistic and turned to a "de-risking" strategy.
In order to implement de-risking, the United States signed an agreement with Mexico to strengthen cooperation in foreign investment screening and is trying to extend this model to Vietnam. However, the implementation of the de-risking strategy may be difficult in Vietnam due to its geographical location, strong economic ties with China, and a large proportion of Chinese investment and manufacturing in Vietnam.
Overall, the U.S. de-risking strategy faces challenges in Vietnam, and its success will depend on a variety of factors, including the continuity of U.S.** policies and the response of Chinese companies.