Vietnam’s recent military and naval modernization potentially puts it on a collision course with China. Aside from further destabilizing regional security, such tensions could scare off Chinese investors, a disastrous development for Vietnam’s economy.
Over the past decade, Vietnam has embarked on a long-delayed, wide-ranging military modernization project. As recently as a decade ago, Vietnam’s navy was armed chiefly with 1960s-vintage Soviet equipment and American models taken after the fall of South Vietnam.
Now, Vietnam has ordered equipment from a number of countries, including maritime patrol aircraft from Canada and Sigma Corvettes from the Netherlands. Spurred by growing fears of Chinese maritime assertiveness, Hanoi has also turned to its traditional patron Russia in a bid to update its naval capabilities.
The partnership between Russia and Vietnam is multi-faceted, covering energy cooperation, trade and investment, and perhaps most poignantly, military equipment and technology. The bulk of Hanoi’s new military purchases come directly from Russia, including the Vietnamese navy’s workhorse, the Gephard-class light frigate. Vietnam has purchased six of these vessels from Russia, with the sale of the latest two coming in March. The Vietnamese variants are packed with anti-submarine warfare capabilities, making them powerful tools in a region with fast-growing submarine arsenals.
China’s own naval overhaul – arguably the Asia-Pacific’s most destabilizing trend – includes a vast expansion of its submarine fleet aimed at countering US surface fleet superiority. With the purchase of six Kilo-class submarines from Russia, evidence is mounting that Hanoi may be looking into adopting a similar strategy vis-à-vis the People’s Liberation Army Navy.
The 3000-tonne Kilo subs are armed with Klub-S anti-ship cruise missiles and are well-equipped for quick strikes against larger vessels. Given Vietnam’s proximity to the PLAN Southern Pacific Fleet in Hainan, and China’s relatively-poor anti-submarine capabilities, these subs could prove to be the biggest game-changer.
One of the most overt risk factors stems from the heightened tension that a modernized Vietnamese military will bring to the region. The Asia-Pacific is in the midst of a full-scale arms race with regional procurement spending expected to account for 28 percent of global defence spending by 2020. Hanoi, though risk-averse and wary of antagonizing Beijing, may become increasingly confident in its military prowess.
The disputed Spratly and Paracel islands – a number of which were seized by China in 1974 and 1988 – continue to be sore wounds for Vietnam. Anti-Chinese nationalism could embolden the Vietnamese defence establishment to push these longstanding claims more forcefully.
Skirmishes between Vietnam and China could well take place in coming years, especially if bilateral ties continue to fray (and long-term trends point to this being the case). The lack of a clear chain of command and general overlap between China’s various maritime agencies only heightens the risk for a miscalculation by the Vietnamese.
Though Hanoi and Beijing will likely be quick to either gloss over or cover up such events, repeated stand-offs or actual skirmishes could scare off investors, both international and Chinese. Vietnamese dependence on China is immense: Chinese FDI in Vietnam hit a record $2.3 billion in 2013, spiking from USD$370 million in 2012. Much of this has been pumped into the country’s booming textile and real-estate sectors. Chinese companies control up to 90 percent of engineering, procurement and construction contracts in Vietnam’s various industrial zones.
An escalation in China and Vietnam’s maritime disputes, spurred on by Vietnam’s military modernization, will stoke pre-existing anti-China nationalist sentiments and pave the way for an anti-Chinese business climate in Vietnam. This would prove disastrous to the Vietnamese economy.
The memories of Vietnam’s naval defeats are still fresh on Hanoi’s mind. Though it will take years to reach its goal of a modern navy, Vietnam’s drive for a maritime force able to go toe-to-toe with its northern neighbour only adds another layer of risk to the region.