US embassy cable - 05HANOI1143

C O N F I D E N T I A L  HANOI 001143 
 
SIPDIS 
 
 
E.O. 12958: DECL: 05/16/2015 
TAGS: CH, MOPS, PGOV, PREL, SENV, TW, VM, CVR 
SUBJECT: VIETNAM AND CHINA: COMING AROUND WARILY 
 
REF: A. HANOI 247 B. 04 HANOI 2745 C. IIR 6 950 0016 
     05 D. IIR 6 950 0027 05 
 
Classified By: Charge D'Affaires John Boardman. Reason: 1.4 (D). 
 
1. (C) Summary: After a rocky six months (ref A), China and 
Vietnam are knitting relations back together.  An exchange of 
leader visits is in the works, the GVN is looking forward to 
a China-hosted conference on the Mekong and the Chinese 
Minister of State Security recently visited Vietnam for talks 
on sensitive security issues.  Scholarly and ideological 
exchanges have carried on throughout, focusing on the 
challenges for continued regime maintenance on both sides; 
the pros and cons of economic liberalization and development; 
and, the inescapable fact of American dominance on the world 
stage.  Positive steps are tempered, however, by suspicion: 
Vietnam's decision to participate in the joint seismological 
survey in the South China Sea was made reluctantly, and some 
in the Ministry of National Defense are concerned that China 
may be planning military moves in the Spratlys, including 
attacking a Taiwan-held island.  End Summary. 
 
HIGH LEVEL VISITS 
----------------- 
 
2. (SBU) Various sources in the GVN, including the Ministry 
of Foreign Affairs (MFA) China Desk, confirmed that Vietnam 
and China are actively planning to exchange leadership-level 
visits beginning in the second half of 2005.  After being 
frustrated in their efforts to nail down a visit by Chinese 
President Hu Jintao during the October visit of PM Wen Jiabao 
(ref B), in late 2004 Vietnam persuaded China to commit to a 
Hu visit in March of 2005, according to the Japanese Embassy 
in Hanoi.  Following the January 8 incident in the Gulf of 
Tonkin when Chinese maritime police clashed with Vietnamese 
fishermen, killing eight (ref C), the Chinese reportedly told 
the GVN the Hu visit would have to be rescheduled.  (Note: 
GVN officials would not confirm this version of events, or 
even that a Hu visit had been scheduled at all for March. 
End note.)  Hu's new date is not set, but Chinese and 
Vietnamese officials said it would occur in the "second half 
of 2005."  A visit by Vietnamese State President Tran Duc 
Luong may happen in the next three months (Institute for 
Chinese Studies), or it may happen in early 2006 (MFA China 
Desk). 
 
3. (SBU) Dr. Do Tien Sam, head of the Chinese Studies Center, 
told Poloff that in June or July the Chinese PM will host a 
Greater Mekong Subregion conference in Yunnan Province to 
discuss problems related to the Mekong River.  All of the 
Prime Ministers of the downstream countries will be invited 
to the conference, Dr. Sam said.  "The meeting was requested 
by the downstream countries," Dr. Sam observed, "and China's 
decision to hold the meeting demonstrates China's willingness 
to address the concerns of downstream countries.  The 
province of Yunnan has plans to build hydroelectric dams on 
the Mekong, with potentially serious effects for us.  But 
downstream countries recognize that no solution is workable 
without Chinese participation." 
 
SECURITY COOPERATION 
-------------------- 
 
4. (C) The recent marquee event in Sino-Vietnamese relations 
was the visit to Vietnam of Minister for State Security (MSS) 
Xu Yongyao, the first time a Chinese Minister of State 
Security has visited Vietnam.  Vietnamese Ministry of Public 
Security (MPS) official Tran Van Trinh told Poloff that the 
visit, which was reciprocating a visit to China in 2003 by 
Vietnamese Minister of Public Security Le Hong Anh, was 
positive and that the two sides had signed "an agreement 
highlighting our very good cooperation."  Trinh said the 
agreement covered "the security side" and complemented 
"another subagreement" with China signed last year covering 
the police sector.  Together, the two agreements commit both 
sides to close cooperation on crime prevention, 
counterterrorism, counternarcotics and anti-trafficking in 
persons.  Both sides have also committed to "cooperate in 
protecting social order and security in border areas," Trinh 
said.  He further described the agreements as "a general 
framework containing a commitment to cooperate on 
transnational crime issues and for China to provide 
assistance to Vietnam on capacity building."  The only 
specifics in the agreement, he said, were in the section 
identifying communications channels between the two 
Ministries.  (Note: Neither Trinh nor any of our contacts in 
the Chinese Embassy would provide a copy of these "sensitive" 
agreements.  End note.) 
 
5. (C) A Chinese national source added that the Chinese were 
unpleasantly surprised by the GVN's decision to announce in 
the press what was supposed to be a secret visit.  Xu's 
delegation included the director of MSS's Bureau of 
Intelligence, the director of MSS's Bureau of International 
Cooperation, and the Security Bureau directors of Guangxi and 
Yunnan provinces, the source said.  The agreement Xu signed 
is the fourth security-related agreement China has signed 
with Vietnam, following agreements signed with the Chinese 
Ministry of Defense (MOD), Ministry of Foreign Affairs (MFA) 
and Ministry of Public Security (MPS), he explained.  The 
agreement covered intelligence exchange; a regular exchange 
of visits "at the leadership and scholar levels;" "security 
equipment" Vietnam wanted to purchase such as recording 
equipment, typing equipment, reconnaissance equipment, and 
"general equipment;" and, a commitment to cooperate in the 
fight against transnational crime.  In all, the source 
assessed, it was a successful visit. 
 
DEFENSE COOPERATION 
------------------- 
 
6. (C) Bilateral defense cooperation remains cool and 
measured, resting entirely on the framework of the October 
2003 Memorandum of Cooperation (signed by the MND in 2004) 
spelling out the mechanism for interaction between China and 
Vietnam's Ministries of Defense.  In April 2005, the PAVN's 
Deputy Chief of General Staff visited his counterpart in the 
PLA (ref D).  We have no details on any outcomes of this 
visit, which the Vietnamese MND characterized only as 
"maintaining the relationship."  In the last year, there have 
been no bilateral defense-related contacts other than those 
specifically cited in the 2003 Memorandum. 
 
IDEOLOGICAL COOPERATION/SCHOLARLY EXCHANGE 
------------------------------------------ 
 
7. (SBU) As both China and Vietnam grapple with the 
contradictions inherent in attempting to maintain a 
traditional communist political system while encouraging 
free-market-driven economic growth, ideological cooperation 
and scholarly exchange remain an enduring bright spot in 
bilateral relations.  The Presidents of China and Vietnam 
will have the "important task" of addressing basic 
ideological issues, Dr. Sam said.  "We have no choice," he 
said,  "bilateral cooperation has to become more 
comprehensive in light of problems of market openness and 
economic development."  It falls to the State Presidents, he 
continued, to address the question of whether it is possible 
to combine socialism and a market economy. 
 
8. (SBU) Vietnamese and Chinese scholars and government 
officials, as well as Party officials, frequently exchange 
ideas on these subjects, Dr. Sam said.  Regardless of the 
state of bilateral relations, the ideological conversations 
continue.  "Vietnam and China learn from each other.  Vietnam 
in particular looks to China to learn how certain economic or 
political initiatives will affect society."  Dr. Sam provided 
illuminating detail on the topics of conversation between 
Chinese and Vietnamese scholars and government-supported 
thinkers. 
 
Private sector development vs. encouraging SOEs 
--------------------------------------------- -- 
 
9. (SBU) Both China and Vietnam agree that the State sector 
plays a key role in the economy, Dr. Sam said.  China has 
"taken many measures" to develop the private sector and plans 
that in 5-10 years the private sector will contribute 60 
percent of GDP.  In formal papers, Chinese scholars write 
that the State sector is key; in reality, the Chinese 
government actively encourages the private sector, he noted. 
Vietnam also says officially that the State sector plays a 
key role, but in reality encourages the private sector. 
Increasingly, in both countries, the private sector complains 
about the uneven playing field with State-owned enterprises 
(SOEs). 
 
10. (SBU) This issue is a major subject for exchange and 
discussion between Vietnamese and Chinese experts, Dr. Sam 
said.  "Should we keep this idea of saying the State plays 
the key role?  That implies the official prioritization of 
SOEs in economic development.  We need a breakthrough in our 
ideological thinking.  In a market economy, all players 
should be equal.  The challenge that (Chinese and Vietnamese 
thinkers) face is how to express these ideas with a proper 
socialist orientation." 
 
Rule of law 
----------- 
 
11. (SBU) The second major subject of dialogue and exchange 
among Chinese and Vietnamese intellectuals and Party members 
is rule of law, Dr. Sam continued.  "Both countries say 
explicitly they are trying to build rule of law.  But there 
are contradictions.  Rule of law implies a nation of a 
constitution and laws.  But we are one-party states, so how 
can we say we recognize rule of law?  In China people say 
rule of the Party is higher than the rule of law or the 
rights of people.  All branches of government are controlled 
by the Party.  In the United States, the branches are 
independent and the supreme power is the Constitution. 
Regardless of the party the President comes from, he must 
work under the Constitution." 
 
12. (SBU) "In Vietnam and China," Dr. Sam observed, "the 
branches are not independent and must coordinate in 
accordance with a mechanism controlled by the party.  It 
isn't even an effective coordination system.  To move towards 
a market economy, we need to strive for rule of law, but what 
a rule of law country is remains unclear to us.  These are 
issues Vietnam and China are exploring together." 
 
Social consequences of economic development 
------------------------------------------- 
 
13. (SBU)  For the past 20 years, Vietnam and China have 
focused on building their economies, with success in 
promoting economic development but with some problems as 
well, Dr. Sam said.  In China, problems have fallen heavily 
on rural areas as rapid urbanization has caused farmers to 
lose land; in 2004 more than 40 million Chinese farmers lost 
land and were compensated at "low rates," he explained. 
Worse, as much as 15 percent of the limited compensation 
farmers did get was siphoned off by "local and state agents." 
 The Chinese people criticize their government, Dr. Sam said, 
because "the farmers don't have fields, the workers don't 
have jobs, and the people don't have social security."  The 
same issues are beginning to confront Vietnam, Dr. Sam said, 
"and, if we ignore them, dangerous instability will follow." 
 
14. (SBU) "Farmers represent 80 percent of our population," 
Dr. Sam continued.  "Fifty percent of those are subsistence 
farmers who produce no surplus.  They have nothing with which 
to participate in the market and do not benefit from 
market-based reforms.  All these people see is an increasing 
gap between what they have and what the rich have." 
Addressing this potential threat to social stability and to 
the people's confidence in the regime is a very important 
topic of discussion between Vietnam and China, he noted. 
 
15. (SBU) "Our other common interest is corruption, which has 
reached the level of a national disaster here and in China," 
he continued. 
 
The international situation 
--------------------------- 
 
16. (SBU) Chinese and Vietnamese scholars and thinkers spend 
a great deal of time analyzing global trends and politics, in 
particular the role of the United States, Dr. Sam said.  Both 
countries agree that "multipolarization" is both desirable 
and difficult.  Practically, Vietnam and China have to 
acknowledge that there is only one pole - the United States. 
"The United States has an economic, political, 
technical/scientific and military advantage," Dr. Sam 
explained.  "Acknowledging this is a new aspect of bilateral 
relations between Vietnam and China.  Before we only 
acknowledged the economic, technical and military advantage 
of the United States.  Now we acknowledge cultural and 
political dominance as well."  Chinese scholars and 
government officials admit that the U.S. political system is 
"optimal," Dr. Sam said, "and for the next 25 years no one 
will be able to counterbalance that advantage.  We agree with 
that assessment." 
 
JOINT EXPLORATION IN THE SPRATLYS 
--------------------------------- 
 
17. (SBU) Vietnam's announcement earlier this year that it 
would join an announced China-Philippines joint seismological 
survey expedition in the South China Sea came as a surprise 
to some within the GVN.  Dr. Sam characterized it as a 
"positive development," but acknowledged that the GVN had 
stalled as long as possible before finally agreeing to 
participate, having given up on the possibility that the 
expedition would not go forward.  "If Vietnam does not 
participate, China will continue to exploit these oil 
resources with other bilateral partners, and Vietnam's stocks 
of oil will be depleted by China's straw in our teapot," Dr. 
Sam said. 
 
18. (C) A Chinese Embassy source explained to Poloff, "once 
we got the Philippines to agree, Vietnam had no choice. 
Refusing to participate would weaken their claims over 
economic resources.  Joining us is an admission that we have 
the right to be there.  When they realized they could not 
prevent the expedition, they decided it was better to join 
it." 
 
VIETNAMESE NAVY SEES POSSIBLE CHINA-TAIWAN SPRATLYS CLASH 
--------------------------------------------- ------------ 
 
19. (C) An SRV Navy officer working in the Ministry of 
National Defense explained that Vietnam knows "from long 
experience" that China balances positive and peaceful actions 
and statements with aggressive or confrontational moves, a 
dialectic the Vietnamese call the "look East, hit West" 
policy.  In the current environment, the Vietnamese Navy's 
assessment, according to this officer, is that China will as 
a "next step" follow up the tripartite seismological 
expedition with an attack on Taiwan forces occupying the 
"Peace" island (aka Itu Aba island, located at 114 degrees 22 
minutes E longitude and 10 degrees 23 minutes N latitude). 
In addition to "advancing Chinese control over the Spratlys," 
this action would "provide China with valuable information 
about the nature and extent of U.S.-Taiwan military 
cooperation and coordination without a significant risk of 
U.S.-China conflict," the officer said, because "the United 
States would not involve itself in Spratlys disputes."  The 
next step after that, he continued, would be the occupation 
of Vietnamese-held islands.  (Note: We have not been able to 
corroborate this officer's statement, and we note that 
defending Vietnam's claims over the South China Sea is a 
substantial part of the Navy's reason to exist.  Assessments 
of potential Chinese naval action in the South China Sea 
would support the Vietnamese Navy's requests for resources 
and position within the military hierarchy.  These factors 
could affect the Navy's conclusions about China's intentions; 
additionally it is possible that this officer was expressing 
his own opinion and characterizing it as that of the Navy. 
The comment is useful mainly to illustrate the level of 
mistrust of China that exists in the Vietnamese military. 
End Note.) 
 
COMMENT 
------- 
 
20. (C) Broadly and generally speaking, the attitude of the 
Vietnamese power structure towards China is split.  On one 
side are self-proclaimed nationalists, often connected with 
the military, who see China as a threat to Vietnam's 
sovereignty and territorial integrity.  On the other side are 
those who see close relations with China as the best way to 
guarantee continued economic development and the maintenance 
of CPV power.  These two sides balance each other: the 
military remains vigilant against encroachment on Vietnamese 
territory, and the Party actively pursues closer ties and 
dialogue.  While we do not see a momentous or enduring shift 
in GVN-Chinese relations, things have definitely improved 
since the glacial conditions that prevailed after the fishing 
boat shooting incident in January 2005.  This has been a 
result of conscious effort by the GVN, which strives to 
maintain stable and friendly relations with China and the 
United States simultaneously. 
 
21. (C) Comment continued: Dr. Sam's description of recent 
ideological and scholarly exchanges between China and Vietnam 
is interesting because of the acknowledgement of corruption 
as an internal threat to both the CPV's and CCP's hold on 
power, and the assessment of the power and "optimal 
character" of the political system and culture of the United 
States.  The last time we asked about China-Vietnam 
ideological exchange (in February 2004), our Vietnamese 
interlocutors would admit only to discussing issues that fall 
comfortably within the boundaries of orthodox 
socialist/Communist Party doctrine, such as resolving social 
inequalities and recruiting high-quality cadres.  Our more 
recent conversation indicates that the China-Vietnam dialog 
has matured considerably and become more realistic. End 
Comment. 
Boardman 
 
 
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