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Wed. December 06, 2023
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The Poster Child of whom: Washington or Beijing Consensus
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By Nima Khorrami Assl After decades of enduring struggle against foreign powers, beginning with the French and then the Americans, Vietnam finally realized its goal of a unified and sovereign nation in 1975 under the sole leadership of the Vietnamese Communist Party (VCP). In the immediate aftermath of independence, the VCP seemed incapable of living up to the aspirations and expectations of the Vietnamese public failing to improve the living conditions of the millions of people who had made tremendous personal sacrifices for the revolution; a development that had its roots in legacies of war, international economic sanctions led by the U.S., economic mismanagement, and the collapse of the Soviet Union. By the 1980s, therefore, it had become clear to the VCP leadership that continued economic stagnation would eventually erode party's legitimacy in the public eyes. The party sensed an urgent need to reform its economic policy, and that it adopted a new policy in 1986 commonly referred to as doi moi or the 'politics of renovation' aiming at economic modification, administrative decentralization, and market liberalization. There was then a turn of fortune for the Vietnamese state with the economy growing by an annual average rate of 7.5%-8% during the period of 1989-1995. Many observers in the West, however, remained skeptical. There were concerns about Vietnam's inadequate civil service, its amateurish management of economic risk, and its power deficit in comparison to more advanced emerging markets to dominate investor interest. Indeed, these factors, combined with the financial crisis of 2008, left Vietnam with the highest inflation rate in its neighborhood to the extent that the political survival of reformist Prime Minister Nguyen Tan Dung was threatened. Nevertheless, Vietnam remained politically stable through the tough times, and, despite pressure from conservatives, the bureaucracy has largely remained committed to reform. Investors are now buzzing about opportunities in Vietnam's major cities and its provinces with export zones, and there is a rapidly evolving interest, particularly from Japan, South Korea and the multinational corporations, in Vietnam's export infrastructure not least because the cost of labor is rising in China. What is more, Doi moi has particularly had a great impact upon agriculture for it shifted the state's agricultural policy from collectivization to a household responsibility system. Agricultural production has significantly increased since 1986 enabling a country of 85 million, once barely able to feed itself, to transform itself from a rice importer into the third largest rice exporter in the world. Vietnam has also become a key exporter of clothes, shoes, furniture, and microchips as of 2010 when Intel opened its $1 billion factory outside Ho Chi Minh City. All this has kept government revenues buoyant and thus the government is now both willing and able to spend more on power generation, roads and rail. As such, much of the praise now being showered on Vietnam is well-deserved though the going will get tougher as Vietnam becomes richer. Vietnam will need to diversify its foreign lenders portfolio in order to compensate for its loss of international finance in the face of its emergence as a middle-income country. On the political front, the government urgently needs to tackle elite' corruption and also reform the legislative and bureaucratic processes. Yet, Vietnam is still considered to be a plausible candidate to write another story of sustained growth similar to that of China. So, the interesting question to be asked is whose guidance has Vietnam been following for in this question lies a geopolitical possibility that could challenge the western narrative that sees democracy and economic prosperity as the two sides of the same coin. Vietnam's Communists brought in market-based reforms similar to those Deng Xiaoping had introduced in China. As a result, many have compared Vietnam to China given the similarities between the two countries which go far beyond social and cultural aspects. To transform from a centrally-planned economy to a more market-oriented economy, both countries started with de-collectivizing land usage and adopted a gradualist approach to state-owned sector reforms, at the same time as they opened up to foreign trade and investment. What is more, and like China, economic transformation and liberalization in Vietnam was not preceded or accompanied by political liberalization. Nevertheless, Vietnam has managed to make remarkable strides in poverty reduction. Therefore, uninterrupted economic modernization in Vietnam can provide developing countries with a different model for development based on Beijing rather than Washington consensus where a strong, responsible government has the priority over democracy and human rights. This significantly adds to China's soft power in the developing world which in turn explains why China pays close attention to socio-economic developments in Vietnam. Nima Khorrami Assl is a researcher at the UK Defence Forum in London.

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