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Vietnam has a lot to lose if its anti-Chinese riots continue

Vietnam: China’s move to place an oil rig to the disputed territory, in the South China Sea, sparked a riot by the Vietnamese dissidents, and there were twenty people died in violence most of them Chinese. The Taiwanese steel mill has been undergoing construction that causes the riots.

Vietnam: China’s move to place an oil rig to the disputed territory, in the South China Sea, sparked a riot by the Vietnamese dissidents, and there were twenty people died in violence most of them Chinese. The Taiwanese steel mill has been undergoing cons
Photo by Pool/Getty Images

The tension soars between the two countries and escalates on potential damage for Vietnam, which relies heavily on foreign investment and tourism. Vietnam’s GDP growth of 5.43% in 2013 was boosted significantly by foreign companies, including the establishment of thousands of foreign projects and factories in recent years, and foreign tourist visitors of more than 7 million.

Industrial output from foreign-owned industries has been rising, and made up 46% of the country’s overall industrial output in 2012, which is the most recent government data available.

At this time, the Chinese investors are not in the forefront of this trend: In the first 10 months of 2013, the biggest source of foreign direct investment in Vietnam was Japan, with $4.8 billion, followed by Singapore and South Korea. However, rioting factory workers did not make much difference. “We kept telling the rioters that we are Taiwanese, not Chinese, but they wouldn’t listen,” the head of a Taiwanese business association told Vietnamese television.

Vietnam is more dependent on China’s raw materials supplied to its factories. It gets about one-quarter of its imports from China.

“This is serious,” Vietnamese Prime Minister Nguyen Tan Dung said in a telegram to Vietnamese police, the AP reported. “There are reports of a growing police presence on the ground,” the US embassy said in a message to its citizens in Vietnam.

Further escalation of the situation seems like a very real possibility. Vietnamese state-run newspapers on Wednesday ran photos of Chinese's ships attacking Vietnamese vessels near the oil rig, which were attributed to the Vietnamese Coast Guard.

Unlike Japan and the Philippines, conflict on their own maritime disputes with China. Vietnam is not able to call on the United States as a military ally. Still, the US Navy’s Seventh Fleet is pushing for more port visits to Vietnam as a counterweight to China, Reuters reported. A Vietnamese military source told Reuters the country was “talking to the US, but it was too early to say how the recent tensions could affect the US-Vietnam relationship. “We have a lot to consider,” the source added, in a massive understatement.