China Power

China, Vietnam Ink Deal

China and Vietnam have signed an agreement to set up a hotline to help reduce tensions in the South China Sea.

China and Vietnam have stood down a little from their confrontation over disputed waters in the South China Sea, signing an agreement that will include the setting up of a hotline between the two countries’ capitals to resolve crises and the creation of semiannual talks aimed at finding ‘a mutually acceptable basic and long-term approach to solving maritime disputes.’ 

But Vietnam wasted no time in firing the next shot in the ongoing territorial dispute. As Vietnamese Communist Party Chairman Nyugen Phu Trong signed the agreement in Beijing, President Truong Tan Sang was negotiating another agreement in New Delhi on Wednesday that will double down on India’s support for Vietnam’s maritime claims. 

The Indian agreement will expand joint oil exploration in Vietnamese waters, bringing Indian state-owned enterprises into the disputed area, and committing India to supporting Vietnam’s position. China has warned India about getting involved before, fearing isolation over its territorial claims. Tuesday’s agreement may be a blow for the Philippines’ effort to organize a united ASEAN stance against China’s position, but a state visit by Vietnam to the Philippines announced for March will give President Benigno Aquino a chance to persuade Vietnam to join its proposed framework. 
Indian and Vietnamese leaders dismissed suggestions that the new agreement is a rebuff to China, using the argument that Vietnam’s position is clearly right.  President Truong said in a Hanoi interview that ‘All cooperation projects between Vietnam and other partners, including ONGC, in the field of oil and gas are located on the continental shelf within the exclusive economic zone and under the sovereign rights and jurisdiction of Vietnam, entirely in conformity with international laws, especially the 1982 UN Convention on the Law of the Sea.’
Vietnam’s oil deal with India comes as part of a broad raft of agreements, including an extradition agreement and other economic initiatives. Coming only a day after the country made its effort to appease China, recommitting to joint oil exploration is a bold step – even more so considering that China is Vietnam's largest trading partner, with a total volume of $27 billion in 2010 – about ten times its $2.7 billion volume with India.  
Vietnam’s apparent commitment to India illustrates a growing challenge of China’s rise – as it gains in power and assertiveness, China faces a serious risk of driving its neighbours (and in Communist Vietnam, comrades), into strategic alliances aimed at balancing and possibly containing the rising superpower.