Riding on the back of a motorbike is probably the best way to see Vietnam’s capital. The hair-raising experience lets you feel the energy on the street, the incessant buzz of small businesses, the informal sidewalk kitchens, and the surprisingly large numbers of Western tourists gawking at the fading yellow French colonial architecture. Compared to other economies in Asia, Vietnam seems a sure growth bet for the next quarter century. Yet capitalizing on that potential will task the government even as it eyes closer relations with its erstwhile enemy, the United States.
The plethora of goods, restaurants, and crowds make it easy to forget this is still a Communist-run country. Everywhere one looks, newlyweds in their wedding best pose for pictures, dotting major parks or central Hoan Kiem Lake, or clustering in front of the majestic Opera House. Officials in Vietnam seem genuinely interested in dialogue, while people on the street are invariably helpful. They pepper a visitor with questions, seeking answers about development or trying to understand what’s going on in America.
This country of 87 million has a median age of 27 years, and over 60 million of its people are between the ages of 15 and 65. Its nominal GDP per capita, according to the World Bank, was $1,224 in 2010, about a quarter of the size of China’s, but has been growing rapidly over the past decade thanks to steady growth in GDP, including a 6.8 percent growth rate in 2010. Even though China is Vietnam’s largest trade partner, trade between Vietnam and the United States increased more than six-fold from 2002 to 2010, to $18.6 billion.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Most of the Vietnamese business and trade officials I talked with were eager for Vietnam to have greater access to world markets and the modernization that it would force on Vietnam’s export sector. There was particular interest in discussing whether Vietnam, with its nearly 3,500 kilometers of coastline, can become a major logistics center for Asia. In general, officials openly acknowledge economic problems, including a volatile 18 percent inflation rate and the need to move up the value chain in production. A recent consultant group study flagged dangers to growth in Vietnam at the macro level, calling for more reform. But demand at the micro level is what will keep the economy humming.
Officials are also aware how future economic performance is tied to higher education, and of the need to adequately fund their growing universities. I visited one of Vietnam National University’s campuses, where the upbeat energy of the students stood in stark contrast with the run-down and utilitarian buildings.
The Vietnamese have successfully merged the past and future in the footprint of Hanoi. While much of the city retains its colonial charm, perhaps the most prominent symbol of development stands at the site of the old Hanoi Hilton, the downtown French prison that became notorious in America for housing downed U.S. airmen during the war. Only about a fifth of the original Hoa Lo Prison remains, and is now a museum. Covering the rest of the site, and looming over the old barracks and entry gate is the Hanoi Towers complex, hosting a Western hotel and high-end goods shops. Yet still surrounding it are temples, small coffee shops, “Made in Vietnam” clothing stores, and storefront restaurants.
A shared wariness of China has been the major reason for the United States and Vietnam to explore closer ties. Yet despite strategic concerns, the biggest obstacle to closer Washington-Hanoi ties remains politics. In particular, the two governments remain years apart on human rights issues, as well as on freedom of expression for political and religious purposes. The Communist Party shows no signs of relaxing its political hold, and is quick to squelch overt political criticism. But that doesn’t seem to impinge particularly much on how individuals choose to engage in economic activity. U.S. officials I talked with stressed the need to move slowly, not only to deal with these problems, but also because the Vietnamese remain extremely wary of getting too close to the United States and then being sacrificed on the altar of Sino-U.S. relations.
Washington's relationship with Vietnam may be one of its most delicate, yet important in the coming decades. As long as U.S. leaders are realistic about the limitations, there’s a huge area to fill with development assistance, security discussions, and trade. The welcoming attitude of Vietnamese towards Americans only reinforces the feeling that this is one country whose energy Washington should embrace.
Michael Auslin is a resident scholar in Asian and security studies at the American Enterprise Institute.