Vietnam tensions loom large as Communist party congress begins
Economy, political reform and China relations in focus at start of five-yearly meeting

Michael Peel in Hanoi

Vietnam’s ruling Communist party is preparing to select its next leaders at its five-yearly congress, amid tensions over China, the economy and the pace of political reform. The weeklong event in Hanoi offers a rare glimpse of the power struggles inside one of Southeast Asia’s largest countries and fastest-growing economies. Here are the big themes facing the country.

Who’s who

Not many people think the country is set for radical change. While internal battles are taking place, none of the likely new leaders is expected to push hard for greater freedom of speech, accelerated economic change or a love-in with China. Much of the smart money is on Nguyen Phu Trong, the party general secretary and one of a triumvirate of senior leaders, having his term extended by a year or two. An effort by one party faction to install Nguyen Tan Dung, prime minister for 10 years, as general secretary appears to be foundering — although the picture remains unclear. The third key figure is President Truong Tan Sang. However it plays out, there is little sign of a large injection of the youth that might better mirror the country’s populace.

Change needed

While the prime minister’s supporters say he is a reformist, pointing to greater freedom of speech, privatisation, economic deregulation and better international ties, critics say he is given too much credit. Such public debate as exists is via social media rather than the government, which still detains dissidents often enough to remind people of the dangers of straying too far out of line. There is cronyism in business and privatisation has been slow — the flagship Vietnam Airlines part-sale last year amounted in the end to just 5 per cent of the company and attracted little international interest (although Japan’s All Nippon Airways announced this month it was taking an 8.8 per cent stake).

International relations

Anti-China sentiment has grown so strong that it is hard for any politician to take a more accommodating line with Beijing, even if some would probably tone down the rhetoric of Mr Dung. The foreign ministry said this week it had raised concerns with China over its movement of an oil rig in a disputed area of the South China Sea — exactly the sort of clash that sparked anti-Chinese riots in some of Vietnam’s vast industrial zones in 2014. But Vietnam cannot afford to be too aggressive — it has a complex cultural and political relationship with China, by far its biggest trading partner. While Hanoi has been making some overtures to Washington, including high-level official visits each way, realpolitik and history mean it will never be in the western camp. Rather, Vietnam will probably try to use US links to persuade China to moderate its behaviour.

Investment climate

With gross domestic product growth back above 6 per cent, Vietnam is benefiting from manufacturers’ relocating in a bid to cut costs after wage rises in countries such as Thailand and, particularly, China. But while the headline numbers and trends might look attractive to international investors, there is also a strong sense of unfinished business in Vietnam’s economy. These include bad loans at banks and enduring problems at big state companies. There are also fears the property bubble that led to a crash in the late noughties could be reinflating again. The government has made a huge and still unproved bet on using generous perks to attract multinational companies such as Korea’s Samsung and Intel of the US to make Vietnam an export hub.