AMAC Exclusive – By Ben Solis
Facing significant political pressure at home, President Joe Biden is finally making some feeble attempts to reduce U.S. imports from China and cut American reliance on Chinese goods and technology. But instead of bringing that production back to the United States, much of it is simply traveling south to Vietnam – where in some cases Chinese entities are executing an end-run around U.S. sanctions and tariffs.
During the last week of January, U.S. Undersecretary of State for Economic Growth, Energy, and the Environment Jose Fernandez traveled to Vietnam to meet with Vietnamese Minister of Planning and Investment Nguyen Chi Dung. One major topic of discussion was funding from the CHIPS Act – a 2022 bill which allocates some $280 billion to ostensibly boost U.S. semiconductor manufacturing capacity and create “regional high-tech hubs” throughout the country.
According to a report from Nikkei Asia, Vietnam is a top target for $500 million in the CHIPS Act set aside for “improving semiconductor training, cybersecurity and business climates globally.” 15 U.S. companies are also reportedly considering investing $8 billion in chip manufacturing in Vietnam.
While the White House and proponents of the bill in Congress touted it as a bipartisan win for the U.S. manufacturing sector that would cut reliance on Chinese products, it has now become clear that much of that money will actually flow to foreign countries, including Vietnam.
Vietnamese media have reported that the Biden administration plans to subsidize Vietnam’s nascent microchip industry as a first step to transforming the country into a “world factory” that will replace China. If that is indeed the case, U.S. taxpayers could end up paying for the training of workers in Vietnam’s microchip industry.
Biden is also reportedly considering changing Vietnam’s status from a “non-market economy” (a grouping that includes countries like China and Russia) to a “market economy.” Such a status upgrade would, as the Alliance for American Manufacturing argues, “fundamentally alter the U.S.-Vietnam trade relationship, including by eroding tools used to counter illegally dumped goods and, in turn, creating new options to circumvent key laws like the Uyghur Forced Labor Prevention Act.”
According to several experts in the field whom I interviewed, this strategy comes with some severe risks for the United States.
“It mirrors all the mistakes America made regarding China when it liberalized trade, opened doors to the WTO, and eventually lost its hard-earned centuries-old industrial advantage,” said Professor Winfried Possman de Ritters Schild, a retired lecturer of economics and advisor to former Austrian President Thomas Klestil.
While the United States has enjoyed generally friendly relations with Vietnam in recent decades, the country is still ruled by the Communist Party of Vietnam (CPV). Like the Chinese Communist Party (CCP) the CPV adheres to Marxist-Leninist ideology and views itself as part of a communist community with China.
During an interview in 1999, the late professor Robert Conquest warned about collaborating with any communist nation, as Biden is now trying to do. “Collaboration always bolsters them by saving them from the consequences of their mistakes while they continue to deny their people freedom,” he said.
“Communism is not a political ideology but a technique to win and retain power by violence. At home, it includes persecutions and murders while abroad, it is a war by proxy with terrorism, subversion, psychological war, and other covert techniques,” he continued.
Despite not receiving nearly as much media attention as China, human rights abuses are all-too common in Vietnam. In 2023, the country ranked 130 out of 165 in the Human Freedom Index, a measure developed by the Canadian libertarian-conservative Fraser Institute and the American libertarian Cato Institute.
Vietnamese dissidents have recounted similar stories of oppression as Chinese dissidents, with some reporting imprisonment and torture for anyone who opposes the ruling communist party.
“To understand [Vietnam] correctly, think about it as essentially mini-China with all features of its tyranny under the aegis of the same hammer and sickle gang,” Dr. Dung Trương, a former government official who defected to the West in the 1990s, said, adding that nothing has changed since 1975. “Omnipresent propaganda leads crowds in appreciation of the communist party for transforming country into a paradise while the political police persecute dissent.”
He emphasized that the only difference between China and Vietnam is the scale: “They are big; Vietnam is smaller.”
Biden’s own State Department has even placed Vietnam on a “special watch list” of countries “for engaging in or tolerating severe violations of religious freedom.” Christian minority H’mong and Montagnard people suffer particularly acute persecution, being deprived of all rights and punished with stateless status for having the courage to stand up to the communist government.
However, in an apparently contradictory move, Biden also traveled to Hanoi last year and cemented a new agreement whereby Vietnam would recognize the United States as a “comprehensive strategic partner” – the highest designation in Vietnam’s diplomatic hierarchy. During the visit, Biden glossed over the Vietnamese government’s persecution of its own people, instead claiming a “50-year arc of progress” since the end of the Vietnam War.
Professor de Ritters Schild, however, told me that “no progress has occurred for the Vietnamese people.” He also doubted the economic data cited by Biden showing strong growth for Vietnam, saying it was “polished by censors.”
“We must stop being gullible,” he added, saying that Vietnam’s foreign and economic policy “are aligned with China” and that Biden would be foolish to think he can manipulate the dictatorship. “This concept failed with China; it will fail with other tyrannies.”
Indeed, China already appears to be one step ahead of Biden when it comes to manufacturing investment. As even some Democrats in Congress have warned, Chinese companies are already using Vietnam to circumvent U.S. tariffs. In some cases, Chinese companies have set up factories and imported workers to Vietnam so as to avoid the “made in China” designation.
All of this is at the expense of American workers. Even without China using Vietnam as a pass-through entity, Biden’s focus on building up Vietnam’s manufacturing base while America’s continues to struggle is yet another betrayal of American workers.
It may well be the case that Biden’s Vietnam policy could become his next major foreign policy flub.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
