Vietnam’s Deep Integration Into The CPTPP Will Substantially Impact Its Relations With China – Analysis
By Anbound
By Zhou Chao
Recently there have been media reports that Vietnam seems to be further reforming the power structure of its ruling party. The reports suggest that the Communist Party (CPV) in Vietnam is dividing the party’s internal power into three major areas in hopes of achieving a rational division to improve decision-making efficiency. The further improvement of the checks and balances mechanism within the CPV’s power structure also “helps strengthen internal supervision, ensure effective checks on power, and make the selection of cadres more reasonable”. However, as for the credibility of the reports, there is currently no substantial and strong evidence to confirm the authenticity through in-depth investigation and comparisons. That said, it is important to note that in the past decade, Vietnam has undergone profound changes in many areas, including politics, economy, and society.
First, in terms of the political power structure, the highest political power in Vietnam is divided into four major pillars, known as “tứ trụ” in Vietnamese: the General Secretary of the CPV, the President, the Prime Minister, and the Chairman of the National Assembly. These four positions are held by different individuals, reflecting a balance of power. Since 2021, after Nguyễn Phú Trọng stepped down as President, Tô Lâm briefly held both the positions of General Secretary and President for five months before quickly relinquishing the latter. Since then, Vietnam’s highest power structure has no longer displayed a “triple unity” of party, government, and military. Since 2001, the CPV’s Central Committee has abolished the Politburo Standing Committee and retained only the Secretariat, with the number of Politburo members gradually increasing from 7 in the 12th Party Congress to 18 in the 13th Party Congress, showing a general trend of decentralization in the highest power structure.
Second, the anti-corruption campaign continues to deepen. On December 24, 2024, the Government Inspectorate of Vietnam held a nationwide online meeting to provide a preliminary summary of the implementation of the Anti-Corruption Law over the past five years. Data shows that from 2020 to 2024, a total of 264 leaders at various levels were disciplined for dereliction of duty and for condoning corrupt practices; 73 individuals were criminally prosecuted for causing corruption due to negligence. Notably, both former Presidents Nguyễn Xuân Phúc and Võ Văn Thưởng were ousted due to involvement in corruption.
Third, political freedom continues to increase. Previously, in local elections, Vietnamese voters could directly elect representatives to the People’s Councils at various levels, and these representatives were responsible for formulating local policies and overseeing the work of local governments. In recent years, Vietnam has continued to implement groundbreaking reforms in the political field. In some local elections, independent candidates have been allowed to run, which has increased political diversity and competition to some extent. As a one-party state, Vietnam has never expressed its intention to adopt a separation of powers system, but under the trend of the ruling party self-limiting its power, social and political freedoms have improved.
Fourth, economic market-oriented reforms continue to advance. In December 2024, Vietnam’s Ministry of Home Affairs announced that after streamlining, the government is expected to have only 13 ministries, 4 ministerial-level agencies (a reduction of 5), and 5 government-affiliated agencies (a reduction of 3), along with a reduction of 190 public service units. Through this approach, the Vietnamese authorities aim to streamline institutions, clarify functions, and save costs, ensuring that government functions are fully aligned with supporting the development of the market economy.
In recent years, Vietnam has also implemented significant reforms in state-owned enterprises (SOEs), including introducing market-oriented management mechanisms, reducing government intervention, and promoting privatization. In 2024, one of the most notable moves in Vietnam’s economic reforms was the abolition of the State Capital Investment Corporation (SCIC). Nguyễn Khắc Giang, a political researcher at the Vietnam Institute for Economic and Policy Research (VEPR), stated in an interview that, in Vietnam’s current economic development strategy, excessive reliance on state-owned enterprises is no longer seen as a key path for growth. As a result, Vietnam tends to privatize some SOEs, allowing them to compete in the market as private entities rather than having state-owned enterprises dominate the market. Vietnam has already seen the rise of large private enterprises like VinGroup, which spans multiple industries, including manufacturing, real estate, technology, and electric vehicles. The government is attempting to provide a more balanced and fair business environment for these private companies, encouraging competition among enterprises.
Additionally, in terms of legislation, Vietnam has allowed the formation of independent unions. Although specific regulations and practical implementation are still pending, this represents a legal opening. In the future, Vietnam’s market-oriented tendencies are expected to further strengthen, particularly in the protection of labor rights and the development of labor social movements.
In terms of a series of actions taken by Vietnam in recent years, its fundamental motivation is undoubtedly to fully integrate into the framework of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In the current Asia-Pacific region, the two main regional trade cooperation frameworks are the Regional Comprehensive Economic Partnership (RCEP) and the CPTPP. In terms of overall scale, RCEP’s 15 member countries cover approximately 2.2 billion people, accounting for about 30% of the global population, with a total economic volume of USD 26 trillion. The combined GDP and trade volume of its members represent about one-third of the global total, making it the largest free trade agreement (FTA) in the Asia-Pacific region and globally in recent years.
RCEP emphasizes adherence to multilateral trade system rules with the World Trade Organization (WTO) at its core and relatively focuses on the interests of developing countries. In practice, RCEP seeks to balance “flexibility” and “high standards”. In contrast to RCEP, the CPTPP is a strict, comprehensive trade agreement that sets high standards in many areas, such as labor and environmental rules, competition policies, state-owned enterprises, intellectual property regulations, internet rules, and the digital economy, while RCEP adjusts flexibly according to the specific needs of countries at different levels of development.
In terms of tariff levels, the RCEP stipulates that its zero-tariff coverage reaches over 90% and maintains certain quotas for agricultural products, a standard lower than the CPTPP agreement, which requires 99% zero tariffs, zero subsidies, and zero barriers—the “three-zero” standard. This means that in certain areas, the coverage and strictness of the RCEP agreement are relatively weaker. Relevant studies generally suggest that RCEP tends to give some consideration and preferential treatment to the actual situations of developing countries, while the CPTPP more strongly reflects the deep free trade aspirations of developed countries. As a developing country, why is Vietnam making significant efforts to deeply integrate into the CPTPP framework? Researchers at ANBOUND believe the main reasons may be the following:
First, Vietnam has already decided to focus on advancing to the high end of the industrial chain and is no longer willing to rely solely on the comparative advantage of labor to develop labor-intensive industries. In recent years, foreign investment in Vietnam has increasingly focused on high-value-added sectors. For example, technology giants such as Samsung, Intel, and Nvidia have established production bases in Vietnam, which has not only provided Vietnam with opportunities for technology transfer but also directly boosted the export of high-tech products.
In 2023, Vietnam’s electronic product exports surpassed USD 100 billion, making it an important electronics manufacturing hub in Southeast Asia, second only to China. In addition, Vietnam has actively introduced emerging industries such as electric vehicle manufacturing and new energy technologies, accumulating energy for future economic growth. For high-value-added products, developed country markets are the most important consumer terminals. In recent years, Western countries, particularly the U.S., have frequently imposed sanctions on environmental and labor condition grounds. In 2024, the U.S. once again refused to recognize Vietnam’s market economy status. To enhance its position in the industrial chain and further enter developed country markets, Vietnam has no choice but to align itself with the higher standards set by the CPTPP.
Second, the practical benefits from trade have prompted Vietnam to continue deeply integrating into the CPTPP. Since joining the CPTPP, Vietnam’s international trade scale has continued to expand. The agreement has granted Vietnam lower tariff rates with developed economies such as Japan and Canada, significantly boosting the competitiveness of Vietnam’s exports. In 2024, Vietnam’s exports to CPTPP member countries grew by over 20%. At the same time, CPTPP member countries have become the main source of Vietnam’s trade surplus. However, within the RCEP framework, Vietnam generates an annual trade deficit of about USD 50 billion in trade with China alone. Furthermore, the CPTPP has not only driven the development of Vietnam’s outward-oriented economy but has also helped upgrade its domestic consumer market. With the expansion of the middle class and the growth of household income, Vietnam’s domestic demand potential is being increasingly unlocked.
One point that should be noted is that, as a small country, Vietnam is destined to develop an outward-oriented economy. The markets of developed Western countries are the main sources that can provide practical trade benefits to Vietnamese enterprises and drive the upgrade of domestic consumption in Vietnam. Therefore, Vietnam can only continuously align itself with the CPTPP to provide lasting momentum for its foreign trade.
Third, Vietnam’s population surpassed 100 million in 2023, making it the 15th country in the world and the third in Southeast Asia to reach a population of over 100 million. However, in December 2024, Vietnam News Agency cited data from the Vietnamese Ministry of Health’s Population Department, which stated that Vietnam’s total fertility rate in 2024 was 1.91, a historic low, and is expected to continue declining in the coming years. Statistics show that Vietnam’s total fertility rate has been below the 2.1 required to ensure population stability for three consecutive years, with the rate dropping to 1.91 in 2024. If this downward trend continues, Vietnam’s population will begin to experience negative growth after 2054, with the decline expected to accelerate. Since 2011, the proportion of people aged 60 and above in Vietnam has exceeded 10%, signaling that the country has entered an aging society. The latest data also indicates that the aging of Vietnam’s society is deepening. Changes in the population structure mean that the advantage of low labor costs will continue to diminish, making it increasingly difficult to sustain labor-intensive industries. As a result, Vietnam will need to continue advancing its position in the industrial chain. Therefore, only by continuing to integrate into the higher standards and stricter requirements of the CPTPP can Vietnam have the opportunity to achieve this goal.
As it stands, although the Vietnamese authorities firmly deny that they will fully adopt the Western liberal democratic path, and the one-party system in Vietnam is unlikely to undergo fundamental changes in the short term, i.e., 3-5 years, the basic trend of Vietnam’s deep integration into the CPTPP is already very clear. This, in turn, is likely to have a series of profound impacts on its relationship with China.
First, the ideological gap between Vietnam and China is likely to continue widening. For a long time, ideology has been a key focus for China in its efforts to strengthen ties with Vietnam. During several high-level exchanges in recent years, Chinese officials have repeatedly emphasized that the two nations should “maintain a shared institutional foundation”. However, as Vietnam deepens its integration into the CPTPP, the overall freedom of the ruling party and society is likely to significantly increase, causing the ideological gap between Vietnam and China to gradually widen. In the future, ideology may not only fail to serve as a bonding agent to bridge the differences between both countries but could even become a new point of conflict. Combined with the existing territorial and maritime disputes between the two, the potential for tensions in Vietnam-China relations is likely to gradually increase.
Second, Chinese capital and Chinese enterprises operating in Vietnam will face more restrictions and uncertainties. The CPTPP has stricter and higher requirements for rules of origin. To ensure smooth exports, especially to European and American markets, the Vietnamese government is likely to increase pressure on Chinese enterprises operating in Vietnam to localize, requiring them to procure more raw materials and components from Vietnam or encouraging more companies in related supply chains to move to Vietnam. At the same time, due to the additional restrictive requirements of the CPTPP on state-owned enterprises and state capital, infrastructure projects in Vietnam led by Chinese state-owned enterprises are likely to face more challenges in securing contracts in the future.
Third, although independent unions have not yet been formally established in Vietnam, legal openings have already been made. As Vietnam further integrates into the CPTPP, the space for activities of social organizations is expected to expand. Due to the structural and historical issues in Vietnam-China relations, the overall anti-China sentiment within Vietnamese society is deeply ingrained, and the strengthening of the bilateral relations is often interpreted negatively by the public in Vietnam. It can be expected that with Vietnam’s deeper integration into the CPTPP and the increase in social freedoms, Chinese capital and Chinese enterprises will likely face growing suspicion and hostility from grassroots organizations in Vietnam on issues such as labor and environmental concerns. The economic activities of Chinese enterprises are likely to encounter increasing interference from the public, with Western NGOs in Europe and the U.S. likely to back these movements.
Final analysis conclusion:
ANBOUND believes that the CPTPP will be the core framework of global trade in the future, and it is likely to gradually replace the WTO. Vietnam’s pursuit of joining this core trade bloc will certainly strengthen its position in the global economy in the future, but it will also lead to structural political reforms. This means the growing distance between the two nations will become an inevitable outcome.
- Zhou Chao is a Research Fellow for Geopolitical Strategy programme at ANBOUND, an independent think tank.