China's Premier Discusses Trade Amid South China Sea Tensions

China's Premier Li Qiang recently visited Vietnam, focusing on bilateral trade and investment despite ongoing territorial disputes in the South China Sea. The visit comes at a critical juncture, with both countries seeking to balance economic cooperation with strategic interests in the region.


Bilateral trade between China and Vietnam has witnessed remarkable growth, reaching US$171.9 billion in 2023 and US$148.6 billion in the first nine months of 2024. China remains Vietnam's largest trading partner and second-largest export market, while Vietnam is China's largest trading partner in ASEAN and its fifth-largest globally. This robust trade relationship underscores the importance of maintaining a stable and cooperative atmosphere between the two nations.


During the visit, Li Qiang and Vietnamese Prime Minister Pham Minh Chinh discussed ways to further strengthen the Comprehensive Strategic Cooperative Partnership. They agreed to enhance cooperation in various sectors, including trade, investment, and infrastructure development. The two leaders also emphasized the need to maintain peace and stability in the South China Sea, acknowledging the importance of resolving territorial disputes through dialogue and diplomatic means.

The shared economic interests in bilateral trade and investment have fostered a spirit of cooperation between China and Vietnam. Despite their differences over the South China Sea, both countries recognize the value of maintaining a constructive relationship, as it benefits their respective economies and regional stability. The integration of supply chains between the two nations has also contributed to this dynamic, with China being a significant source of foreign direct investment (FDI) in Vietnam.


However, the South China Sea disputes remain a contentious issue, with both countries asserting their claims over the strategic waterway. The potential for conflict in the region could have severe economic consequences, as a military confrontation would disrupt international shipping routes and impose significant costs on countries in the region. A study by the US National Bureau of Economic Research estimated that a conflict in the South China Sea could lead to a 10-15% economic loss for countries like Vietnam, the Philippines, and Malaysia, and a 22% loss for Singapore.


In conclusion, China's Premier Li Qiang's visit to Vietnam highlights the importance of economic cooperation and diplomatic dialogue in managing the complex relationship between the two countries. Despite their differences over the South China Sea, both nations recognize the value of maintaining a stable and cooperative atmosphere, as it benefits their respective economies and regional stability. As they continue to navigate their strategic interests in the region, it is crucial for China and Vietnam to prioritize dialogue and diplomacy in resolving their territorial disputes.