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China and Airbus among potential losers from boosted US-Vietnam ties

HANOI – The United States and Vietnam agreed on Sunday to upgrade their diplomatic relations in a historic step for the two former foes, paving the way for business deals and possible new investments. But for every winner, there is often a loser.

These nations, companies and groups are unlikely to benefit from closer relations between Washington and Hanoi:


Vietnam has been careful to stress that its elevated ties with Washington would not upset relations with Beijing, fearing a backlash from China.

But Washington’s elevation to the same tier as Beijing in Vietnam’s ranking will inevitably have an impact on China.

Beijing could lose business deals, especially in the semiconductor field, where Washington pledged to boost Vietnam’s industry with the explicit goal of reducing the sector’s exposure to China-related risks.

“China believes that the development of bilateral relations between countries cannot target third parties,” China’s Foreign Ministry spokesman Mao Ning said on Monday, urging the US to “abandon hegemony and Cold War thinking”.


Vietnam is a close partner of Russia and one of the top importers of its weapons, which are estimated to account for about 80 per cent of the South-east Asian country’s arsenal.

The White House had no new arms deals to announce, but the new ties could facilitate future supplies from the US or its partners.

That would inevitably reduce Vietnam’s reliance on Russian gear, although Hanoi is now negotiating a possible new arms deal with Moscow.


During US President Joe Biden’s visit to Hanoi, US plane-maker Boeing agreed to sell 50 Boeing 737 Max jets to flag carrier Vietnam Airlines.

The Vietnamese company now operates narrow-body jets from Airbus, Boeing’s direct rival.

The deal marked what is known in the industry as a “flip” – when either Boeing or Airbus poaches a customer from the other, especially in the ultra-competitive narrow-body market.

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Such defections are relatively rare because of the expense of introducing new pilot training and spare parts, as well as the complexity of switching to a new fleet.

“We do not have any comment on a decision that does not involve Airbus,” an Airbus spokesman said. “However, Vietnam Airlines is an important customer and we look forward to building further on our longstanding partnership.”

Human rights groups

The White House fact sheet issued during Mr Biden’s visit weighed in at more than 2,600 words. The section on human rights contained just 112 words, including a subhead.

“The Biden administration is clearly sidelining human rights in the interest of advancing partnerships with governments it sees as strategically important,” said Ms Carolyn Nash, Asia Advocacy Director at Amnesty International.

Vietnam holds at least 159 political prisoners, and at least 22 others are in detention pending eventual trial before a court controlled by the ruling Communist Party, non-governmental organisation Human Rights Watch said.

The two countries agreed on Sunday to “enhanced commitment to meaningful dialogue”.

Malaysia and India

Washington has agreed to significantly boost support to Vietnam’s chip and artificial intelligence (AI) industries, announcing new investments from US companies, including a US$1.6 billion (S$2.18 billion) semiconductor factory to be built by Amkor Technology, and partnerships between US AI giants Nvidia and Microsoft and Vietnamese companies.

That could affect Malaysia and India, Vietnam’s top rivals among emerging Asian nations in semiconductors and AI, respectively.

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AES and Siemens

Among the deals announced by the White House was a partnership between solar company Ami and US conglomerate Honeywell to launch “Vietnam’s first-ever battery energy storage system”.

That may have not pleased Nasdaq-listed company Fluence, whose parent organisations are US energy company AES and Germany’s Siemens. Fluence produces battery energy storage systems in Vietnam through a supplier.

At the moment, its Vietnam output is exported.

Fluence and Siemens did not reply to requests for comment. AES did not comment. REUTERS

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