The bilateral relations between China and Vietnam date back to the 1950s. The six decades of friendly ties saw both countries collaborating on various fronts such as infrastructure and energy. However, there were three territorial disputes which emerged between both the countries during this period. Apart from the dispute over Spratly islands in South China Sea, the other two territorial disputes have been amicably resolved; maritime delimitation in the Tonkin Gulf and land border disputes. In recent times, Vietnam has started improving its ties with other countries, with a special focus on the United States of America (USA). This has been viewed as Vietnam�€™s desire to involve a third party in resolving the dispute in the South China Sea. Vietnam has also started investing in its defense capabilities. China seems to be upset with these recent developments. In the light of these events and shifting relationships, it is important to examine the future of bilateral ties between China and Vietnam. 

There is a perception that China wants to gain supremacy in the South East Asian region and gain dominance over Vietnam. The Vietnamese port of Cam Ranh Bay is of strategic importance to China, as it is an important shipping lane in South China Sea and close to the disputed Spratly islands. China is investing in almost all key sectors of the Vietnamese economy from infrastructure and electricity, to cement and chemical plants. The increasing Chinese investments, which are predominantly state controlled, have seen a growing influx of Chinese workers from mainland. Nguyen Van Thu, Chairman of Vietnam's Association of Mechanical Industries says that the �€œChinese contractors bring everything, even the toilet seats�€. 

The growing influence of China has stirred resentment amongst the Vietnamese people. One such example is the public protest against government�€™s decision of giving bauxite mining licenses to Chinese companies in the central highlands. Apart from the environmental degradation, the central highlands might also see an influx of workers from China, depriving the locals from employment opportunities. Such an influx of foreign workers could quickly escalate into widespread agitation, threatening the stability of not only the central highlands, but other parts of the country as well. The Vietnamese people are also angry over alleged Chinese involvement in a recent hacking episode of government websites.

As a counter measure, Vietnam has begun to increase its defense expenditure. The Ministry of Defense in Vietnam, recently lobbied to purchase six state of the art Kilo Class submarines from Russia, to act as a potential deterrent to China�€™s expanding naval power. Vietnam is also planning to buy Sukhoi 30 fighters, freights and other anti submarine warfare equipments. Vietnamese military personnel are being sent to USA for training. In the 11th National Party Congress the Vietnamese Defense Minister announced the defense budget of Vietnamese Dong (VND) 52 trillion for 2011, an increase of 70 percent from 2010. The development of military strength can lead to souring bilateral relations between both the countries as China is likely to perceive the military building as an act of defiance.

As a counter to China, over the last decade Hanoi has sought to increase and strengthen its relationship with Washington. The defense ties started improving since 2003, and over a period of seven years twelve U.S. warships have visited Vietnam for various reasons. USA is also showing interest in resolving the dispute in South China Sea. Contrary to its plans of reducing the defense expenditure, U.S. has increased the military aid to Philippines, who is also contesting ownership of several islands in South China Sea. In the ASEAN Regional Forum of 2010, U.S. Secretary of State, Hillary Clinton, said that �€œmaritime security in the region was in the U.S. national security interest�€™. Moreover, in 2010, Vietnam announced that Cam Ranh Bay Port would be reopened to port calls by foreign navies. In 2011, Vietnam and the US conducted joint naval exercises, which came almost immediately after the re-occurrence of tensions in the South China Sea. Both these moves have added to the ongoing tension between China and Vietnam. 

While Vietnam has attempted to flex its muscles and strengthen ties with the worlds super power, in reality it cannot afford to sour her relationship with the giant in the region. Realizing this, Vietnamese Prime Minister Mr. Dung visited China to build confidence amongst the investors, despite public outrage over giving the bauxite mining licenses to Chinese investors in 2009. Hanoi cannot ignore the economic importance of China. The economic importance of China can be demonstrated by the fact in 2009 USD 11.53 billion or 90% of the Vietnamese trade deficit was attributed to China. 

On the other hand, USA might not prove to be a fruitful defense alliance partner, as it is unlikely to get embroiled in another conflict.  On an economic front, USA might not be a beneficial partner, with a struggling economy to recover from. The recent downgrading of the credit rating of USA, its huge debt and high unemployment level, at present 9%, are not encouraging factors for economic collaboration between US-Vietnam. 

In the given circumstances Vietnam is unlikely to take any major steps which could prove detrimental to its bilateral relations with China. Instead, Vietnam is likely to continue its growing economic relations with China, in the hopes that relations might balance out in the future. With the USA, Vietnam will look to improve its defense ties in the coming years, as its presence is seen as an important factor for peace and stability of South East Asian region.

In such a scenario, wherein Vietnam may have to walk a tightrope between China and USA, it would also prove beneficial to Vietnam to look to immediate neighbours to forge new ties.