How Vietnam Has Reconciled a Single-Party System with Capitalism

The Vietnamese model represents a hybrid experience in global politics, blending isolation and openness. Despite the dominance of a single party in political life, Vietnam has managed to cultivate a diverse foreign policy and an investment environment integrated with global capitalism, leading some to describe the country as a “land of opportunity.” On the other hand, China’s unwelcoming response to Vietnam’s claims in the South China Sea has made Vietnamese citizens more receptive to the United States than to China, in terms of political, security, and economic ties, which has pushed Vietnam towards a non-formal security alliance with Washington.

In this context, twelve experts provide a comprehensive overview of Vietnam’s politics, economy, society, and foreign relations through the book “Vietnam: Navigating a Rapidly Changing Economy, Society, and Political Order.” The book highlights the challenges of economic inequality and environmental damage, and calls for improvements to the higher education system. This would allow the country to benefit from the indirect effects of foreign direct investment, and attract high-tech manufacturing companies that want to invest outside of China, as well as the reforms required if Vietnam is to become a sustainable, modern, and high-income country in the coming decades.

Flexible Control:

Vietnam is a Southeast Asian country that borders the South China Sea. It has a long history of political, social, and economic transformations. The Vietnamese political system is a socialist republic, similar to its neighbor China. Power is exercised by a single party (the Communist Party of Vietnam, which combines elements of capitalism and Leninism) that controls political life, the military, the police, the administrative apparatus, and the judiciary. However, this system differs relatively from China’s, being more flexible and open to local discussions. It responds to public protests, as long as they do not directly challenge the one-party state, its orientations, and its stability, and respect the independence of foreign and private companies.

In this context, Vietnamese civil society operates within the existing system and does not contradict it, especially since this system controls the media and collective consciousness. Therefore, the book points to a gap between society and the ruling party. It adds that Vietnam has succeeded in combining this authoritarian system on the one hand, with the dynamics of global capitalism on the other, as well as a foreign policy characterized by diversity in choosing its international partners without entering into military alliances or aligning with a particular power in the international system.

Capitalist Openness:

The book provides an accurate and comprehensive assessment of rapid economic development in Vietnam, within the context of the “Đổi Mới” (Renovation) policy, a name given to the economic initiatives in Vietnam in 1986, in addition to addressing foreign investments and the development of local investors. Before the unification of the country in 1975, Vietnam faced a division between the communist North and the US-backed South, which ended with the victory of the North in 1975 and the unification of the country under communist rule. Like other socialist countries, Vietnam turned towards a market economy instead of a directed economy where the ruling party controls economic activity. However, Vietnam differs from other socialist countries in that the market economy was not completely replaced.

Concurrent with the collapse of the Soviet Union, the Communist Party of Vietnam adopted the “Đổi Mới” policy aimed at economic liberalization in the late 1980s, after years of central economic control. The state also sent young people on missions to study and work in Eastern Europe, as part of the economic reform policies during this period. In 1999, the Enterprise Law was issued to promote Vietnam’s transition to a market economy. The law facilitated the establishment of companies in terms of time and procedures, which resulted in an increase in local and foreign investments and accelerated economic growth.

Over the years and with the return of citizens from abroad, the private sector in Vietnam began to crystallize and a class of local investors, Vietnamese oligarchs, emerged. The book defines them as a group of citizens who have become billionaires, who own huge companies and accumulate their wealth by focusing on specific investments, particularly real estate development or banking services. These investors are supported by the political elite and have a set of special strategies to protect their gains.

On the other hand, there is a set of threats facing investors’ wealth, the most important of which are: the weak ability of small and medium-sized private companies to compete with foreign direct investment companies and state-owned companies, which have good capital and have favorable political relations. The book reviews a set of strategies, some of which are not widespread (such as: emptying local investments, transferring wealth abroad) and others are widespread in Vietnam, such as inviting international strategic investors to participate and subjecting commercial interests to the framework of international law, as well as replacing state-owned companies as a tool for government industrial policy. Therefore, the book calls on the ruling party to ensure that private companies receive fair treatment through equal access to land, capital, and other resources.

Service Reforms:

The book also discusses the impact of rapid economic growth on the well-being of citizens in Vietnam, including education, healthcare, the development of the Vietnamese family model, policies to reduce poverty and inequality, and dealing with changes in protecting people’s health. Despite the decline in domestic output in Vietnam, the government has moved to mobilize resources to improve service sectors, including the health sector. The successive historical events on the state have pushed it to harness the outputs of market reforms to reform the rest of the service sectors. However, there is a growing disparity between families in accessing good education and healthcare. As a result, a portion of the Vietnamese population will be permanently sentenced to take unstable and low-paying jobs, which hinders the improvement of labor productivity, and may also lead to social instability in the long run.

As for healthcare services, the Vietnamese Council of Ministers announced in 1992 a “social health insurance program” for workers, but it did not include any concept of poverty support, as the program then focused on non-funded exemptions from fees for eligible groups. Therefore, the program was not initially effective in improving the lives of citizens. However, the government paid special attention to this program until, with time, it became comprehensive for many groups, most notably children and the elderly. In 2020, the Vietnamese social health insurance program targeted more than 90% of the population, in the context of the state’s goal of covering all the population by 2030. Vietnam is also working to consolidate global health insurance, which is the term that refers to providing high-quality health services to all residents.

But there is a challenge facing the health sector with the rise in the standard of living of citizens, because it coincides with a rise in expectations of obtaining high-quality services, which means more cost to the state, especially since the Corona pandemic posed an additional challenge to the health sector in Vietnam. In the context of the “Đổi Mới” policy, the book demands that the Vietnamese government expand the privatization of the health sector and involve the private sector in financing and operating health facilities and improving services, and thus reduce the cost to the government, all of which are goals that fall within the global health insurance adopted by the ruling party.

On the environmental front, the book assumes that agricultural expansion within the “Đổi Mới” policy had some benefits and challenges. Government strategies led to increased agricultural output, ensuring food security for the state, and Vietnam even became an exporter of agricultural products. But this expansion also increased pressure on the environment, leading to land degradation and water and soil pollution. Accordingly, environmental sustainability needs to be a priority for the party as Vietnamese intensify their demands for better environmental protection.

Changing Contexts:

The book addresses Vietnam’s management of its foreign relations. In the late 1980s, most of the world still associated the country with resistance, war, hardship, refugees, and a poorly managed planned economy. In contrast, major countries began in the 1990s to view Vietnam as a potential partner and an actor of strategic importance, especially in light of the competition between the United States and the emerging China. International investors then began to see Vietnam as a land of opportunity.

The Communist Party of Vietnam has proven its skill in balancing Vietnamese foreign policy between China and the United States, according to the book, a game with high benefits and risks at the same time. The party has been able in recent decades to integrate the state into regional and international organizations such as the Association of Southeast Asian Nations and the United Nations. On the other hand, Sino-Vietnamese relations are very complex and have witnessed periods of tension and peace. Despite the fact that China is Vietnam’s largest socialist neighbor, in addition to being its largest trading partner and its oldest diplomatic supporter, the war that broke out between the two countries in 1979 caused a deterioration in bilateral relations for a decade.

However, the book distinguishes between Vietnam’s external orientation as a party and as a state. The ruling Vietnamese party considers “China” a strategic ally with the same ideological and cultural orientations, and the party also sees the Western liberal camp led by the United States as an enemy of conservative communist thought on issues of democracy and freedoms in Vietnam. In contrast, there are tensions between Vietnam as a state and China over sovereignty in the South China Sea, which represents the biggest challenge in bilateral relations, as well as considering Washington an important strategic partner for the Vietnamese government, especially since the issuance of the joint vision between the two countries in 2015, which included (respect for the political systems of the two countries, their independence, sovereignty, and territorial integrity). Accordingly, the balance of Vietnamese foreign policy depends on local priorities.

The book concludes that Vietnam has succeeded in reconciling what is supposed to be irreconcilable: a one-party system and a market economy linked to global value chains, as a result of the “Đổi Mới” policy, which has led to remarkable economic growth and enhanced the legitimacy of the party. Therefore, the stability of the party is of utmost importance, as the future of the country depends heavily on the state’s abilities to overcome the challenges of political, economic, and social development from within and abroad.

Source:

Börje Ljunggren and Dwight H. Perkins (ed.). Vietnam: Navigating a Rapidly Changing Economy, Society, and Political Order. Harvard University Press, 2023.