China Slams the Brakes on Vietnam

Military ChinaBeijing is telling its state-owned enterprises to halt investment into Vietnam. Government officials have informed them to even stop bidding on any new projects in the country. The projects are mainly engineering bids revolving around the chemical and power industries.

The relationship between the two Asian neighbors has become seriously strained over the past couple months, the catalyst being a new Chinese oil platform sent to a disputed part of the South China Sea on May 1.

The location of the rig is approximately 32 km from the China-controlled Paracel Islands and 278 km from the coast of Vietnam. The islands have been an area of contention for quite some time, with both countries claiming territorial rights. In 1974 the two countries engaged each other militarily around the disputed islands and Vietnam ended up on the losing end, with China grabbing control. After the engagement, Vietnam made a formal protest to the United Nations but to no avail. The situation was viewed then simply as a power play benefiting China and nothing more.

The arrival of the rig to the area has obviously refueled tensions on both sides. A well-documented confrontation with Vietnamese fishing boats sparked public outrage from Hanoi and set off anti-Chinese street protests. “Hundreds of factories were damaged” and China said that four Chinese citizens were “brutally killed” and over 300 injured in the protests.

According to South China Morning Post, “Vietnam has no hope of competing with China militarily.” Government officials are reported to want a “peaceful solution,” but cautioned, “All restraint had a limit.”

H/T: Bloomberg