China's curb on ties with Vietnam a 'punishment and warning'

Analysts see move as symbolic rebuke and not seeking to hurt close relations

CHINA'S move to suspend some bilateral exchanges with Vietnam after riots there killed two Chinese nationals last week is a punishment, a warning and also a response to nationalistic domestic pressure, analysts say.

While the Chinese Ministry of Foreign Affairs gave no details on what bilateral exchanges have been suspended, observers believe these to be likely low-level, people-to- people exchanges rather than economic or military projects. Beijing is reaching for a symbolic rebuke and not seeking to hurt a historically close relationship, they added.

"This is still a first, experimental move on the part of the Chinese government," said South-east Asian expert Zhang Mingliang of Jinan University. "If Vietnam responds well by reining in the protests and compensating those who suffered losses, then it will just be a momentary blip."

Since the communist neighbours fought a brief border war in 1979, their ties have been growing, with bilateral trade now worth US$50 billion (S$63 billion). Vietnam is officially one of China's comprehensive strategic partners. Premier Li Keqiang visited Hanoi last October.

However, ties plunged to a post-war low after China moved an oil rig on May 2 into a part of the South China Sea that Vietnam also claims. Last week's anti-China riots caused serious damage to businesses owned by Chinese and Taiwanese companies there. 

Chinese Foreign ministry spokesman Hong Lei said after announcing the partial suspension yesterday that "China will consider taking further steps depending on how the situation plays out".

Professor Xu Liping of the Chinese Academy of Social Sciences believes that China will restore ties after Vietnam does three things: Compensate Chinese nationals adequately for their losses, stop Vietnamese ships from attacking Chinese vessels near the oil rig in the South China Sea and cease attempts to "internationalise" the dispute by seeking support from Asean or the United States. 

Analysts said the Chinese move was made also in part to mollify its own citizens, who had reacted with outrage at the Vietnamese and also anger at their own government for making Chinese nationals in Vietnam pay the price for the oil rig gamble. 

"The widespread view among the people is that the Vietnamese government silently permitted if not supported the protests," said Prof Zhang. "The Chinese government cannot let that slide."

Analysts said they expected Vietnam to step up security efforts to prevent another outbreak of violence, pay compensation and work quietly through existing communication channels to repair the bilateral relationship. 

"Vietnam's wildest point is over," said Singapore-based analyst Li Mingjiang of Nanyang Technological University. "It does not have many options left because it is in a weaker position and needs Chinese investment."

Chinese funds are key to several large planned infrastructure projects in Vietnam, such as the construction of highways linking northern border Lang Son province and the capital. 

"The good thing now is that this will give momentum to both sides to seriously pursue the path of joint development of resources in the disputed areas," Dr Li said.