Can Vietnam be another China? No.

I was travelling in Southeast Asia, and while in Ho Chi Minh City, I could not help thinking of China and Vietnam in paired comparisons. A simple comparison of leadership turnover in China and Vietnam reveals an interesting contrast.

Since 1949, China has had seven top Communist Party leaders and eight state presidents. Over roughly the same period, Vietnam has had nine Communist Party leaders and no less than fourteen presidents. By this measure, China appears to have been more stable at the top. Fewer individuals have occupied the highest offices, and several leaders — notably Mao Zedong, Jiang Zemin, Hu Jintao, and Xi Jinping — remained in power for long periods.

A tale of two kinds of political stability

Yet this apparent stability masks another reality. China has also experienced a higher degree of elite instability. Some of its most senior leaders were removed through political purges. Liu Shaoqi, once the state’s president and Mao’s designated successor, died in custody during the Cultural Revolution. Lin Biao, Mao’s chosen heir, died while fleeing China after being accused of plotting against Mao. Hu Yaobang was forced to resign, and Zhao Ziyang spent the final years of his life under house arrest. There have been many purges at one tier below that level, Bo Xilai and Zhou Yongkang, for example, at the Politburo level.

Vietnam presents a different pattern. Yes, leadership turnover has been more frequent, but elite removals have generally been less severe. Truong Chinh was forced to step down after the failures of land reform in 1956. Le Kha Phieu lost his position as party leader in 2001. More recently, Presidents Nguyen Xuan Phuc and Vo Van Thuong resigned under political pressure. Yet no Vietnamese party chief or president has been imprisoned, exiled, or died in custody after losing office. If you lose power, you want to do it in Vietnam. (In my 2023 book, The Rise and Fall of the EAST, I call it “gentle politics”.)

One way to describe the difference is that China has achieved static stability at the top through a process of periodic elite disruption. The highest office changes hands relatively infrequently, but when political conflicts emerge, they can produce dramatic outcomes for individual leaders. A form of dynamic instability.

Vietnam has followed a more collective model. Leadership changes occur more often, but they are typically managed through retirement, reassignment, or resignation rather than through severe political punishment. More rule based, at least on the surface.

The result is a kind of paradox. China appears more stable when measured by the political longevity of those who survived and who were winners, but Vietnam appears more stable when measured by fewer number of purges and by personal security of those who ended up losing their power.

I do believe these differences can translate into differences of long run economic fortune for these two countries.

Compared with the last time I was in Vietnam, the changes in the country are visible and significant. Many of the things I saw there reminded me of China of 2001 just after China joined the WTO. The economy was open to foreign direct investment (FDI) and foreign trade and the revenues from export markets were pouring in. Also the sentiment was similar — everything was about business and getting business deals. It was the economy, stupid.

Many may wonder whether Vietnam is a possible “next China”. At the level of the whole country, the comparison does not hold up. China has about 1.4 billion people and an economy of nearly US$19 trillion, with a manufacturing base that runs from rare earths to passenger jets. Vietnam has about 100 million people and an economy of roughly US$514 billion. At that scale, Vietnam is not going to replicate China.

Guangdong as a benchmark

A more useful comparison is with a single Chinese province: Guangdong, the centre of China’s export manufacturing. Guangdong has an economy of about US$2.0 trillion and merchandise exports of around US$845 billion. Measured against that benchmark, Vietnam has been closing the gap quickly and many of the elements that were in Guangdong are also now in Vietnam.

In 2015, Vietnam’s exports were about US$162 billion, roughly a quarter of Guangdong’s total. By 2025 they had reached about US$475 billion — more than half of Guangdong’s exports.

The two economies differ sharply in size but attract comparable amounts of foreign investment. Guangdong’s economy is about four times larger than Vietnam’s, yet both now draw similar annual FDI. Relative to GDP, Vietnam’s inflows run at 7 to 8%, against about 1% for Guangdong, but Vietnam’s ratio is not that far off Guangdong’s ratio in 2001, around 8 to 10%. Vietnam’s recent growth has been driven largely by foreign-owned factories producing electronics, machinery, and consumer goods, a telltale Guangdong story.

Much of Vietnam’s export growth has come in the US market, where China’s share has been falling. In 2016, Vietnam supplied less than 2% of total US goods imports; by 2025 it supplied close to 6%. Over the same period, China’s share fell from about 21% to about 9%. Vietnam’s share roughly tripled, while China’s more than halved.

This shift reflects geopolitical tensions between the US and China rather than a proactive Chinese decision to leave the US market. Do not believe the myth that somehow the Chinese companies want to diversify from the US. The US is the largest consumer market in the world, and it is the most profitable one. In fact, the rise of Vietnamese exports to the US is substantially driven by the Chinese firms who are desperate to hold onto their US customers. Arguably, the trade war and the geopolitical tensions between China and the US contributed to a “discovery” of Vietnam. Without the trade war, it is doubtful that the manufacturing supply chain, normally incredibly sticky, would want to move and did so in such a short period of time.

The US now accounts for about a tenth of China’s exports, down from roughly 18% in 2016, and in some months of 2025 the figure fell to 7%, the lowest since 2001. Vietnam has absorbed much of the redirected trade. The US now buys about a third of Vietnam’s exports, up from about a fifth a decade ago. In many cases the production — and the factories themselves — has relocated to countries that retain clear access to American buyers.

There is a similar Guangdong dynamic of the 1990s here, except that the geographic realignment of supply chains in the 1990s was driven by cost factors on the supply side rather than by the shifts on the demand side. Manufacturing was moving from South Korea, Taiwan, and Hong Kong to China and to Guangdong specifically, but the customer base remained solidly American.

Where investment flows

Guangdong’s expansion was built largely on foreign direct investment, first from Hong Kong and later from Taiwan, which funded export factories from the 1980s onward. (This is something I analysed in detail in my 2003 book Selling China.)

The story of FDI into China is one of ethnically Chinese FDI. Vietnam’s FDI today comes from a similar set of sources. Its largest investors are Singapore, South Korea, Taiwan, and Japan, with China increasingly prominent and now among the top sources of new projects. Together, East Asian investors account for roughly 70% of Vietnam’s FDI. Capital that once flowed from Hong Kong and Taiwan into Guangdong is now flowing from China and Taiwan into Vietnam, in many cases from the same firms relocating production to remain inside open markets and outside US tariffs.

Vietnam’s labour force is comparatively low-cost but also relatively skilled. That is another feature of Guangdong (and of China as a whole) in the 1990s. On the World Bank’s Human Capital Index, which estimates how productive a child born today will be as an adult, Vietnam scores about 0.69. That places it second in Southeast Asia, behind only Singapore, and ahead of higher-income neighbours such as Malaysia, Thailand, the Philippines, and Indonesia. Expect manufacturing to go where human capital is.

Vietnam increasingly resembles Guangdong: an open, FDI-driven export economy. The entire country has acquired a stake in the current global order. In this aspect, Vietnam is fundamentally different from China, and that difference is political rather than economic. Guangdong, by far, was the most successful region in China (along with Zhejiang), but its leaders failed to claim the top mantle of power at the national level — basically two positions, the party secretary of the CCP and the premier.

Imagine China’s national politics populated with leaders who opened Guangdong to foreign trade and FDI and integrated its economy into the world economy. Would the tensions with the West be as severe as they are today? Perhaps not. This is a strain that Vietnam may not have to wrestle with, and its outward-facing economy may loom larger on Vietnamese politics than it ever did on China’s.

This article was first published in Substack by Yasheng Huang as “China and Vietnam” and “Can Vietnam be another China? No.”

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