Yellen visits Vietnam to build US ties, push supply chain diversity

U.S. Treasury Secretary Janet Yellen poses for photos in Hanoi, Vietnam Thursday, July 20, 2023. Yellen is on a visit to Vietnam in her latest effort to promote stronger ties with Asian countries where U.S. companies are investing in manufacturing as they seek to balance risks in China. (AP Photo/Hau Dinh)

HANOI  — The U.S. considers building strong economic and security ties with Vietnam a priority, U.S. Treasury Secretary Janet Yellen said Thursday as she met with Vietnamese officials in a visit aimed at fortifying America’s relations across Asia.

Yellen arrived in Vietnam after visits to Beijing and to India, where she attended financial meetings of the Group of 20 major industrial economies.

“The United States considers Vietnam a key partner in advancing a free and open Indo-Pacific,” Yellen told Vietnamese Prime Minister Pham Minh Chinh, according to remarks provided by the U.S. Treasury Department.

A “free and open Indo-Pacific” refers to the latest iteration of broad U.S. diplomacy aimed at cultivating stronger ties with other countries in the region to in effect counter China’s growing sway among its neighbors.

“Vietnam is also a close economic partner, with our two-way trade reaching record highs last year and the United States serving as Vietnam’s largest export market,” she said. “It is a priority for our administration to deepen our economic and security ties with Vietnam in the months and years to come.”

Speaking separately to a group of business women and economists, Yellen said she was encouraged by growing investments in Vietnam in industries including computer chips and renewable energy.

Her visit is part of continued U.S. efforts to counter China’s growing influence in the Indo-Pacific. Earlier this year, Secretary of State Antony Blinken visited Vietnam weeks after the 50th anniversary of the U.S. troop withdrawal that marked the end of America’s direct military involvement in Vietnam and pledged to boost relations to new levels.

Diplomatic relations between the two countries were only restored in 1995. Since then, bilateral trade has grown, reaching a high of $138 billion in goods trade last year.

“We have worked closely to address the legacies of the war,” Yellen said.

China’s border is less than 60 miles (96 kilometers) from Hanoi and Vietnam, like many of China’s neighbors, has had maritime and territorial disputes with Beijing in the South China Sea. But China is Vietnam’s biggest trading partner.

Yellen also met with the governor of Vietnam’s central bank, Nguyen Thi Hong, and announced a new economic policy dialogue between the State Bank of Vietnam and the U.S. Treasury Department.

She also thanked her for the “close cooperation” between the U.S. and the State Bank of Vietnam to address American concerns over Vietnam’s currency practices. She added that the U.S. would remain supportive of Vietnam’s growth and that this would be beneficial for both Vietnamese and American people.

Vietnam has quickly become a major export production hub for global manufacturers like South Korea’s LG and Samsung Electronics, suppliers to Apple, Inc. and auto makers like Honda and Toyota.

Companies have been expanding investments beyond China to counter risks due to political friction between Washington and Beijing and also because of disruptions resulting from the COVID-19 pandemic.

Yellen has highlighted what she calls “friend-shoring,” or “derisking” to manage such risks.