China and Vietnam have pledged to set up joint working groups to boost maritime, onshore and financial cooperation, raising the prospect of closer economic ties even as territorial disputes in the South China Sea dog bilateral relations.
The pacts were announced on Sunday evening after Chinese Premier Li Keqiang met his Vietnamese counterpart Nguyen Tan Dung in Hanoi, as Mr Li started the third and last leg of his South-east Asian tour which included Brunei and Thailand.
The deals with Hanoi are part of a series of attempts by Beijing to strengthen economic ties with regional neighbours jittery over its military might and territorial ambitions, most notably over potentially resource-rich swathes of the South China Sea. Over the past week, Mr Li had urged regional states not to let territorial disputes sour ties.
According to Xinhua news agency, the Sino-Vietnam deals cover environmental protection, navigation safety and infrastructure connectivity. There are also plans to open trade promotion offices.
Mr Li was cited as saying that the joint working group on financial cooperation should also eventually lead to a bilateral currency swap deal and local currency settlement agreement, to maintain stability in the event of financial turbulence.
He also said both countries should look ahead and forge win-win cooperation, as well as find innovative solutions to the South China Sea disputes.
International Institute for Strategic Studies analyst Alexander Neill tells The Straits Times: "It is entirely possible that Vietnam wants to compartmentalise territorial disputes from other parts of the (bilateral) relationship."
While Hanoi is not afraid of a military confrontation, it is also keen to develop its ports and maritime trade, he says. China, meanwhile, is keen on "binding" its neighbours into strong economic relationships. "The more business you do with your neighbour, the less likelihood of escalations taking place," he adds.
China has been Vietnam's top trade partner since 2004, and bilateral trade grew 15 per cent to cross US$40 billion (S$50 billion) last year. Vietnam runs a trade deficit with China, with exports valued at less than half of its imports last year. Meanwhile, China was the top source of tourists to Vietnam last year.
The two countries' ties have been bogged down by testy exchanges over territorial disputes over the Paracel Islands - known as Xisha to the Chinese - in the South China Sea.
On Monday, Mr Li met Vietnamese President Truong Tan Sang, Communist Party chief Nguyen Phu Trong and legislature chairman Nguyen Sinh Hung. Today, he is scheduled to meet Vietnamese Chinese businessmen and scholars.
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