The world is witnessing an unprecedented political, strategic, and economic transformation. U.S.-China containment currently forms the most important instance of great-power Competition in the existing interstate system. As a result, it holds within itself the key to the all-important question of global stability and continued peace.

The intensification of Sino-American competition has come about as a result of the realization by the U.S.A. of the systemic challenge that China’s unhampered development and rise poses to the unparalleled hegemony enjoyed by the U.S. thus far.

The U.S.A, in addition to the “the Quad,” (consisting of Australia, India, Japan, and the U.S.A) is not in favor of allowing China to make inroads into the IOR. Huge resources, particularly financial and military, are being injected into the region by both opposing sides in this region.

The competition and the political tensions are growing and, if not handled properly, the possibility of a much larger conflict centered in the Asia Pacific region cannot be ruled out during the first half of the 21st century.

Further adding to these developments are the dedicated efforts by both the U.S.A. and China to woe the Southeast Asian countries littered in the area. On one hand, Beijing is focusing simultaneously on several nodes of the Global South, especially its neighbors in ASEAN and across Eurasia. For instance, the Beijing-funded Jakarta-Bandung high-speed railway, Southeast Asia’s first: BRI project.

China is also building the East Coast Rail Link in Malaysia and has renewed negotiations with the Philippines for three railway projects. For China, the stakes could not be higher, as the drive behind expanding BRI across the Global South is not to allow China to be dependent on Western markets.

U.S.A. on the other hand is not only strengthening its traditional allies like Japan, South Korea, and the Philippines but is also reaching out to cement new alliances with China’s neighbours in ASEAN both directly and through its friends like Australia. The latest example of this is the Strategic Cooperation Agreement signed between Australia and Vietnam on the side-lines of the recently concluded Australia-ASEAN Summit. The move would help advance several core areas of cooperation in the burgeoning bilateral relationship between the two countries.

The economic component of Vietnam and Australia’s upgraded partnership will help Vietnam achieve its green energy ambitions and grant Australia greater access to one of Southeast Asia’s fastest-growing markets, while the defense component portends increased bilateral cooperation on efforts aimed at improving maritime security in the region. Enhanced economic cooperation will help Vietnam realize its green energy desires and will grant Australia greater access to one of Southeast Asia’s fastest-growing markets. The two sides also signed a memorandum of understanding on energy and mineral cooperation at the same time.

The defense part of the upgraded Comprehensive Strategic Partnership will apparently herald increased bilateral cooperation on efforts aimed at improving maritime security in the region but has raised eyebrows in the region and beyond.

Although Vietnam did not overtly mention up gradation of defense and security ties, the overall upgrade of the relationship also implies an upgrade in defense ties. This is reflected in Australia and Vietnam’s joint statement, though neither country is interested in highlighting this component over economic considerations given its sensitivities, particularly vis-a-vis China.

Through this agreement Vietnam and Australia will enhance their limited defense partnership, building on an annual defense dialogue at the deputy-ministerial level. This partnership will focus on areas such as intelligence sharing, cyber security, police, and coast guard cooperation, as well as efforts against illegal, unreported, and unregulated fishing. It will also include port calls made to Vietnam by the Australian Navy.

In addition, Australia and Vietnam’s joint statement affirmed each country’s commitment to the United Nations Convention on the Law of the Sea (UNCLOS). This is an oblique reference to China’s activities in the South China Sea amid its dispute with Vietnam and signals Australian support for Vietnam in that dispute. Closer ties with Vietnam will also enable Australia to stretch its maritime strategic space amid competition with China for influence in the Pacific Islands and, increasingly, Southeast Asia.

Vietnam’s earlier upgraded ties with South Korea in December 2022, the United States in September 2023, and Japan in November 2023 to top-tier comprehensive strategic partnerships. Vietnam has recently sought to deepen its relations with the Western world and its Asian allies in the hopes of securing the financing, technical know-how, and market access Vietnam needs to achieve its goal of becoming a high-income economy by 2024.

This latest elevation of ties with Australia after a busy year in Vietnamese Bamboo Diplomacy saw a broader elevation of relations with its closest economic and security partners.

In September 2023, Vietnam established a CSP with the United States, skipping over the “strategic partnership” level, followed by an upgrade with Japan in November of the same year. Hanoi is also considering upgrading its relationships with Singapore and Indonesia to the same level.

It is anticipated that in 2024, Vietnam could similarly upgrade ties to its top level with Singapore, the Philippines, Indonesia, and Thailand, highlighting the many vectors of tightening regional cooperation on bilateral and multilateral bases in the context of shifting geopolitics.

This growing appetite of Vietnam to upgrade its ties with the Asia-Pacific countries is in line with both countries’ desire to diversify their security and economic partnerships in the region in light of China’s growing assertiveness and political and economic influence and U.S. policy uncertainty. It is also a conscious attempt by Hanoi to diversify its foreign partnerships to hedge against China in the two countries’ territorial dispute in the South China Sea.

Australia, for its part, shares considerable geopolitical interests with Vietnam and other emerging middle powers in Southeast Asia, including a desire for maritime security, renewable energy development, and supply chain resiliency, as well as a need to navigate the escalating U.S.-China rivalry. ASEAN countries are broadly opposed to security blocs in their region, as demonstrated by Indonesia’s and Malaysia’s negative reactions to the 2021 signing of the AUKUS security pact between Australia, the United States, and the United Kingdom, which took most of the Southeast Asian bloc by surprise.

The fact that the U.S.A. is now arming the Australians with the latest defense technologies, including the controversial induction of nuclear submarines in the Australian Navy, would certainly raise concerns in Beijing on this new agreement between Australia and Vietnam although for the moment it does not qualify as a defense alliance.