Insight | Vietnam's Hundreds of Billions Energy Plan, How Can Chinese Enterprises Seize Opportunities?

Against the backdrop of the trade war, the geographical location between China and Vietnam may become the foundation for in-depth energy cooperation.

China and Vietnam are geographically close neighbors, with close economic and social ties and deep historical connections. In recent years, Vietnam has achieved rapid economic growth through vigorously promoting opening up, leveraging its demographic dividend, and accepting industrial transfers, becoming one of the fastest-growing economies in Southeast Asia and even globally.

During President Xi Jinping's recent visit to Vietnam, the two countries reached a new consensus on economic cooperation and signed a series of new cooperation agreements, with artificial intelligence and energy cooperation being important focal points.

The Time is Right to Promote New Energy Cooperation. Trump's entry into the White House and the tariff trade war he launched have severely disrupted the world economic order. In addition to major economies such as China and the European Union, Southeast Asian countries, including Vietnam, have been strongly impacted by tariffs. In recent times, the US's tariff bullying has intensified. The US Department of Commerce's International Trade Administration (ITA) stated that it intends to impose tariffs of up to 3521% on solar panels from Southeast Asian countries such as Vietnam, Cambodia, and Malaysia, claiming it is to offset China's cross-border subsidies to Southeast Asian countries, rehashing old arguments.

Looking at the Trump administration's "100-day plan," it is clear that tariff policy is core, and the suppression and containment of China is "said and done," with methods constantly being innovated and used to the extreme. China is the world's largest manufacturing powerhouse, accounting for one-third of global manufacturing capacity, possessing the world's most complete manufacturing industry chain, and playing an irreplaceable role in the global supply chain. It is no exaggeration to say that if Chinese manufacturing were artificially severed from the global economy, global manufacturing would be largely stagnant. In the US government's plan, Southeast Asia is theoretically a substitute for the Chinese manufacturing supply chain. But this plan is very weak. On the one hand, the completeness of the industrial system in Southeast Asian countries cannot compete with China; on the other hand, the development of Southeast Asian manufacturing also requires the supply of parts and raw materials made in China, and close cooperation with China.

In the future, Southeast Asian manufactured products, whether or not they are exported to the United States, will be inseparable from Chinese manufacturing. The US's imposition of additional tariffs challenges the world's division of labor and violates the laws of economic development, and will inevitably be punished by economic laws. This has become a global consensus. If the US stubbornly insists on its tariff policy, Southeast Asian countries will inevitably face the problem of "exporting to domestic sales," and their economic development thinking needs to be adjusted. Under this situation, promoting Sino-Vietnamese new energy cooperation is one of the important choices for China and Vietnam to explore and open up new development paths under the volatility and drastic changes in the external situation.

Cooperation Status and Direction

The important basis for choosing the energy industry as a fulcrum for cooperation is that energy consumption has always been a prerequisite for economic growth. The more developed the economy, the more it needs the support of the energy industry in terms of both quantity and quality. The scale of energy consumption is generally proportional to economic growth, and optimizing the structure in economic growth is also a common practice in various countries around the world. Therefore, Sino-Vietnamese energy cooperation has lasting vitality and is a significant undertaking.

1. Progress of Sino-Vietnamese Energy Cooperation

Sino-Vietnamese cooperation in fossil energy involves oil and gas resource development, as well as coal and electricity. In terms of oil and gas, China and Vietnam have sovereignty disputes in the South China Sea, but the two sides have made positive attempts at cooperation under the principle of "joint development." The Framework Agreement on Oil and Gas Cooperation in the Beibu Gulf signed by the two sides in 2008 aims to promote joint exploration in the Beibu Gulf waters. Vietnam plans to build several LNG receiving terminals in the future (such as the Yishan project), with Chinese companies participating in the bidding, and China Huanqiu Engineering Company participating in the preliminary planning of the Hai Phong LNG project in Vietnam. China and Vietnam are also exploring the possibility of transporting natural gas through pipelines. In 2022, Vietnam imported approximately 21 million tons of coal from China, accounting for 30% of its total imports, mainly used for power generation and industry. In 2021, the two countries signed a memorandum of understanding, planning to strengthen cross-border electricity trading, with cooperation projects including the cross-border power grid connection between Fangchenggang, Guangxi, and Quang Ninh Province, Vietnam, with particular emphasis on complementary energy supply during the dry season. China exports electricity to Vietnam through Guangxi, with exports of about 1.2 billion kWh in 2022, accounting for 0.5% of Vietnam's total electricity consumption. The current proportion is relatively small, but theoretically there is large potential for future growth.

In terms of new energy, Chinese companies such as Power Construction Corporation of China and JinkoSolar have invested in multiple photovoltaic and wind power projects in Vietnam. The Song La solar power plant in Binh Thuan Province, with an installed capacity of 600 MW, was built by a Chinese company, accounting for 10% of Vietnam's newly added photovoltaic capacity in 2021. Chinese companies are participating in Vietnam's energy storage projects, such as CATL cooperating with Vietnamese battery companies to deploy battery manufacturing to support the grid connection of renewable energy. The Vietnamese government plans to increase the proportion of renewable energy to 20% by 2030, and has recently adjusted this target. On April 15, 2025, Vietnam officially approved the revised version of its national power development plan, planning to invest US$130 billion in power development by 2030 to ensure the country's long-term energy security. To ensure that power supply can match its ambitious high economic growth rate, the government's new plan considers solar energy as the main energy source in the future, surpassing the current main energy source, coal. The new target is for solar power to account for more than 25% of Vietnam's power generation capacity by 2030, with gas and coal power accounting for 12% and 17%, respectively. At the same time, in addition to increasing the proportion of renewable energy, this updated roadmap highlights the inclusion of nuclear power development in the planning goals for the first time. China is a major global player in new energy and nuclear power, possessing comprehensive advantages in production capacity, technology, and industrial operation, and the two countries are close neighbors. Relying on technological and cost advantages, China can completely become an important energy partner for Vietnam.

2. Future Directions for Upgrading Bilateral Energy Cooperation

Overall, Vietnam has excellent geographical advantages and abundant natural resources, making it suitable for developing new energy. Vietnam is located in the tropical monsoon region, with long sunshine hours throughout the year, averaging 2000-2500 hours per year, suitable for the development of the solar energy industry; Vietnam has a coastline of more than 3,000 kilometers, theoretically with great potential for developing offshore wind power and nuclear power; the northern rivers have large drops, making them suitable for hydropower development; the Red River Delta and the Mekong River Delta have flat terrain and abundant biological resources, suitable for developing bioenergy. The future direction of Sino-Vietnamese energy cooperation, especially new energy and nuclear power cooperation, should be focused on these areas.

Potential Adverse Factors

Sino-Vietnamese cooperation in the energy sector has great potential, but there are also some problems and obstacles. Chinese companies participating in energy cooperation with Vietnam should pay attention to the following aspects.

First, there is competition from European, American, Japanese, and South Korean companies. Vietnam's development potential and geographical advantages have led to European, American, Japanese, and South Korean companies valuing cooperation with Vietnam under the changing international political landscape. Vietnam's multi-faceted opening up and emphasis on introducing resources from multiple sources have led to competition between Japanese, South Korean, European, and American companies and Chinese companies. Japan and South Korea have entered the Vietnamese energy market through official development assistance and low-interest loans. European and American companies have certain technological strengths in emerging fields such as hydrogen energy and carbon capture, squeezing the space for Chinese companies in the high-end Vietnamese energy market. Furthermore, Vietnam tends to balance the influence of various countries in terms of political and diplomatic affairs, leading to cooperation projects between China and Vietnam being easily affected by external factors.

Secondly, there are differences in technical standards that urgently need systematic benchmarking and improvement. In practice, there are some differences in compatibility and technical standards between the China-Vietnam power grids, affecting the operation of some projects. Although both power grids operate at 50Hz, differences in voltage levels and dispatch protocols affect grid efficiency, requiring additional technical investment for cross-border electricity trading. The 110kV cross-border line between Guangxi and Vietnam's Quang Ninh Province once suffered from low power transmission efficiency due to inconsistent equipment standards. Chinese wind power companies operating in Vietnam need to adopt IEC international standards, which differ from Chinese national standards, increasing certification and transformation costs to some extent.

Thirdly, Vietnam's localization policies for foreign investment have imposed varying degrees of constraints on Chinese enterprises. Vietnam's Foreign Investment Law strictly limits the foreign ownership ratio of joint ventures, with a cap of 49% in the energy sector. The Vietnamese government requires foreign-invested energy projects to use a certain proportion of local labor to boost employment and accelerate technology transfer, driving local industrial development and technology introduction. The technological advantages of Chinese companies in photovoltaic and energy storage sectors are at odds with Vietnam's localization policies. A domestic company's photovoltaic factory in Vietnam was once required to rectify due to disputes over employee hiring ratios. Vietnam levies a high corporate income tax and resource tax of 20% on energy projects, and the land acquisition compensation standards are not transparent, creating uncertainty for Chinese companies' investment and operations.

Fourthly, the carbon neutrality goal is driving continuous improvement in green development standards. The carbon neutrality goal reflects policy will, and public awareness of low-carbon development is also increasing. With the awakening of environmental awareness, Vietnamese people's opposition to coal-fired power plants and large hydropower dam projects is growing. A hydropower plant in Vietnam invested by a Chinese company was suspended in 2021 due to protests over resettlement issues. The "China environmental threat theory" hyped by some Western media has misled Vietnamese people to some extent, leading to Vietnamese environmental organizations repeatedly criticizing Chinese-funded projects for damaging mangrove ecosystems, affecting project progress. Vietnam has pledged to achieve carbon neutrality by 2050, planning to phase out coal-fired power plants and develop renewable energy. Chinese investment in coal-fired power plants in Vietnam faces policy uncertainty, and in the long run, it needs to shift to photovoltaic and wind power sectors.

Safeguarding Measures

First, strategic mutual trust between the two sides needs to be further consolidated and enhanced. Seizing the opportunity of fruitful high-level visits and consensus-building, implementing signed agreements, and creating a favorable atmosphere for energy cooperation. Continuing consultations on the South China Sea sovereignty issue, promoting joint oil and gas exploration and the integrated development of new energy sources such as wind power in the South China Sea, further improving the level of energy security for both sides, and enhancing energy green development efficiency. Leveraging the respective advantages of both sides in resources, technology, and equipment, while also leveraging the geographical advantage of "neighbors", strengthening cooperation in production resource elements to improve the level of China-Vietnam new energy industry cooperation.

Second, strengthen the alignment of energy industry technical standards. Promote the alignment of China's new energy technology standards with international standards to further enhance competitiveness. In the near term, the focus is on resolving grid compatibility to ensure stable and smooth power transmission and distribution; creating diversified China-Vietnam energy cooperation models, shifting from the current single electricity export model to an integrated development model of joint new energy development.

Third, against the backdrop of tariff and trade wars, actively strive for more favorable conditions for foreign investment in Vietnam. If the US imposes high tariffs on products exported from Southeast Asian countries, exports from Southeast Asia to the US will be hindered, and economic growth will be suppressed. Vietnam has a high dependence on exports to the US and will be significantly affected. Under this scenario, seeking new development momentum will become a major strategic choice for Southeast Asian countries, including Vietnam. It is advisable to leverage the natural advantages of the geographical proximity between China and Vietnam, to follow the trend of time and people, and based on existing project cooperation, further promote deeper energy cooperation. Under this situation, it will be easier for China and Vietnam to achieve breakthroughs in policy consultations on energy cooperation.

Fourth, continuously enhance green energy competitiveness and adhere to the concept of sustainable development to guide Chinese companies' investment and factory construction in Vietnam. The core challenge of in-depth China-Vietnam energy cooperation lies in balancing geopolitical interests and economic demands, while addressing environmental pressures and international competition. In the future, both sides need to resolve differences through technological innovation, policy coordination, and multilateral frameworks to achieve mutual benefit and win-win results. The core of energy cooperation is new energy, and cooperation is in line with the trend of low-carbon development, best matching Vietnam's policies and development needs. If developing fossil fuel projects, it is advisable to vigorously promote the research and development and industrial practice of CCS technology to further improve the clean utilization level of fossil fuels.