China, Vietnam sign deals as Xi visits Hanoi amid US tariff tensions

By Francesco Guarascio, Khanh Vu and Phuong Nguyen

HANOI (Reuters) -China's President Xi Jinping on Monday called for stronger ties with Vietnam on trade and supply chains amid disruptions caused by U.S. tariffs, as he attended in Hanoi the signing of dozens of cooperation agreements between the two Communist-run nations.

The visit, planned for weeks and part of a wider trip in Southeast Asia, comes as Beijing faces 145% U.S. duties, while Vietnam is negotiating a reduction of threatened U.S. tariffs of 46% that would otherwise apply in July after a global moratorium expires.

"The two sides should strengthen cooperation in production and supply chains," Xi said in an article in Nhandan, the newspaper of Vietnam's Communist Party, posted ahead of his arrival on Monday. He also urged more trade and stronger ties with Hanoi on artificial intelligence and the green economy.

"There are no winners in trade wars and tariff wars," Xi added, without mentioning the U.S. specifically.

After he met Vietnam's top leader To Lam, the two countries signed dozens of cooperation agreements, footage of the documents reviewed by Reuters showed, including deals on enhancing supply chains and on cooperation over railways.

The content of the agreements was not disclosed and it was unclear whether they involved any financial or binding commitments.

On Saturday Vietnam's Deputy Prime Minister Bui Thanh Son had said around 40 agreements would be signed.

Under pressure from Washington, Vietnam is tightening controls on some trade with China to make sure goods exported to the United States with a "Made in Vietnam" label have sufficient added value in the country to justify that.

One memorandum of understanding signed on Monday is to boost cooperation between the China Council for the Promotion of International Trade and the Vietnam Chamber of Commerce and Industry, which issues certificates on the origins of goods.

Vietnam is a major industrial and assembly hub in Southeast Asia. Most of its imports are from China while the United States is its main export market. The country is a crucial source of electronics, shoes and apparel for the United States.

In the first three months of this year Hanoi imported goods worth about $30 billion from Beijing while its exports to Washington amounted to $31.4 billion, Vietnam's customs data show, confirming a long-term trend in which imports from China closely match the value and swings of exports to Washington.

RAIL LINKS, PLANES

After a two-day stop in Hanoi, Xi will continue his Southeast Asian trip on Tuesday by visiting Malaysia and Cambodia from April 15 to 18. He last visited Cambodia and Malaysia nine and 12 years ago, respectively.

Xi's trip to Hanoi, his second in less than 18 months, aims to consolidate relations with a strategic neighbour that has received billions of dollars of Chinese investments in recent years as China-based manufacturers moved south to avoid tariffs imposed by the first Trump administration.

Vietnam's Lam in an article published on Monday on state media said Hanoi wanted to boost cooperation in defence, security and infrastructure, especially on rail links.

Vietnam has agreed to use Chinese loans to build new railways between the two countries, in a major confidence-building step that would boost bilateral trade and connections.

However, no loan agreement has yet been announced.

Beijing is also seeking Vietnam's approval for its COMAC planes, which have so far struggled to find foreign buyers.

On Sunday, Vietnam's budget airline VietJet and COMAC signed a memorandum of understanding in Hanoi, according to an invitation to the event seen by Reuters.

One COMAC C909 regional plane with Vietjet's livery and the logo of China's Chengdu Airlines was parked on Monday at Hanoi international airport.

The content of the agreement has not been announced yet, but Reuters reported in past weeks that under a draft deal, Vietjet would lease two COMAC C909 planes, operated by crew from Chengdu Airlines, on two domestic routes.

Despite strong economic ties, tensions frequently surface between the countries over contested boundaries in the South China Sea.

Vietnam's concessions to the U.S. to avoid tariffs may also irritate Beijing, as they include the deployment of Elon Musk's Starlink satellite communication service in the Southeast Asian nation, in addition to the crackdown on some trade with China over possible fraud on rules of origin.

Vietnam, in recent months, has also imposed anti-dumping duties on several Chinese steel products and ended a tax waiver for low-value parcels in a move that government officials described as meant to reduce the inflow of cheap Chinese goods.

The two other countries on Xi's Southeast Asia itinerary, Cambodia and Malaysia, are facing U.S. duties of 49% and 24%, respectively, and have already begun reaching out to the U.S. to seek a reprieve.

(Reporting by Francesco Guarascio, Khanh Vu and Phuong Nguyen, Thinh Nguyen, Athit Perawongmetha in Hanoi, Liz Lee in Beijing; Writing by Francesco Guarascio; Editing by Himani Sarkar, Lincoln Feast and Hugh Lawson.)