The French granted Vietnam independence in 1954. With the division of the country into two halves, the south became the Republic of Vietnam (ROV), and the north became the Democratic Republic of Vietnam.
Roughly eighty-five percent of Vietnam's Chinese population lived in the ROV, and despite an early, abortive "Vietnamization" drive, Chinese economic dominance prevailed during the twenty years of the Saigon regime(from 1955 to 1975).
Particularly during the Vietnam War (which the Vietnamese call the American War), the wealth of the "compradore bourgeoisie" in the ROV rapidly intensified: This was a time when opportunities for business came with the U.S. need for a trade and service network to supply its troops fighting in
Vietnam. The post-1964 years also saw an ROV government inclined to deregulate the economy and promote liberal market practices. Local Chinese businessmen were quick to seize these opportunities and expanded operations not just in their traditional strongholds of trade and services, but also in finance and light industries.... The political underside of such economic practice was the inevitable corruption of the power elite. In order tooperate... [the disadvantaged local Chinese] had to cultivate the politicians and military leaders of the ROV. At the simplest level it was wining and dining them. But a more serious form involved the use of huge monetary bribes or offers of shares in businesses
Following the country's reunification in 1976, the revolutionary Vietnamese government singled out the entrepreneurial Chinese of thesouth as "bourgeois" and "an important part of world capitalism,"
arresting and brutalizing thousands and confiscating their property, along with that of their Vietnamese counterparts.
In March 1978, all private trade was banned in Vietnam. A few months later, the government introduced a new currency and rendered existing money holdings worthless, thus completing its campaign to transform Vietnam into a socialist society. Vietnamese authorities claim that this "campaign was not directed against any particular ethnic group." Nonetheless, a disproportionate number of Vietnamese Chinese were affected. Many former businessmen and traders were left "without any means of sustaining themselves."" Others faced forcible relocation to "new economic
zones." As a result, many thousands of Chinese from the former ROV fled the country.
In 1986, after years of economic disaster and famine, and in the face of triple-digit inflation, unmanageable debt, and declining aid from Soviet bloccountries, the Vietnamese government launched a program of economic liberalization, known as doi moi ("renovation"), designed to
move Vietnam away from centralized planning toward a market-based economy. The implementation of doi moi has been described as follows:
Since 1988, Vietnam has given free priority to maintaining macro-stability while concentrating its limited administrative resources on strengthening the institutional base of its emerging market economy in order to promote micro-stability. There has been no rush to privatize SOEs [state-owned enterprises] ... as in Eastern Europe. Instead, the promotion of micro-efficiency has focused on price liberalisation, on creating space for the growth of the private sector and, finally, on imposing market discipline on SOEs both by removing the soft budget constraint and by exposure to international competition.
The effects of doi moi, in particular the inflow of foreign investment, have been more pronounced in southern Vietnam than in northern Vietnam.
As of 1995, the Mekong Delta and Ho Chi Minh City had almost 30,000 private-owned enterprises, in contrast to roughly 3400 in Hanoi and Halphong." Following familiar development patterns, doi moi has also benefited urban areas far more than rural areas, which by most accounts have experienced minimal improvement from marketization.
Economic liberalization in Vietnam has revived the entrepreneurial presence of the predominantly urban Chinese minority."' Today, the Chinese in Vietnam cluster in Ho Chi Minh City (still Saigon to most Vietnamese), where they constitute about twelve percent of the population but control thirty to thirty-five percent of that city's commercial activity. For the moment, the Vietnamese government is openly encouraging the Chinese minority to play a substantial role in Vietnam's economic development, for example by engaging in joint ventures with the government and by bringing in foreign investment from their overseas contacts.