Vietnam is more than just a neutral host for the second summit between Democratic People's Republic of Korea (DPRK) leader Kim Jong Un and United States President Donald Trump, which is slated for Wednesday and Thursday. The Southeast Asian nation's model of reform is widely touted as a path that the DPRK could follow to become an "economic rocket."

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When U.S. Secretary of State Mike Pompeo visited Vietnam last July, he suggested the DPRK should follow Vietnam's economic path.

"President Trump believes your country can replicate this path. It's yours if you'll seize the moment. The miracle could be yours; it can be your miracle in North Korea (DPRK) as well," he said.

What is the Vietnam model?

Vietnam in 1986 launched free-market reforms similar to China's reform and opening-up process which began in 1978. The reforms were called Doi Moi, which means renovation.

The cornerstone of Doi Moi was to transform the centrally planned economy into a market-oriented system capable of competing effectively in the international arena. 

Vietnam was one of the poorest countries in the world before the reforms, but now the country reported a gross domestic product (GDP) growth rate of 6.88 percent in 2018 which was double the 3.40 percent GDP growth rate of the U.S. in the same year. The reforms also lifted Vietnam's national income per capita from less than 95 U.S. dollars in 1990 to 2,342 U.S. dollars in 2017.

"Vietnam embodies the future the United States hopes that North Korea (DPRK) embraces," said Troy Stangarone, senior director of the Korea Economic Institute, because it was "a former adversary who has transitioned to a friend of the United States and undertaken economic reform."

Is Kim willing to learn from Vietnam?

Deciding between weapons and wealth has always been a question for Kim, and it's also the main question at the Hanoi summit. Kim seems to have chosen wealth, as he announced last April that the country will focus on economic development, and he also reportedly showed a willingness to learn from Vietnam's Doi Moi policy in developing the economy.

Citing the ROK's Unification Ministry, Yonhap News Agency reported that Kim has attended 98 public events throughout 2018, of which 41 were economic activities, accounting for 41.8 percent, the highest proportion of all activities. In 2017, Kim had 26 economic activities, accounting for 27.7 percent of the total.

And learning from Vietnam is not a new idea. The Vietnam model has been discussed directly between the leaders of the two countries since the 1990s, and Kim sent a delegation to Hanoi in 2012 that was specifically focused on Vietnam's experience of reforms and market-oriented socialism.

According to reports, Kim has mentioned his willingness to emulate Vietnam's economic model during meetings with Republic of Korea (ROK) President Moon Jae-in. And this was echoed by DPRK Foreign Minister Ri Yong Ho's visit to Vietnam last December. 

Ri visited the Hoa Lac Hi-Tech Park in Hanoi and the coastal province of Quang Ninhin, an indication of the DPRK's intention to learn from Vietnam's experience of opening its economy. Both places have welcomed domestic and foreign investors.

While in Vietnam, Kim reportedly plans to visit the Vietnamese manufacturing base of Bac Ninh Province, northeast of Hanoi, and the industrial port city of Haiphong.

Can the DPRK follow Vietnam to economic success?

The two Asian countries are both communist countries, and once had similar economic situations: Both adopted a socialist planning economy, both have suffered internal division, have faced or faced UN sanctions and a common enemy – the U.S. However, the DPRK faces challenges that might make it difficult to follow Vietnam's footsteps, as it has significant differences in its external environment, military policies, extent of openness and much more.

Economic situation

The DPRK's economy in recent years is similar to Vietnam's in 1985, a year before it embarked on its Doi Moi reforms. According to UN figures, Vietnam's GDP per capita was one percent of that of the U.S. in 1985, while the DPRK was in a parallel position relative to the U.S. in 2015.

UN sanctions

Vietnam once also faced UN sanctions, but it was lifted in 1989 after Vietnam ended its occupation of Cambodia, finally allowing it to trade freely with the outside world, while the DPRK is still facing grave economic sanctions - the major barrier for its economic development.

International relations

After Vietnam withdrew its army from Cambodia in 1987 and began its reforms, it has remained a peaceful figure on the world stage, while for the DPRK, a peaceful external environment still seems to be a fantasy in the near future since it has not yet reached an agreement with the U.S. in regards of nuclear talks.

Military 

In 1988, Vietnam's leadership realized the price was too high to put constructing a military power above economic development, and thus gave up the path to make way for economic development. However, the DPRK's "military first" policy has been deeply rooted, and it prioritizes the Korean People's Army in the affairs of state and allocation of resources. Besides, the U.S. Army withdrew from Vietnam completely in 1973. However, the DPRK still faces the deterrence of 28,000 U.S. soldiers stationed in the ROK, which makes Pyongyang dare not lose its nerve.

The extent of openness

The DPRK is far more isolated compared with Vietnam in its 1980s before the reforms, said Michael Schuman, author of "The Miracle: The Epic Story of Asia's Quest for Wealth" and "Confucius and the World He Created." In 2017, Vietnam's trade as a percentage of GDP was over 200 percent, making its economy the most globalized of any sizable country. Vietnam's exceptionally globalized economy is a result of its focus on exports. If the DPRK wants to follow Vietnam's path, it would mean embracing globalization, which is still a question of whether Pyongyang has the willingness.

(Graphics by CGTN's Hu Yiwei, Gao Hongmei and Yin Yating)