The unresolved dispute between China and Vietnam over possession of the Hoang Sa archipelago has caused an increase in tension between the two neighbors. China has long exerted a strong political, ideological and cultural influence on Vietnam. On the other hand, Vietnam, with its important geographical position and its strong and experienced military force, has always made the Chinese wary. Taiwan's economic ties to Vietnam also influenced the government's decision to keep their official comments terse. Taiwan is the second largest investor in Vietnam.
Taiwanese investment is especially important in the manufacturing and high technology fields.
The recent growth of Taiwanese tourism has helped revitalize that ailing industry which had experienced a dramatic slump following the Asian economic crisis in the late 90s. The two countries are currently negotiating an important labor deal that would bring Vietnamese workers to Taiwan. Such a visit would certainly anger Beijing and jeopardize the recent improvements in the relationship between Vietnam and the mainland. Many Vietnamese overseas and foreign experts have interpreted U.S. Defense Secretary William Cohen's recent visit to Vietnam as a warning to Beijing not to use military force to acquire Taiwan. Other rumors suggest that the United States and Vietnam are pushing for more military cooperation.