China and Vietnam have a long history (and for long I mean centuries old) of poor relationships: this is only bound to make things worse.
China of lately has started to be quite aggressive with her Asian neighbors regarding natural resources: for example they drastically cut shipments of rare earths to Japan and are threatening to reduce coal shipments to the land of the Rising Sun. In a rare case of common sense entering the realm of politics the Japanese government gave charte blanche to the Sumitomo and Toyota shosha (roughly and improperly translated as “trading houses”) to open up new channels for the supply of rare earths. Vietnam answered enthusiastically and is reportedly ready to ship to Japan all the production from the Dong Pao deposits where large scale mining will start in 2012: this alone will cover 20% of Japan’s needs. While the Japanese no doubt offered a very good financial deal to Vietnamese authorities (including top-notch mining and pollution-reducing technology for the new mines) there’s little doubt Hanoi wants to strengthen her ties with Tokyo and stick one (figuratively speaking of course) to her giant neighbor.
The control of water sources in Asia is bound to be one of the great geo-political themes of the XXI century. There’s little doubt that China stands in a position of immense strength: largest economic powerhouse of the continent, nuclear superpower, in control of Tibet since 1959. The beating the PLA gave to India in 1962 in a series of “border skirmishes” is a remainder of how quickly tensions can turn into full-blown war in the area. With Hindu nationalists growing stronger by the day and China’s foreign politics becoming more and more aggressive there’s little doubt these tensions will rise in the near future. US meddling in the area and their not-so covert attempt at winning India’s backing to meddle even more with Pakistan don’t help things one tiny bit. Pakistan has long-standing defence and economical agreements with China (which haven’t been pushed due to the “peculiar nature” of the present Pakistani government): by meddling in the area even more the US is sure to stir up a hornets’ nest. And we are talking very angry, nuclear armed hornets here.