As the Americans scramble for allies in the West Pacific to contain China’s rise, its once antagonist Vietnam could prove a tremendous asset.

Joel Kotkin and Jane Le Skaife of the conservative American Enterprise Institute suggest that “Vietnam has emerged as the un-China, a large, fast growing country that provides an alternative for American companies seeking to tap the dynamism of East Asia but without enhancing the power of a potentially devastating global competitor.”

Sino-Vietnamese relations haven’t much improved since the two countries briefly went to war in 1979. Border disputes and regional rivalry continue to be cause for mutual mistrust even as Vietnam joined in a free-trade agreement with other Southeast Asian states and China in January of last year. Chinese revisionist maritime border claims in the South China Sea in particular are forcing other countries in the area to seek American protection.

Mere decades after end of the Vietnam War, relations between the country and the United States appear to be improving however. The two have staged naval exercises together and the Cam Ranh Bay naval base was opened to foreign warships last year. But perhaps the greatest thing tying America to Vietnam, write Kotkin and Le Skaife, is people.

After the communists took over South Vietnam in 1975, millions of Vietnamese fled overseas with the majority of them heading to Australia, Canada, France and the United States. Four million Vietnamese live abroad. Half of them live in America.

Vietnamese Americans have done well. Their income is on par with the national average and nearly 65 percent of them owns homes. “Vietnamese are also three times more likely to be in such fields as information technology, science, and engineering than other immigrants, and have one of the highest rates of naturalization — 72.8 percent.”

This prosperous diaspora will prove a huge asset to the home economy as it’s moved away from central planning and is now open to international trade. Vietnamese exports have increased from about $5 billion to over $70 billion during the last three decades. America is by far Vietnam’s largest market with more than $10 billion in annual trade.

Despite the cautious liberalization, there are major impediments to growth. The regulatory framework for small businesses has improved but multinationals face import bans and restrictions as well excessive licensing requirements to do business in Vietnam. Foreign investment is either prohibited by the state or requires government approval, a process that is susceptible to bribery and cronyism. Property rights aren’t properly enforced.

On the upside, Vietnamese labor is cheap and 95 percent of Vietnamese are literate which gives the nation a huge edge over China. The government still owns entire industries but total public spending as a share of gross domestic product is less than 30 percent. Taxes and tariffs are low. Improvements are being made but need to happen faster if Vietnam is to capitalize on its demographic advantages in the decades ahead.