The process of cautious modernization, especially of the economic system, inaugurated in the second half of the 1980s by the Communist Party – single party under whose leadership it had taken place in 1976 the reunification of the country – experienced an acceleration during the following decade, also following the collapse of the USSR, to which Vietnam was closely linked. In this period, in fact, incentives for private initiative and foreign financing increased, while the forced collectivization policies that had characterized government interventions in the previous period, especially in the South of the country, were set aside. This led to a gradual improvement in economic conditions, which was however accompanied by the emergence of widespread corruption phenomena and the deepening of regional imbalances and social inequalities. It began to take hold, especially in the new middle class linked to private activities and in the new generations attracted by Western models of life, conveyed by the same economic reforms, the need for greater political, cultural and religious democratization, which was also the spokesperson for a minority sector of the party. However, the internal debate remained very limited and no substantial changes were recorded.
After the elections for the renewal of the National Assembly, held in July 1997, in September Tran Duc Luong took over from Le Duc Anh as President of the Republic, while the post of Prime Minister, held by Vo Van Kiet since 1991, was taken over by Phan Van Khai, a reform-oriented economist. Instead, Le Kha Phieu was called to lead the Communist Party in December to replace Do Muoi. The activities of the new government were aimed above all at limiting the effects of the economic crisis which, after having hit the main countries of Southeast Asia in the summer of 1997, had begun to have repercussions in the country as well. It was also intensified during 1998 and 1999, the fight against the corruption of the party apparatuses, within which the conservative wing, opposed to the liberalization measures, regained strength – following the economic crisis.
On the international level, the process of regional integration was strengthened through a series of trade agreements with neighboring countries, and relations with China were strengthened, despite the rekindling, in 1998 and again in 1999, of the dispute over the Spratly Islands. Relations with Washington also recorded a further improvement: in June 1997, Vietnam received an official visit from the United States for the first time, reciprocated in September 1998. Finally, in July 1999, the resumption of commercial relations between the two countries was announced, and in August Washington again established, after 24 years, a diplomatic seat on Vietnamese territory.