The two countries had a tense stand-off in 2014 when China drilled for oil in disputed waters
Vietnam has cancelled a major oil project in the South China Sea for the second time in a year, in the wake of Chinese pressure, the BBC has learned.
State-owned PetroVietnam ordered Spanish energy firm Repsol to suspend a project off the south-east coast, a well-placed industry source said.
It means Repsol and partners could lose up to $200m of investment already made.
The news is unexpected as final preparations for commercial drilling were under way.
China is likely to regard this move as a significant victory. The Vietnamese decision seems to demonstrate that the recent show of force in the South China Sea by the United States has not changed Vietnam’s strategic calculations.