Hillary Clinton met with Vietnam's top communist leaders Tuesday for talks aimed at boosting trade as the US seeks to shore up its stuttering economy with an Asia-focused export drive.
But the Secretary of State, who arrived from a trip to Mongolia, also made a strong push for improved human rights, arguing: "Democracy and prosperity go hand-in-hand. Political reform and economic growth are linked."
Clinton held talks with Foreign Minister Pham Binh Minh and had a landmark meeting with communist party head Nguyen Phu Trong at which she pressed human rights concerns, US officials said.
She also witnessed the signing of two deals between US company General Electric and Vietnam's biggest state-owned telecoms group Vietnamese National Power Transmission Corporation, and a private Vietnamese company.
There have been "remarkable" changes in Vietnam and the cooperation between the two countries is "steadily growing", Clinton said, adding that they shared "important strategic interests" on issues like the South China Sea.
Vietnam has made clear it welcomes a closer relationship with its former wartime enemy amid territorial disputes with its historic rival China.
Minh said the two sides had held "interesting, open and constructive talks on several issues of bilateral relations and regional issues".
They agreed disputes in the South China Sea should be resolved through "peaceful measures" and Minh said he hoped the bilateral relationship would "grow rigorously" in years to come.
Later this week Clinton will host a meeting of American business leaders in the Cambodian city of Siem Reap, on boosting US exports to the region and taking advantage of the region's growing middle class.
At a forum in a Hanoi hotel she urged American and Vietnamese business leaders "let's get to work", adding, "there is so much untapped potential".