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For many years, extreme political issues in the countries of Cambodia, Laos, Vietnam, and Thailand have readily effected the economic status of Indochina.

Indochina is a name given to the peninsula between India and China, which includes Myanmar (formerly known as Burma), Thailand, Cambodia, Laos, and Vietnam. In a narrower sense it refers only to Cambodia, Laos and Vietnam which were united under French rule as the Indochinese Union (more commonly known as French Indochina). France created this Union from its territories in Cambodia and Vietnam in 1887 and incorporated Laos in 1893.

The French smoothly controlled Indochina for 50 years before its first threat of rebellion. In 1940, the Japanese invaded Vietnam and took control from the French. The ease of the Japanese victory led many Vietnamese to conclude that the French were not invincible. At the end of World War II on September 7, 1945 Ho Chi Minh declared Vietnam independence.

The French agreed to leave Vietnam and soon were ferried away. On November 22, 1946 the French Navy bombarded the port city of Haiphong, killing 6000 civilians and injuring an additional 25,000. The Viet Minh would fight back. The Viet Minh were a group of nationalist resistance fighters. When the resistance began, there were only 2000 Viet Minh troops, but by December 1946 their numbers jumped to 60,000. While the French easily took over multiple cities, the countryside belonged to the Viet Minh. In May of 1954 the Viet Minh forces, numbering in excess of 200,000, utterly defeated the French troops at the pivotal battle of Dien Bien Phu. This victory led to peace negotiations in Geneva, Switzerland. In late 1954 the partition of Vietnam, which divided Vietnam into North (communist)Vietnam and South Vietnam. The communists completely changed the social structure of North Vietnam. Private property was eliminated, and peasants were given a new, if nominal, dominance in the social order, while in South Vietnam the social structure was not changed by the partition. Since the mid-1980s a more complicated social system has developed as a result of market economic reforms. Although most Vietnamese remain farmers, the number of industrial workers is dramatically increasing. Furthermore, an urban middle class is emerging, which includes many private entrepreneurs.