The two countries are forging better ties, pushed in part by mutual concerns over China's expansionism in the South China Sea, as well as a desire to expand trade and investment.
But Clinton also raised concerns about human rights in Vietnam, highlighting the sharp differences that remain between Washington and Hanoi's autocratic, communist-party-controlled state, which sharply limits dissent.
"The United States will continue to urge Vietnam to strengthen its commitment to human rights and give its people a greater say over the direction of their lives," Clinton said in Hanoi, according to The New York Times. "But our relationship is not fixed upon our differences. We have learned to see each other not as former enemies but as friends."
Some 58,000 Americans and at least 3 million Vietnamese were killed in the Vietnam War, which ended in 1975. Clinton said in Hanoi that the U.S. would also boost aid for Vietnamese still suffering effects of the widespread use of Agent Orange in that conflict, according to the Times.
Washington's ties with Hanoi were normalized in the 1990s during the presidency of the secretary of state's husband, Bill Clinton.
Wendell Minnick, Asia bureau chief for Defense News, said China's muscle-flexing in the South China Sea was helping to push the U.S. and Vietnam closer.
"There are still bumps in the road in U.S.-Vietnam relations," Minnick wrote in an e-mail. "There are still legacy issues with the older leaders of Vietnam who fought in the Vietnam War and still harbor anger at the U.S."
"But the opportunities for Vietnam greatly outnumber the negatives, and it's clear that many in the Pentagon see China's aggressive moves in the South China Sea as a plus for better ties with Vietnam," Minnick said. "The old saying still holds true: 'The enemy of my enemy is my friend.'"
Both Vietnam and the U.S. had run-ins with China in the South China Sea last year.
Vietnam was incensed when China unilaterally declared its annual fishing ban in the South China Sea, then seized Vietnamese ships and detained two dozen Vietnamese fishermen for several weeks.
Also last year, Chinese fishing vessels harassed two U.S. Navy ships on patrols in the South China Sea, nearly causing a collision.
The U.S. conducts naval and air patrols off China's coast to establish the precedent of freedom of navigation and to spy on China. Washington insists such activity is legitimate as it is conducted outside China's territorial waters, defined as waters up to 12 nautical miles from a country's shoreline, according to the U.N. Convention on the Law of the Sea.
But China views its territorial waters as extending 200 miles from its coast, the extent of its "Exclusive Economic Zone." It views U.S. patrols as a violation of its territory and has demanded that all ships or planes request Beijing's permission before traversing the South China Sea.
"China's assertiveness has caused anxieties in the region," Carlyle A. Thayer, professor of politics at the Australian Defense Force Academy in Canberra, told Bloomberg.
China claims virtually all of the 3.5 million-square-kilometer South China Sea as its own, and analysts say it has recently upgraded its claim to a "core interest," putting it on par with Beijing's claims over self-ruled Taiwan and Tibet.
China's claims overlap with five other countries (see map here.) It has fought two naval skirmishes with Vietnam over those claims, in 1974 and 1988. China won both engagements and now controls the Paracels. But Vietnam still claims those islands and views China as an occupying power.
Driving tensions in the South China Sea are potentially huge but unproven oil and natural gas resources (see factsheet from the U.S. government here). Energy-thirsty China pressured U.S. oil giant ExxonMobil to withdraw from a joint oil exploration project with Vietnam in 2008 in waters also claimed by Beijing, according to the U.S. State Department.
In Hanoi today, Clinton called the resolution of territorial disputes in the South China Sea a "leading diplomatic priority," according to Bloomberg, and called for negotiations.
"The United States supports a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion," Clinton said, according to Bloomberg. "We oppose the use or threat of force by any claimant."
China has been pursuing a rapid and far-reaching military buildup with an eye toward backing up its claims and denying the U.S. Navy access to waters close to its shores.
Though still far from matching the U.S. military in overall capabilities and technology, it has been pouring money into submarines, including nuclear-armed subs, a new aircraft carrier expected to enter service in 2012 and other hardware.
China is also building up its cruise missile and short- and medium-range ballistic missile arsenal, and is believed to be developing an anti-ship ballistic missile, sometimes called a "carrier-buster," which one Washington think tank says that if deployed "could alter the strategic landscape in Asia-Pacific region and beyond."