In April 1978, thetook increasingly drastic action to transform the capitalist economy of the south into a socialist one. The Hoa-Chinese minority were disproportionately affected, leading to protests by Hoa-Chinese in against discrimination in relation to business closures and property losses. The creation of, and threatened transfer of people to, New Economic Zones led to the first wave of ‘boat people’ primarily from the south of Vietnam.
In the south of Vietnam and, in particular, Chinese businesses controlled much of the economic activity. An announcement on 24 March outlawed all wholesale trade and large business activities, which forced around 30,000 businesses to close down overnight, followed by another that banned all private trade.
While such measures were targeted at all bourgeois elements in Vietnam, such measures hurt Hoa-Chinese the hardest and resulted in the expropriation of Hoa-Chinese properties in and around major cities. Hoa-Chinese communities offered widespread resistance and clashes left the streets of Cholon full of corpses.
The repressive measures together with increasing violence caused an exodus of the majority of Hoa-Chinese from the north and the south of Vietnam, of which more than 170,000 fled overland into the province of Guangxi, China, and the remainder fled by boat from the south. China received a daily influx of 4,000–5,000 refugees, while Southeast Asian countries saw a wave of 5,000 boat people arriving at their shores each month. China sent unarmed ships to help evacuate the refugees but encountered diplomatic problems as the Vietnamese government denied that the Hoa-Chinese suffered persecution and later refused to issue exit permits after as many as 250,000 Hoa-Chinese had applied for repatriation.