Addressing a joint press conference with his Vietnamese President Tran Dai Quang, the US president that the lifting of ban on lethal weapons was part of a defense co-operation agreement which Washington has reached with Hanoi.
The Vietnam War ended in April 1975 with the fall of Saigon after the withdrawal of the US combat forces and the launch of a massive offensive by North Vietnamese to reunite their homeland under communism.
It is notable that Vietnam and China are neighbors and both are Communist nations but China has aggressively claimed territory in the South China Sea, which has not gone down well with Vietnam and its other Southeast Asian neighbors.
Commenting on Obama's decision, China's Ministry of Foreign Affairs spokeswoman Hua Chunying said that it was appropriate for the ban to be lifted.
"(The) arms sales ban was a product of the Cold War and should no longer exist," she told reporters. "We hope the lifting of all such bans will benefit regional peace and development. And we are happy to see the United States and Vietnam develop normal cooperative relations," she added.
For his part, Obama justified the decision to lift the arms ban despite Vietnam's dismal record on human rights, stressing the sales of arms to Vietnam would be evaluated on a "case-by-case" basis.
Human Rights Watch executive director Kenneth Roth tweeted that Obama was opting to "arm Vietnam as (an) anti-China ally rather than care about its ongoing repression."