Because it is near a big market, the dependence on China’s trade has caused Vietnam’s concerns and major challenges.
According to the lecture of the Center for Economic Management Research Institute (CIEM) on December 2nd, “International Economic Forecasting under the Background of Integration of Medium Term Social Planning”, Vietnam believes that among its major partners, such as the United States, Europe, Japan and Southeast Asia ( ASEAN has the highest degree of dependence on imports from China.
If in 2004 the ASEAN’s dependency index exceeds Vietnam’s by 16%, then all this will have changed by 2014. Vietnam’s index exceeded ASEAN by 21.7%. What’s more, all this happens very quickly, especially for some commodities such as textile raw materials, instruments, electronic components, machinery, and mechanical equipment.
The deputy director of the Industry and Trade Information Center stated that Vietnam’s economy is heavily dependent on China, and its trade deficit is growing continuously, from 200 million USD in 2001 to 28.9 billion USD in 2014, an increase of 144 times. Products imported from China directly serve the company’s daily production and operation activities, and only 20% are consumer products.
“This long-term impact is to upgrade the technology of local companies and allow Vietnam to enter the initial stage of ‘industrialization’ to export goods to China based on natural resources. In the long run, this will weaken Vietnam’s productivity and lead to long-term slow economic growth. Mr. Fang said.
The main causes of the trade deficit with China include system-oriented policies, exchange rates, interest rates, land, and the enthusiasm of the system… Specific economic policies have distorted the economic structure rather than encouraging domestic production because these industries are at the bottom of the value chain
In this context, experts discuss and take measures to reduce their dependence on China. Unpredictable geopolitical tensions and complex disputes around the world may occur in the South China Sea. In the future, China will impose restrictions on trade relations between the two countries.
“At present, China is Vietnam’s largest customer. If Vietnam does not actively seek new markets, the situation will deteriorate and the Vietnamese economy will face many difficulties,” said Dr. Liang Yinsui.
“Because of the high degree of openness to trade by the country, the role of trade and economic growth in Vietnam is enormous. China is an important trading partner. The growth of trade has led to whether economic growth depends on China for exports and imports. If yes In this way, does Vietnam sacrifice growth or reduce dependence?” CIEM experts asked questions.
However, according to Dr. Kyi, currently, in the process of signing a free trade agreement with other partners outside China, the dependence on this market will improve in the near future. He said that the Trans-Pacific Partnership Agreement (TPP) will give Vietnam better trade prospects, help balance trade relations with key market sectors, and avoid over-reliance on specific regions in the market.
He also suggested that the government should formulate policies to meet various opportunities and challenges brought about by trade agreements, with the emphasis on reducing the import of intermediate products, especially those semi-finished products, increasing the added value of export products and improving the competitiveness of the economy.