Vietnam-China Trade poised to grow: What’s in it for You?
China has been Vietnam’s largest trading partner for more than a decade and this has not changed during 2017, where the total transactional value reached 93.69 billion USD. This figure represents a total of 22% of Vietnam’s total import-export value. Vietnam’s economic relationship with the largest country in the world is growing steadily and experts predict that in 2018, bilateral trade will hit the 100 billion USD milestone.
This is despite the somewhat “love-and-hate” relationship between the two countries. While Vietnam is similar to China in its culture, traditional values and even its political system, there are on-going skirmishes at the political level, particularly regarding claims over islands in the South-China Sea (also called “East Sea” in Vietnam). The large trade volume also creates a degree of dependency on China – China is Vietnam’s second biggest export market after the USA (35.46 billion USD in 2017) and its largest source of imports (58.22 USD in 2017), even though Chinese products still have the “cheap and low-quality” reputation among the Vietnamese. One of the reasons why Vietnam entered into many free trade agreements recently could be an effort to reduce this dependency.
Vietnam and China’s economic relations are closely interlinked. The leaders of both countries are very aware of this fact and would do not want to put the relation in jeopardy, which manifest itself in frequent mutual visits of senior officials and continuous joint declarations of furthering economic cooperation, such as the one on November 8th last year. Vietnam hence presents itself as a good base for enterprises targeting the Chinese market, or possibly those planning to source Chinese raw material. Currently, products with the largest export value from Vietnam to China are agricultural products (seafood, rice, rubber), electronic parts, telephones and footwear. The Vietnamese Government also supports this bilateral trade by establishing special economic zones near the Chinese border - Dong Dang (Lang Son province), Mong Cai (Quang Ninh province) Lao Cai (Lao Cai province) Tra Linh (Cao Bang province), to name a few.
Additionally, the deepening economic ties made through preferential and free trade agreements (some made through ASEAN) give enterprises in Vietnam tariff-free or reduced-tariff access to other markets of the world, i.e. Australia, New Zealand, Korea, Japan and soon to markets across the Pacific Ocean.