Economy, trade, investment - Highlights in Vietnam

Vietnam and China have been and are each other's leading trade partners. China has been Vietnam's largest trade partner and second largest export market for many years. Meanwhile, Vietnam continues to be China's largest trade partner in ASEAN and the fourth largest in the world by national criteria. In the context of the gloomy global economy, Vietnam-China bilateral trade has maintained good growth momentum. In 2018, Vietnam-China bilateral trade turnover exceeded 100 billion USD. Since then, trade between the two countries has grown continuously, each year higher than the previous year. In the first 9 months of 2023 alone, bilateral trade reached 122.04 billion USD, equivalent to nearly 70% of the turnover of the whole year 2022. According to the analysis of some experts, in addition to the solid foundation of high political trust, the full implementation of the Regional Comprehensive Economic Partnership (RCEP) Agreement is the basis for the two sides to increase the scope and depth of bilateral cooperation. According to the assessment of large enterprises of both Vietnam and China, since RCEP took effect on January 1, 2022, especially after China recently allowed the import of some agricultural products from Vietnam such as durian, bird's nest, sweet potato and passion fruit, Vietnamese enterprises nationwide have found great opportunities to export new products to the neighboring country. In the coming time, to increase export turnover to RCEP member countries, including China, Vietnamese enterprises must innovate technology, improve designs, and enhance product quality. RCEP has become a launching pad for Vietnamese enterprises to increase output and product quality as well as export quantity and value. Under the impact of the Covid-19 pandemic, fluctuations in fuel prices, inflation and supply chain shifts, Vietnam and China need to strengthen cooperation to revive the economy, especially when the economies of the two countries are complementary. China's production capacity combined with Vietnam's trade advantages in connecting major markets can complete the regional supply chain and maximize the effectiveness of economic and trade cooperation. Over the past 5 years, China has always been one of the top 5 countries with the largest investment in Vietnam. Figures from the Foreign Investment Agency (Ministry of Planning and Investment) show that in the first 9 months of 2023, China invested 2.92 billion USD in Vietnam, ranking second only to Singapore in terms of investment volume.

Vietnamese durian is labeled before being exported to the Chinese market. Photo: Xinhua

The attraction of the two economies The attraction of the Vietnamese market to Chinese enterprises comes from the following factors: Vietnam is located adjacent to China, creating favorable conditions for the transportation of goods, raw materials and production lines. In addition, the Northern Key Economic Zone of Vietnam is geographically close to China, with the advantage of competitive industrial land prices compared to the Southern region, thereby creating a unique attraction for the provinces in the region for Chinese investors. In addition, Vietnam's high level of economic integration is noteworthy. To date, Vietnam has established economic and trade relations with about 224 partners from many countries and regions around the world. This creates favorable opportunities for Chinese enterprises in Vietnam to expand their presence in the market. Vietnam also possesses an abundant labor force, including a highly skilled workforce with competitive labor costs. Notably, the Vietnamese Government has recently introduced tax incentives and a clean energy strategy to attract foreign investors. In addition, regular meetings between senior leaders of Vietnam and China have created a favorable atmosphere and environment for cooperation between businesses of the two sides. Customs clearance activities at Vietnam-China border gates continue to be stable with high clearance efficiency. In particular, Vietnamese agricultural products tend to increase strongly in the billion-people market. Overcoming barriers At the Vietnam-China Trade and Trade Promotion Conference held last November in Beijing, Mr. Hoang Minh Chien, Deputy Director of the Trade Promotion Department, Ministry of Industry and Trade of Vietnam, commented that the prospects and potential in economic, trade and investment cooperation between the two countries are still very large. Therefore, businesses on both sides need to take advantage of and seize opportunities to strengthen cooperation, effectively exploit mutual complementarities, thereby promoting stable and sustainable business cooperation, contributing to bringing the Vietnam-China economic and trade cooperation to new heights. This assessment comes from the fact that Vietnamese agricultural, forestry and fishery products have not yet deeply penetrated the Chinese domestic market, have not yet connected with large corporations, modern distribution channels, electronic sales networks, online, and large supermarkets in China. Meanwhile, the figure of more than 2 billion USD of Chinese investment capital poured into Vietnam in the first 9 months of this year is still very small compared to the more than 100 billion USD that this country invests abroad every year. To open the flow of cooperation and promote investment, what needs to be done is to increase exchanges and connections between businesses on both sides. Geographical proximity is an advantage, but differences in language, culture and business practices are barriers for businesses of the two countries in the process of building a trustworthy and sustainable business relationship. Overcoming these barriers will bring success to each business as well as the common success of the two countries in bilateral economic and trade relations.