Vietnam – China Trade: Driving Force from FTAs

The driving force comes from FTAs

2025 is a special year in the relationship between Vietnam and China as the two countries celebrate the 75th anniversary of the establishment of diplomatic relations (January 18, 1950 - January 18, 2025) and is also the "Vietnam - China Humanitarian Exchange Year".

Notably, the phone call on January 15 between General Secretary To Lam and General Secretary and President of China Xi Jinping was an important and very good start of the "Vietnam - China Year of Humanitarian Exchange", demonstrating the high regard and top priority of each side for the relationship between the two Parties and the two countries, guiding effective cooperation activities between the two Parties and the two countries in 2025 and the following years.

In recent years, economic, trade and investment cooperation between Vietnam and China has grown positively and continuously reached new records. Photo: Can Dung

Vietnam and China are two neighboring countries with a long-standing traditional friendship. The Party, State and people of Vietnam attach importance to and determine that developing friendly neighborly relations and a comprehensive strategic cooperative partnership with the Party, State and people of China is a consistent and long-term policy, a strategic choice and a top priority in Vietnam's foreign policy.

In recent years, the Vietnam-China cooperative relationship has been continuously consolidated and strengthened. High-level and all-level exchanges and contacts have taken place regularly in flexible forms. Economic, trade and investment cooperation has grown positively and continuously reached new records. China has been Vietnam's largest trading partner for many consecutive years and Vietnam has been China's largest trading partner in ASEAN and the 6th largest in the world. Other mutually beneficial cooperation areas have been continuously expanded and deepened, bringing practical benefits to the people of the two countries.

Notably, trade relations between Vietnam and China have been strengthened through new-generation Free Trade Agreements (FTAs) or through cooperation frameworks of which both sides are members.

Currently, Vietnam has signed 17 free trade agreements, making Vietnam one of the most open economies (200% of GDP), creating favorable conditions for Vietnamese enterprises to expand access and establish trade relations with more than 230 markets. Meanwhile, China is participating in 24 FTAs, of which 16 have been signed and implemented.

In 2003, Vietnam and ASEAN signed the Framework Agreement on Comprehensive Economic Cooperation to establish a Free Trade Area (FTA) with China, and in 2020, the two countries also simultaneously signed and are implementing the Regional Comprehensive Economic Partnership (RCEP).

The above two FTAs, together with the establishment of a comprehensive strategic cooperative partnership between Vietnam and China in 2008, have strongly promoted the development of bilateral trade. In 2024, Vietnam and China are working with ASEAN countries to promote negotiations to upgrade the ASEAN-China FTA to version 3.0 to open up more economic and trade opportunities for countries in the region in general and the two countries in particular.

Since 2004, China has always been Vietnam's largest trading partner. Bilateral trade growth in the past 10 years has been at double digits. Currently, China is Vietnam's second largest export market and largest import market. With many advantages in economic and trade cooperation, over the years, trade exchange between Vietnam and China has maintained a stable and sustainable growth momentum.

In 2024, after the two countries upgrade their relationship, two-way import-export turnover will reach more than 205 billion USD. Photo: Hai Hung

According to the General Department of Customs, in 2024, after the two countries upgraded their relationship, two-way import-export turnover reached more than 205 billion USD, marking the first time Vietnam established a record trade scale with the Chinese market, increasing bilateral trade turnover by more than 6,400 times (from 32 million USD to 200 billion USD) in more than 3 decades since the normalization of relations in 1991.

In trade relations, the issue of reducing Vietnam's trade deficit and stabilizing Vietnam's agricultural exports to the Chinese market has been gradually resolved. China has actively opened its doors for Vietnam's agricultural products to penetrate deeply into its market. In 2022, the two countries signed the Protocol on official exports of durian, sweet potatoes, and bird's nests to China.

Currently, the two countries are promoting “hard connections” in railways, highways, and border gate infrastructure; “soft connections” in smart customs and smart border gates, to facilitate and further enhance trade exchanges between the two sides.

Speaking at the reception to celebrate the 75th anniversary of the establishment of diplomatic relations on January 17, Chinese Ambassador to Vietnam He Wei said that the infrastructure connection between the two countries has many bright spots, the cross-border economic cooperation zone and smart border gates are being implemented smoothly, the project of three standard gauge railway lines in northern Vietnam is being promoted rapidly, cooperation in emerging fields such as digital economy, energy conversion, etc. is increasingly developing, and substantive cooperation is being strengthened with high technology and quality.

Prioritizing promoting “6 more” in Vietnam – China relations

According to the Ministry of Industry and Trade, bilateral trade between the two countries still has a lot of room for growth, based on many bilateral cooperation agreements, as well as multilateral trade agreements such as the ASEAN-China Free Trade Agreement (ACFTA), the Regional Comprehensive Economic Partnership (RCEP). Accordingly, when the ASEAN-China Free Trade Agreement (ACFTA) is upgraded, it will contribute to further promoting investment and trade.

China's direct investment in Vietnam has also increased sharply and continuously improved its ranking over the years. To date, China has risen to become the third largest foreign investor in Vietnam, with a total registered capital of 31.8 billion USD. The Ministry of Planning and Investment's report on foreign investment attraction in 2024 shows that China is the leading partner in terms of the number of new investment projects (accounting for 28.3%).

Vietnam-China relations are entering a new stage of development at a higher, deeper and more substantial level. Photo: Binh Duong

Also on the occasion of the 75th anniversary of the establishment of diplomatic relations between Vietnam and China, Ambassador Extraordinary and Plenipotentiary of Vietnam to China Pham Thanh Binh said that now is a favorable time to promote the relationship between the two countries to enter a new stage of development at a higher, deeper and more substantial level. The two sides need to focus on promoting the implementation and concretization of the high-level common perception on deepening and elevating the comprehensive strategic cooperative partnership, building a Vietnam-China Community of Shared Future with strategic significance in the direction of "6 more".

Accordingly, it is necessary to continue to deepen substantive cooperation in various fields, achieving many concrete results. Strengthening the material foundation for bilateral relations, promoting investment and trade cooperation, expanding the import of goods, especially agricultural products of Vietnam; focusing on implementing major projects, new symbols of cooperation in Vietnam-China relations.

In particular, considering the implementation of 3 standard gauge railway lines connecting the two countries (Lao Cai - Hanoi - Hai Phong, Lang Son - Hanoi, Mong Cai - Ha Long - Hai Phong) as the highest priority in strategic infrastructure connection cooperation between the two sides; expanding cooperation in areas where China has strengths and Vietnam has needs such as science and technology, innovation, digital transformation, green growth, clean energy, etc.

In 2024, after the two countries upgraded their relationship, the two-way import-export turnover between Vietnam and China reached more than 205 billion USD for the first time, increasing bilateral trade turnover by more than 6,400 times (from 32 million USD to 200 billion USD) in more than 3 decades since the normalization of relations in 1991.

Source: https://congthuong.vn/thuong-mai-viet-trung-dong-luc-den-tu-cac-fta-370221.html