China-Viet Nam Trade Relations
( Contributed by Duc Minh Le of Nova Southeastern University, Florida)
China and Viet Nam normalized relations in 1991. The friendship and relations of mutual benefit between the two countries cover all fields bringing about practical advantages to each side. Until the present time, the two countries have signed over fifty agreements, providing a foundation for long lasting cooperation between the 2 countries. Both sides have reopened sea /air/land routes facilitating the transportation of products and passengers between the 2 countries. The delegations exchanges at various levels are increasing. Every year, there is an exchange of more than one hundred delegations at various levels. These activities have contributed to enhancing understanding between each other and expanding their bilateral cooperation.
Over the time, China has become one of the leading trading partners of Viet Nam. In 2006, the bilateral trade volume was 10.42 billion US dollars (Viet Nam’s export was at 3.03 million US dollars, and import was 7.39 billion US dollars). In the first 3 months of 2007, the bilateral trade amount was 2.99 billion US dollars, 42.2% higher than the figure for the same period last year. Viet Nam’s export was 722.7 million US dollars (2.29% lower than the number of the same period last year), while its import was 2.27 billion US dollars (66.3% higher than the number of same period last year).
The bilateral trade volume accounts for 0.6% of China’s total foreign trade volume and 12% of Viet Nam’s total foreign trade volume. Since 2001, Viet Nam has experienced increasing deficit in trade with China. The two sides have agreed to aim at the target of 15 billion US dollars in the bilateral trade volume in 2010 and at the same time gradually reduce Vietnam's trade deficit.
According to the Plan and Investment Ministry, by the end of April 2007, China has had 437 investment projects in Viet Nam with the total capital of 1.182 billion US$, ranking 14th among 77 countries and territories investing in Viet Nam. In 2012, China has 842 investment projects in Vietnam with total registered capital of over $ 4.3 billion, ranking 14th out of 96 countries and territories with direct investment in Vietnam. Meanwhile, Vietnam has 10 new investment projects in China with a total registered capital of USD 13 million mainly concentrated in the services sector. Trade turnover between the two sides is growing rapidly: Total bilateral turnover reached 35.7 billion USD in 2011, (an increase of 30.7% compared to 2010 with exports of $ 11.1 billion, and imports of 24.6 billion).
Over the years, cooperation between Vietnam and China has achieved remarkable results, especially in trade and investment. In 2011, their two-way trade stood at $36 billion, while trade between America and Vietnam was $22 billion. Their two-way trade however is a bit more one-way than the Vietnamese would like and their trade deficit already stands at $1.85 billion for the first two months of 2012.
Level of Investment and Trade
Investment in China rose fairly steadily through 2008 (increased 125%). However, due to the world financial crisis, China's investment into Vietnam in 2009 decreased significantly compared with previous years.
In 2011, China is the third largest export market for Vietnam (11.3% of total export value) but is also the largest import market (23.2% of total imports). Meanwhile, the value of Vietnam's exports to China accounted for only 0.6% of the total value of Chinese imports and the total value of Vietnam's imports from China accounted for only 1.3% of total value of the country's exports. The trade deficit with China has increased from 135 million in 2001 to USD 13.5 billion in 2011.
Vietnam's exports to China are mostly raw materials, fuels and minerals such as cassava processing (over 90% of total exports), rubber (61.4% of total exports), oil crude (15.2% of total exports), coal (78.3% of total exports), including processing of alumina bauxite Highlands project.
Vietnam’s imports include mostly machinery, equipment, electronic components. China is the leading exporter of these products into Vietnam (about 33.3% of total import value machinery, equipment, electronic components and 5% of the total value of all imported products),
While Vietnam exports other consumer goods such as gems, coffee to developed countries, most Chinese imports (from Vietnam) are composed of raw materials. For example, 70% of Vietnam rubber is exported to China. Vietnam also buy products made from rubber from China.
Vietnam is the perfect external market for Chinese goods because Vietnam has some similar economic conditions, consumer culture and low transportation costs.
For China, trade relations with Vietnam are less important than the overall relationship with Vietnam. In 2007, Vietnam ranked as 22nd exporter to China, between Thailand and Mexico and 38th importer, between Mexico and Venezuela. Among the Asian partners, Vietnam ranks 16th in exports, behind five ASEAN countries, and 11th in imports, after Singapore, Malaysia, Indonesia and Thailand.