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Warning: trade with China in serious imbalance

VietNamNet Bridge – The excessive trade gap has been pointed out by experts as a latent big disadvantage for Vietnam in the trade relationship between Vietnam and China. The experts have called for solutions to improve the situation.


He Kou border gateStatistics about imports and exports of Vietnam and China in recent years show the serious imbalance, which experts call a latent big disadvantage for Vietnam. The situation has become more serious since Vietnam began fulfilling WTO commitments and the implementation of the ASEAN-China Free Trade Agreement (FTA).

Since 2001, the trade gap between Vietnam and China has been increasing, now reaching 200%. In 2006, Vietnam exported $2.486bil worth of products to China, while China exported $7.465bil worth of products. While Vietnam’s exports to China decreased slightly by 2.6%, imports from China increased sharply by over 30%. In general, Vietnam’s excess of imports over exports has reached 176.2%.

The said figures just cover the export of goods, and the situation proves to be more serious if counting the value of service imports (banking, tourism, telecommunications, and power purchasing turnover).

Experts have also warned about problems in export item structure. Vietnam’s export items to China are mainly raw materials, including crude oil, minerals, rubber, coal and farm produce (90% of total exports). Meanwhile, China mainly exports high-value products, including consumer goods and production lines.

Dr of Economics Le Dang Doanh said that the gap in trade with China was a typical example of Vietnam’s problem: exporting raw materials and importing finished products. Vietnam exports crude oil and imports petrol, exports ore and coal, and imports ingot steel, exports rubber and imports tyres and tubes.
Experts said that China was growing very well and neighbouring countries could benefit from the strong development. Though Vietnam has many advantages, it can reap the smallest benefit in dealing with China, a country that has many big demands to serve its hot development.

It is clear that the situation should be improved if Vietnam does not want to bear the disadvantages in trade with China any longer. However, the problem is that Vietnam and China have similarities in product structure and production advantages, while China proves to be superior in technologies and production costs.

According to Mr Doanh, the solution is that Vietnamese enterprises should focus on their fortes and expanding the markets that are not of China’s interest. 10 years ago, local brewery producers could ‘hold back’ China-made beer and dominate the domestic market.

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