China projected to become Vietnam’s top export market
China projected to become Vietnam’s top export market
HSBC Bank said China is forecast to become Vietnam’s largest export destination by 2030.
HSBC explained in a report released yesterday that China has the largest population in the world and incomes continue to grow strongly as the economy rebalances away from investment towards a greater reliance on consumer spending. Vietnam’s location and strong foothold in both clothing and telecoms means it is well-placed to access this buoyant consumer market.
“Our forecast shows that Vietnam’s fastest-growing export destinations in the decade to 2030 will be China, India and Malaysia with exports to all these growing by at least 14% per annum,” HSBC said.
Figures of the General Statistics Office showed the U.S. was Vietnam’s biggest export market in 2014 with commodity imports of US$28.5 billion, up 19.6% compared to 2013.
The European Union (EU) came second with imports of US$27.9 billion (up 14.7%), ASEAN with US$19 billion (up 3.1%), China with US$14.8 billion (up 11.8%), Japan with US$14.7 billion (up 8%) and South Korea with US$7.8 billion (up 18.1%).
The U.S. and Vietnam enjoy historically strong commercial linkages and by 2030, the U.S. would still account for 15% of Vietnam’s exports.
Vietnam and the U.S. are two of the 12 countries currently negotiating the Trans-Pacific Partnership (TPP). When the agreement is finalized, Vietnam’s exports will become even more competitive in the U.S., probably boosting trade between the two countries.
Meanwhile, HSBC said the next two most important import sectors will be textiles (and wood manufactures) and information-communication technology (ICT) equipment, supporting Vietnam’s export base in these sectors.
China and Korea, emerging Asia’s two leading export nations over the last decade, will continue to be Vietnam’s largest import partners to 2030.
As well as having strong footholds in the global market for industrial machinery (the most important sector for Vietnam in terms of its import requirements), these two countries also present relatively easy transport logistics, with China sharing a border with Vietnam and Korea just a short journey by sea.
By late 2015, the Regional Comprehensive Economic Partnership (RCEP), a free-trade agreement being negotiated among ASEAN countries and the six states with which ASEAN has existing trade agreements, is due to be finalized and this should give a further boost to regional trade.
Imports from India will also grow strongly, contributing 14% of total import growth in the decade to 2030, propelling India past Singapore to become Vietnam’s third largest import partner.
The World Bank’s ‘Doing Business’ report for 2015 puts Vietnam at 75th in its ranking of 189 economies on the ease of trading across borders, well ahead of both China and India, reflecting its role as a regional trading hub and its efforts to dismantle barriers to free trade.
Trade deals with ASEAN, the U.S. and Europe in the next few years will secure market access for the new range of higher-value exports and help to keep import costs down.
