Will a cooler China economy affect Vietnam?
17-08-2015 13:55:16+07:00
Will a cooler China economy affect Vietnam?
The turmoil in the Chinese stock market has raised concerns about the possible cooling down of the Chinese economy, which could influence the world’s economy, including Vietnam.
Nguyen Tu Anh, head of the Central Institute for Economic Management’s (CIEM) Macroeconomics Policy Division, said in an interview with Phap Luat Viet Nam that the influence would be modest because Vietnam’s exports are not large, while Vietnamese listed companies do not have a large volume of exports to China.
If the downward trend of the Chinese stocks continues, more foreign investors would withdraw their capital from China. And they would consider going to Vietnam, a market with great potential, with their money.
“The Chinese stock market fall could be good news for Vietnam,” Anh said.
Dr. Le Danh Doanh, a renowned economist, said the changes in China have had an impact on European and Japanese stock markets.
“Some analysts say if the Chinese stock market falls, the huge capital would flow from China to Vietnam. However, I think this matter still needs more consideration,” Doanh said.
Doanh sees many disadvantages for Vietnam if China's economy cools down.
“If the demand is weak while the supply is abundant in China’s domestic market, Chinese producers would try to bring goods to Vietnam to sell,” Doanh said.
“If cheap Chinese products flood the Vietnamese market, this would be not good news for the Vietnam economy,” he warned.
The trade deficit with China continues to be an issue. A report released at a workshop on Vietnam-China trade held by VCCI (the Vietnam Chamber of Commerce and Industry) in late June 2015 showed that Vietnam exported $6.1 billion worth of products to China in the first five months of the year, a decrease of 1.2 percent compared with the same period last year, and imported $15.9 billion worth of products from the country, an increase of 19.1 percent. As such, the trade deficit reached $9.8 billion in the first five months of the year.
Anh from CIEM noted that it was nearly impossible to avoid consumer goods imports from China, because China can make goods at low prices thanks to large-scale production.
He said what Vietnam can do is keep the ‘beyond-the-borderline” vision, trying to exploit the vast Chinese market with Vietnamese advantages.
“Vietnam has to import Chinese consumer goods, but it should also think of exporting its goods to the neighboring vast market,” he explained.
