US-China trade war to hurt VN economy
US-China trade war to hurt VN economy
The ongoing US-China trade war will greatly impact the structure of the world economy in the future, causing damage but also generating indirect opportunities for countries where the economy relies heavily on agricultural production like Viet Nam.
According to head of the Viet Nam Cashew Association’s Trade Promotion Division Tran Van Hiep, although it is still quite early to assess the impact of the US-China trade war, it’s possible that Vietnamese cashews may benefit from this war.
Hiep said the US was now one of the world’s leading almond exporters. Therefore, if China imposed a tax on this product, it would certainly affect US almond exports. Meanwhile, the almond is just one of the 12 nuts in the international dried fruit goods basket, and it can be replaced with other nuts when prices are too high.
“This will be an opportunity for the Vietnamese cashew industry to promote export of cashew nuts to the Chinese market,” said Hiep.
“In the Vietnamese structure of cashew exports, the US is still the largest import market, accounting for 35 per cent of market share. It’s followed by China with 10 per cent market share,” he added.
Relating to the pig industry, Deputy Chairman of Animal Husbandry Association of Viet Nam Pham Duc Binh said that Vietnamese enterprises had promoted imports of pork due to the high price of pork in the country.
The price of dressed pork in Viet Nam ranges from VND48,000-50,000 (US$2.07-$2.16) per kilo. Meanwhile, the price of slaughtered pork imported into the country is only US$1.5 per kilo. At this price, food processors are forced to increase the imports of pork to meet the production demand in the last months of the year.
“In that context, the US will be the market that businesses are aiming for, in hopes of gaining a cheaper import price due to the impact of the war. However, with the habit of preferring to consume imported goods, in the long run the Vietnamese livestock will lose on the domestic front,” said Binh.
Insiders said that both the US and China were two important trading partners of Viet Nam, so it’s likely that this war would have a great impact on the economy of Viet Nam. Many issues may arise in the near future, such as trade fraud and temporary imports for re-export. Therefore, it’s necessary to strengthen the management role of the State to help the economy grow healthily as well as to identify the risks and opportunities for the economy of Viet Nam in the future.
Timber industry on watch
The list of goods between the US and China that are being taxed has no timber so Vietnamese businesses in this sector are not yet worried. But with the escalating trade tension, it’s possible that the two parties will impose taxes on more goods.
The Association of Vietnam Timber and Forest Product (Vietfores) and timber exporters said that there should be close monitoring to take measures to actively respond.
Vice Chairman of Vietfores Nguyen Ton Quyen said that the export value of Vietnamese wood products to the US market is still relatively high, accounting for 30 per cent of the total forest export turnover in the first six months of this year, equivalent to $4.3 billion.
Quyen said at this point, export signals to the US market remained stable and exporters had signed orders for this year.
“If the US put China’s wood products on the list, there is a risk of China moving goods to Viet Nam. At present, there are many Chinese foreign investment enterprises operating in Viet Nam, while Viet Nam is exporting a lot of timber and wood products to the US,” said Quyen.
“The association and businesses are closely watching this situation. When things happen, there will be warnings right away," he added.
Huynh Quang Thanh, Chairman of Binh Duong Furniture Association cum Chairman of Hiep Long Furniture Company, said that trade tensions between the US and China would not immediately affect the export activities of Viet Nam in general and the furniture industry of Binh Duong in particular.
However, Thanh said it is predicted that the future of the export wood furniture industry would be very difficult, especially when it came to verifying the origins of products from China. The customs authorities and relevant agencies responsible for confirming the origins would have more work to do.
Cao Chi Cong, Deputy Director General of Forestry Department under the Ministry of Agriculture and Rural Development (MARD), said MARD and the Ministry of Industry and Trade had set up long-term solutions, not allowing Chinese businesses or other countries to view Viet Nam as a transit point for furniture exports to the US.
“The wood processing investors must actually produce wood products in Viet Nam, not just label them as made-in-Viet Nam and then export to the US market,” said Cong.
The trade war between the US and China officially commenced on July 6 after the US pulled the trigger on 25 per cent duties on about $34 billion in Chinese machinery, electronics and high-tech equipment.
This is only Washington’s first step in a trade confrontation that is likely to hurt not only the US-China economies, but also threaten global economic instability.
