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How to improve the 'the imbalance' in trade between Vietnam and China

10:28 | 12/12/2016

VCN - According to the Central Institute for Economic Management (CIEM), the status of the trade balance gap between Vietnam and China can absolutely be improved if Vietnam seeks the way to change the structure of exports to this market, or improve technology content as well as the quality and price of products.

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how to improve the the imbalance in trade between vietnam and china

By the end of October of 2016, Vietnam exported $US 17.31 billion to China, up by 23.7% over the same period in 2015

The risk and dependency

Overcoming Japan, from 2014 to now, China has become the 2nd largest export market of Vietnam, after the United States. By the end of October 2016, Vietnam exported $US 17.31 billion to China, up by 23.7% compared to the same period in 2015. With advantageous geographical location, the category ofVietnam commodities which export to China is up to 40 types. Specifically, the mainly groups of Vietnam exportation to China including: Computers, electronic products and components, fruits and vegetables; fibers, yarns of all kinds; cameras, camcorders and accessories; machinery, equipment and other spare parts; wood and wooden products; telephones and accessories.

Realizing that this is a potential market for agricultural products, a particular commodity that Visimex JSC is trading (agricultural products, spices), so the company has "targeted" China since 2002. Although annual export turnover reached $US 5 million, Mr. Bui Duc Son, Head of Import and Export Department of Visimex JSC said, China is a large market with a large consumption demand and dense population, simultaneously the trade border is long, so border gates should work with more trade advantages.

Although it is very potential, but whentrading with China, Vietnam enterprises still has to face so many risks. Mr. Son said that the Chinese market segment is now quite clear. There are customers looking towards luxury products that Viet Nam enterprises cannot instantly meet. "Mostly, enterprises can only meet productswith low and average quality level. However, agriculture and aquaculture products which are exporting to China are under intense competition from similar products from Thailand, Taiwan", Mr. Son shared. Notably, small volume business methods sometimes have impacted negatively on import and export activities of Vietnam enterprises. The reality has shown that agriculture products stagnated repeatedly in the border gatesdue to policy changes of China. Damaged and rotten goods causedso many losses for enterprises.

Besides, in trading relations with China, Vietnam has always been in a trade deficit situation because our economy is mainly processing, so the input material, machines and equipments are imported with a very large scale in order to serve export production. Imports from China in the first 10 months of 2016 reached $US 40.24 billion, decreased by 1.4% from the same period last year, but if we look at the structure of imported commodities, nothing has changed. The commodities which Vietnam imports mostly from this market are fabrics ($US 4.42 billion), materials for textile, garment, leather and footwear ($US 1.55 billion), iron and steel ($US 1.3 billion), machinery, equipment, tools, spare parts ($US 7.35 billion), telephones and components ($US 4.9 billion). Thus, Vietnam's trade deficit from this market is $US 32.93 billion. Large trade deficit is raising concerns about the overwhelming of Chinese goods with domestic goods when many Chinese products have been arriving in Vietnam.

How to improve?

The risks when doing business with the Chinese market, the imbalance in trade with China has been mentioned long ago. This issue once again was discussed in the question and answer sessions to the Ministry of Industry and Trade at the 2nd session of XIV National Assembly in mid-November.

National Assembly representativeNguyen Tao (Lam Dong Province) questioned Mr. Tran Tuan Anh, Minister of Industry and Trade: "The two-way trade of Vietnam-China has many advantages but also many latencies and risks. With experiences in trading promotion activities for many years, in order to ensure the stability and development of trade relations in the long term also limit the risks for Vietnam, according to youMinister, which groundbreaking solutions in the future are needed for this important issue? ".

Answering this issue, Mr. Tran Tuan Anh said, with China and the neighboring countries, Vietnam has certain advantages. There are advantages and conditions for further development of economic cooperation relations ingeneral, as well as trading in particular. We must continue to exploit the potentials and opportunities because this is a very big market. However, in exploiting this market, we have not deeply infiltrated, and failed to provide competitive goods and products. This year, the export of agricultural products has a higher growth rate than in recent years.

how to improve the the imbalance in trade between vietnam and china

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Besides, agricultural restructuring to increase exports to China, according to the Central Institute for Economic Management (CIEM), the technological content of Vietnamese exportations to China is poorer than most countries in the region, leading to Vietnam's export turnover in this market being less than most ASEAN countries. Trade balance disparitystatus between Vietnam and China absolutely can be improved if Vietnam seeks the way to change the structure of exports in this market, or improve technological content, quality and price of products.

By Phan Thu / Tuan Cuong