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Economic Sector

Last updated: Thursday, August 16, 2018

 

Proactively Mitigating Risk from US-China Trade Dispute

Posted: Tuesday, July 31, 2018


The escalating trade tension between the two largest economies in the world will certainly have a significant impact on Vietnam.

Mr Phan Van Chinh, Director of the Import-Export Department under the Ministry of Industry and Trade, said that the trade war was not involved in the two countries; it could, however, affect other exporters to the US. In short, this is a challenge for Vietnamese exports.

Dr Tran Dinh Thien, President of the Vietnam Institute of Economics, said that the US-China trade tension would create some good opportunities for Vietnamese goods to penetrate the US market.

However, Dr Thien warned that if Chinese goods face difficulty being exported to the US, the country will boost exports to other countries, including Vietnam.

The advice for Vietnamese exporters is to keep calm. "This may be an opportunity for businesses, especially FDI enterprises, to access cheap materials and components," Dr Thien suggested. It could be a good thing as companies may have opportunity to increase exports to the US to replace somewhat Chinese goods.

Mr Adam Sitkoff, Executive Director of the American Chamber of Commerce in Hanoi (Amcham), said Vietnamese companies should focus on producing strong products to join the global supply chain, thus reducing the negative impact from the outside.

Mr Adam Sitkoff cited Vietnamese businesses still export frozen shrimp products to the United States despite being sued for dumping. US businesses have complained about customs procedures in Vietnam but are still determined to bring their goods into this market. This shows that businesses should not be discouraged when facing difficulties, they need to invest time, effort, learn the rules of the United States such as quality monitoring process, e-commerce application, etc to enhance internal capacity and create fairness in trade.

Analysing the effects of the US-China trade war on the Vietnamese economy, Dr Tran Toan Thang, the Centre for Socio-Economic Information and Forecast, said that Vietnam's opportunities to boost exports to the United States are not big as Chinese products subject to tariffs are not the main products of Vietnam. The FDI sector will be better off than the domestic ones in grabbing this opportunity.

Dr Tran Toan Thang also noted about the exchange rate effect, forecasting that the dollar will remain worthwhile, so it may not affect the VND exchange rate. However, the yuan may depreciate due to some of China's new policies aimed at offsetting tax losses.

"China will tend to push up the RCEP negotiations, so Vietnam needs to study carefully and have negotiation strategy as China's dependence on RCEP countries grows," Thang said.

Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), is concerned about Vietnam's potential trade deficit with China after the trade war. Dr Vu Tien Loc urged the Vietnamese business community to take a more cautious approach, closely monitor the situation and actively respond to the developments in the trade war.

Under pressure from the world's trade tensions, experts advise businesses to keep a close eye on the situation, updating the list of US and Chinese taxable commodities, the exchange rate of the dollar and the yuan so that enterprises have timely responses.

Dr Vu Tien Loc suggested that the Government direct the ministries to synthesise and analyse the risks and opportunities in the economy; timely update information to the business community. From that information, businesses will actively adjust production, seek markets, partners or consider using or dealing with trade remedies of the countries.

At the same time, trade defense information with the United States should be well prepared in the event of widespread trade wars.

Huong Ly








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