China - ASEAN Free Trade Area (CAFTA) will be established in 2010 and frameworks in the free trade agreement between ASEAN and China will be carried out at the same time. This is a great opportunity for Vietnamese businesses to penetrate a market of more than 1.3 billion people in China. But, together with that, we will face up with numerous difficulties.
Mr Nguyen Thanh Bien, Deputy Minister of Industry and Trade, said: Vietnamese enterprises will encounter many challenges such as the competitiveness of services and products when they take part in this free trade area because Chinese products and services are very cheap and strongly competitive in the Vietnamese market.
Moreover, the balance of trade of Vietnam and China is currently very imbalanced. Vietnam is suffering trade deficit with the neighbouring nation. Most of the trade deficit of some US$6.5 billion of Vietnam in the first nine months of 2009 is the value of Chinese commodities.
“Although the gap in trade with China in 2009 will not as big as in 2008, it is crucial to seek out measures to deal with negative impacts of this unbalance prior to the start-up of CAFTA,” said Deputy Minister Nguyen Thanh Bien. To grasp opportunities from the China - ASEAN Free Trade Area, Vietnamese enterprises have to double their efforts to enhance the competitiveness of their products and services.
At the China’s Guangdong Business Forum held in Hanoi in late October, Ms Han Zhe Sheng, Vice Mayor of Zhongshan City, Guangdong Province, China, said: To improved the excessively imbalanced trade gap and boost economic ties, one of solutions is to expand exportation of Vietnamese goods to China through official channels as well as stepping up cross-border trade between border-sharing provinces of Vietnam with Chinese border-sharing localities.
Notably, Chinese currency, renminbi or yuan, will be used for transactions when CAFTA is effective. Under the current context, Vietnam is adding efforts to reduce its reliance on US dollar. In Vietnam, US dollar exchange was sometimes awkward on both interbank and black markets. As known, the Chinese Government assigned Yunnan Province to promote the use of Chinese yuan in international payments with ASEAN countries, including Vietnam. At present, many cross-border trade payments have been made in yuan. Thus, Vietnam will reduce its reliance on US dollar in trade with Chinese enterprises while we have to import very much from China, Bien analysed.
Currently, the Ministry of Industry and Trade is working with the State Bank of Vietnam (SBV) to advance researches on using Chinese yuan in trade with China. The central bank is also preparing a project on using other foreign currencies for international payments, including yuan in trade with China, to submit to the Government for approval.
Huong Giang
Vietnamese
