How to Ease Trade Deficit from China

China has long been Vietnam’s largest neighbouring market and their import - export structures have much common. Two-way trade is carried out in various forms: official trade, cross-border trade, temporary import for re-export, transit, and exchange of goods between border residents.

 

According to Mr Dao Ngoc Chuong, Deputy Director of the Asia - Pacific Market Department under the Ministry of Industry and Trade, until this time, China is Vietnam’s largest import market and the third largest export market after the United States and Japan. Bilateral trade turnover has grown significantly over the past 10 years. Specifically, two-way trade turnover stood at US$37.7 million in 1991, but climbed to US$27 billion in 2010, an increase of 710 times. Structurally, Vietnam’s three principal exports to the world’s most populous nation are raw materials, fuels and minerals, which account for 55-60 percent of the total export value. Agricultural and aquatic products like fruits, rubber and coffee make up 15-20 percent. Industrial products contribute the smallest proportion, with just over 10 percent. Notably, Vietnam’s shipments of agricultural products to China soared in the first four months of 2011, particularly watermelon, banana, mango, jackfruit, mangosteen, chilli and sweet potatoes.

 

Besides, Vietnamese businesses should know that the market of 1.3 billion consumers needs these commodities from Vietnam, especially rubber products, tropical fruits, coffee, high-grade wooden furniture, seafood, consumer goods, grains and spices. Currently, China is the world’s largest consumer of rubber because of the increasing speed of its automotive industry. This is considered a great opportunity for Vietnam as it has huge advantages for latex production. Apart from rubber, crude oil is Vietnam’s strategic export with China. According to experts, to fuel its robust economic growth, the world’s most populous nation needs to import 40 - 50 million tonnes of crude oil a year. With rising prices expected for this commodity in the coming time, Vietnam will benefit more from this export.

 

According to economic specialists, Vietnam suffers too high a trade deficit with China. If the gap is not narrowed, the import - export imbalance will cause negative impact on the Vietnamese economy. To heal this disproportion, trade authorities and business communities of both nations should have more innovative solutions. Recently, the Ministry of Commerce of the People's Republic of China said it hopes Vietnam will apply all possible measures to fill the trade gap. Specifically, China will create conditions for Vietnamese enterprises to promote trade in its market by organising trade fairs or market survey delegations. In addition, the Chinese Ministry of Commerce will support its companies to do business in Vietnam to narrow the trade gap.