Vietnam - China Trade Targets US$10Bln by 2010

3:26:36 PM | 7/8/2005

China has become a leading trade partner of Vietnam with a two-way exchange turnover reaching US$7.191 billion per year. Vietnam exports crude oil, tea, rubber, rice, seafood, fruit and vegetables and cashew nuts to China. The two countries are seeking ways to boost trade relations with stable growth in the coming years, striving to bring two-way exchange turnover to US$10 billion in 2010.

China’s investment in Vietnam has seen a rapid development with 267 projects, capitalised at US$540 million. Despite being a developing country, China has granted 210 million Chinese yuan plus over US$18 million in official development assistance (ODA) capital. Recently, Yi Xiaozhun, assistant to the Chinese trade minister, said that China, Japan, the Republic of Korea and ten ASEAN member countries would consider feasibility of the East Asia Free Trade Area. China and ASEAN have implemented two major projects within the China-ASEAN Free Trade Area. The two sides will cut import tax on 7,000 goods items from July 1, 2005. By 2006, import tax rates of most Vietnamese main exports to China will be lowered to 0 per cent under the committed roadmap of the Early Harvest programme between China and ASEAN. Agreements on plant quarantine, safety and hygiene have been signed and implemented. What Vietnam hopes for most is to enjoy favourable conditions like Thailand when it joins the World Trade Organisation (WTO) in 2005.

In ASEAN, Vietnam is rated the same as Cambodia, Laos and Myanmar, which are considered less developed in the block and need support from the global community. However, Vietnam is rated the same as Thailand in terms of potential. Even in some way, Vietnam is rated the same as China. For example, Japan’s Nikkel newspaper said that alongside China and Thailand, Vietnam was considered as one of the three major industrial production centres in Asia in the future.

Thailand is considered as a major opponent of Vietnam in the Chinese market. The two countries have the similar major export items. Competition between enterprises from Thailand and Vietnam has become fiercer in China as the two countries are striving to boost exports. Thailand has gone ahead by signing agreements with China. Also, Thai enterprises have an advantage with a quality guarantee of both materials and processing technology. This has become a disadvantage for Vietnamese enterprises.

China has granted a tax cut mechanism to Vietnamese goods. Accordingly, Vietnamese goods with certificates of origin (C/O) will enjoy a 50 per cent tax cut. However, so far Vietnamese have not shown C/O to enjoy such a priority. While Vietnamese enterprises are facing many difficulties, Thailand has found ways to reduce its geographic disadvantages. Nguyen Duy Luat, trade counsellor in Kunming, said that Thailand had taken measures which Vietnamese enterprises had not thought of yet. For example, every day Thailand transports between eight and ten tonnes of fresh shrimps to Kunming by airplane and sells them at a high price. Thailand and China have co-operated to turn the Mekong river into a safe water way, which reduces the cost of transportation of goods such as fruit and vegetables. Every day, Thailand’s seafood, fruit and vegetables continue to reach remote provinces in the west of China via waterway or airway. Meanwhile, Vietnamese enterprises, which continue to transport frozen items, seem to have been left far behind in a race to the Chinese market.

Compared with Thailand, Vietnam’s development strategy has taken much longer. Also, due to overlapping, strategies and policies are implemented ineffectively. Vietnam changes its policies so quickly, that investors have become tired. These have hampered Vietnam’s advantages.

Minister of Trade Truong Dinh Tuyen said that the Chinese market was very important, so if Vietnam did not promote its export to the market, the establishment of the China-ASEAN Free Trade Area and the implementation of the Early Harvest programme would be less effective for Vietnam. The minister said that Vietnam should promote official trade of goods items with high and stable export turnover. In the past, due to geographic features of the border line between Vietnam and China, cross-border trade developed strongly. However, China has removed all priorities for unofficial cross-border trade, except the Lao Cai border gate.

Vietnamese trade counsellor in China Dao Ngoc Chuong proposed that Vietnamese enterprises be aware of China’s regulations on official trade, saying that they should open representative offices in important areas and develop effective programmes for accessing the Chinese market by joining trade fairs and exhibitions.