Vietnam-China Expects US$15Bln Trade Value by 2010

Vietnam and China have decided to increase the two-way trade value by 2010 from US$10 billion to US$15 billion. With the favourable developments in recent years, this goal is not seen as high, however the problem remains in reducing the Vietnamese trade deficit.

According to the WB, China is the seventh biggest economy in the world with GDP in 2004 at US$1,649,3 billion. WTO statistics in recent years showed that China has made several leaps forward in conquering the world market. In 1996, China’s export value was US$148.8 billion and eleventh position in the world export; in 2000 it was respectively US$249.3 billion and seventh position, in 2000 US$437.9 billion and  fourth position; and in 2004, China surpassed Japan, the second biggest world economy, and became third position in export value with US$593,4 billion, after only the US and Germany.

In import value, China was in 12^th position with US$138.8 billion in 1996, it was 8^th and US$225.1 billion in 2000, and in 2003 surpassed UK, Japan and France and became 3^rd and US$413.16 billion. In 2004, China while maintaining 3^rd position, increased its import value to US$516.4 billion (up 35.8 per cent).

After joining the WTO, China has become a big supplier of commodities and also a major importer of materials.  What is more significant is that while continuing the heated growth with big imports, China’s trade surplus maintained at US$109.8 billion in 2001- 2004.

With closeness in location and similarities in culture, the goal of US$15 billion in the two-way trade between Vietnam and China by 2010 is quite feasible. It also meets the need of the two countries to expand their markets.  In 2004, the two-way trade value was US$7,192 million and with average growth rate of over 24 per cent a year, the goal can be easily reached. However, the problem is how Vietnam can avoid a trade deficit. According to economists,  if Vietnam continues its growth rate of 14.56 per cent, its export value with China in 2010 will be only US$6,514 million while that of China will be US$24,688 million. It also means that by 2010, Vietnamese market will be deluged with Chinese products and Vietnamese export to China will decrease proportionately.

The crucial issue is how to increase the export to China. Experts believed that Vietnam should not continue the current export of raw materials to China but should attract more foreign investment, especially Chinese enterprises. Vietnamese processing enterprises can act as “satellites” of the Chinese giant industry and supply products to the Chinese market. The problem is under consideration in the interests of Vietnamese businesses and can increase both the export value and economic growth.             

Quynh Chi