Vietnam increasingly dependent on China, despite rhetoric

Thanh Nien News

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A vendor selling Chinese-made blankets at a market in the northern province of Lang Son on September 23, 2014. Photo: Hoang Dinh Nam/AFP A vendor selling Chinese-made blankets at a market in the northern province of Lang Son on September 23, 2014. Photo: Hoang Dinh Nam/AFP

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Vietnam’s trade deficit to China surged again this year despite pledges to reduce dependence on the dominant supplier following last May's oil rig row.
The latest figures from the General Statistics Office showed that Chinese imports to Vietnam during the first 11 months of this year hit US$39.9 billion -- up 18.9 percent year-on-year.
That left a trade deficit of $26.4 billion or a 22.1 percent increase from last year.
Government officials and economists regularly express alarm about Vietnam's growing trade deficit with China, to little effect.
The rhetoric became particularly pointed in late May, when Prime Minister Nguyen Tan Dung said Vietnam must seek out new trading partners.
At the time, Trade Minister Vu Huy Hoang echoed his point.
In June, Tuoi Tre published a long story quoting farmers and manufacturers as saying they were seeking partners and suppliers in Europe and Asia.
But at the end of the day, local shops and markets remain loaded with Chinese products -- everything from chopsticks to cloth and mechanical components.
A Tuoi Tre reporter recently wrote a piece about shopping for disposable chopsticks and found nothing but Chinese products at a market in Tan Binh District, Ho Chi Minh City.
“I’ve sold a lot of these to restaurants,” a vendor named Hoa said of her Chinese chopsticks.
The chopsticks are available in five to ten-kilogram packs for between VND30,000 and 50,000.
Vendors at other major markets such as Ba Chieu and Go Vap were also quick to ply their Chinese chopsticks, noting how much cheaper they were than Vietnamese ones.
Five kilograms of Chinese chopsticks costs as much as six pairs of Vietnamese chopsticks, a reporter found.
Vendors said the prices determine the speed of their sales: they can sell 80 to 100 kilograms of Chinese chopsticks in a day, when their customers usually take home around ten pairs of Vietnamese chopsticks.
Fruits and vegetables from China also dominate local markets.
A vendor at Thu Duc wholesale vegetable market said her supply from China has stayed the same.
Hanh, a vendor at Pham Van Hai Market in Tan Binh District, said her regular customers still ask for Chinese fruit because it's so cheap.
She said news that Chinese fruit was found to contain high levels of pesticides and preservatives has barely affected her business.
She said her customers are restaurants and karaoke parlors who serve cut fruit and their customers cannot tell the difference.
Meanwhile, industrial imports (such as machines and metal) from China hit $6.45 billion in revenue, more than 30 percent of the value from all other countries combined.
Imports from Japan and South Korea followed at $2.98 billion and $2.54 billion respectively.
While local steel producers struggle to maintain business overseas, Vietnam imports 4.77 million tons of steel and the like from China, four times its imports of the same kind from South Korea and 2.5 times from Japan.
China is also the biggest supplier of Vietnam’s textile and garment industry.
Imports in the sector during the first ten months this year increased 23.5 percent year-on-year to $5.6 billion.
Pham Sy Thanh, director of the Chinese program at the University of Economics at Hanoi National University, said Vietnam depends too much on China due to its weak supporting industries.
Thanh said if that dependence continues, it will just further hinder the ability of most businesses to upgrade their technology. It will take time, he added, for Vietnam to find alternative supply sources, but the country should start doing so.
He said Vietnam should take the upcoming Trans-Pacific Partnership Agreement (TPP) as both an opportunity and motivator to improve its economic environment to draw further business from Japan and the US.
The trade pact does not include China.
Doctor Nguyen Duc Thanh, head of Vietnam Institute for Economic and Policy Research, said Vietnamese businesses now prefer Chinese supplies as they are cheap and allow them to make a quicker return on their investments.
If they accept delayed returns, they will be able to move away from Chinese supply sources, then Vietnamese businesses can enhance relations with its strategic economic partners such as South Korea, India, Australian and ASEAN, he said.

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