US-China trade war spreads to Vietnam

Vietnam has the opportunities to boost exports and attract investment

Economists who keep close watch over the escalation of the trade war said the opportunities for Vietnam to boost exports are not numerous, but they can be exploited. It is expected that export turnover growth rate will be a little higher than 8 percent, the level set earlier this year.

Tran Toan Thang from the Ministry of Planning and Investment (MPI) pointed out that textiles & garments, mechanical engineering and steel would see a flood of Chinese products.

“As the Chinese yuan has depreciated, the input material imports would be cheaper, However, Chinese consumer goods would flood Vietnam, thus disadvantaging domestic enterprises,” Thang said.

The Ban Viet Securities’ report on the possible impact of the China-US trade war on Vietnam’s economy says that the material and component exports from Vietnam to China would be affected if China’s exports get weaker. 

Vietnam’s enterprises would have to compete more fiercely if Chinese goods are dumped in Vietnam.

However, Vietnam would get benefits if the US seeks alternative supply chains and Americans buy Vietnam’s goods instead of Chinese.

Huynh Quang Thanh, chair of the Binh Duong Woodwork Association, thinks that the US imposition of high tax on Chinese woodwork products will bring great opportunities to Vietnam. 

As Chinese products meet barriers in the US market, Vietnam may occupy market share of China. 

Thanh said Vietnamese enterprises can take full advantage of opportunities to increase the production capacity by 30 percent.

The textile & garment industry is also believed to benefit from the trade war. 

According to Le Quang Hung, chair of Garmex Sai Gon, textiles and garments still don’t bear high tax, but many big importers in the US have begun lowering the number of supplies from China and increasing orders placed with Vietnamese businesses.

Many garment companies report that they have enough orders until the end of the year, while Garmex has contracts for the next year as well.

The new taxation campaign launched by the US will worsen conflicts between the two largest economies. This will affect the forex market and put pressure on the Vietnam dong. 

However, Ban Viet Securities believes that the increased exports and FDI disbursement would support the dong.

Meanwhile, HSC Securities pointed out that some sectors would still benefit from the trade war though they do not export products.

It is expected that the volume of goods to arrive in Vietnam’s ports would increase, while goods to be carried by air would also rise. 

As investors want to relocate their production to Vietnam to avoid the trade war, the demand for land and house leasing would rise./.

VietNamNet Bridge