Global Times - 01.08.2019

(Jacob Rumans) #1

Thursday August 1, 2019 BIZIND


B


4-5


By Yun Xu in Hanoi and Bai Yunyi

V


ietnam, the apparent candidate to
pick up the windfalls of the China-US
trade war, is showing concerns over its
long- and short-term economic development,
although the country has seen months of en-
couraging trade statistics.
As some companies are moving their facto-
ries from China to Vietnam as a result of the
trade war, the country has been tipped as the
next “China” in waiting, with some economists
predicting that the size of the Vietnamese
economy will surpass Singapore by 2029. But a
closer look suggests that the “Made in Viet-
nam” label is facing strains as the country is
yet to achieve the capacity to absorb the exodus
from China.

Trade war ‘winner’
Against the background of the trade war,
foreign direct investment in Vietnam soared as
capital flows in from the Chinese mainland and
Hong Kong. More companies are opting for
Vietnam as a second production base to avert
higher tariffs.
The narrative that Vietnam is to reap the
fruits of the trade war has spread. In July, a
report from the Los Angeles Times observed
that Vietnamese exports to the US increased
36 percent in the first five months of 2019. In
May, the total value of Vietnamese exports to
the US reached $25 billion, making Vietnam
the US’ eighth largest source of imports.
Economists from the Japan-based financial
service group Nomura also noted that both
Chinese and American importers are turning
to other countries to evade tariffs. As of March
2019, the trade transfer has contributed 7.9
percent to Vietnamese GDP. A report from the
Institute of Chartered Accountants in England
and Wales shows that in the second quarter of
2019, Vietnam maintained growth in exports
despite an overall dwindling of exports in
Southeast Asia.
According to statistics released by the US
government, in the first five months of 2019,
the export volume of computers and electronic
devices from Vietnam to the US increased 71.6
percent year-on-year. Vietnam’s trade surplus
with the US jumped more than 40 percent to
$21.6 billion in the five months. In addition,
foreign investment in Vietnam increased 9.8
percent in the first two months of 2019, most
of which is in the manufacturing industry,
according to the Foreign Investment Agency in
Vietnam.
Despite the seemingly encouraging statis-
tics, Vietnam is increasingly wary of the narra-
tive. According to Vietnamese media reports,
some foreign companies are labeling their
products as “Made in Vietnam” to avert tariffs,
and it has caught the attention of US President
Donald Trump. During the G20 summit in
late June, the Ministry of Foreign Affairs in
Vietnam responded that it will take actions to
“intervene”.
“Vietnam believes that the trade war be-
tween the US and China will be beneficial to
Vietnam in the short term but harmful in the
long run,” Jiang Guoxue, an expert from Jinan
University told the Global Times.
As attention rises, Vietnam is likely to
become the next target of Trump’s trade war,
and as the US wages war on so many countries,
global investment and trade environment will
be affected, particularly concerning for coun-
tries largely dependent on foreign trade, such
as Vietnam, Jiang said.
Gu Xiaosong, a researcher from the Chinese
Academy of Social Sciences, told the Global
Times that Vietnam is wary of what the US will
do with its rapid growth in trade. From the be-
ginning of July, the US began to impose a 400
percent tariff on steel from Vietnam originally

produced in South Korea and the island of
Taiwan.
Apart from Vietnam, more Southeast Asian
countries have come to refuse the narrative that
they are becoming the “winner” of the trade
war. According to a report from the UK’s Finan-
cial Times, there is almost no evidence to show
a narrowing of the gap between developed and
developing countries, except for China and
India. The current fortune of Vietnam may
be short-lived. “When two elephants fight, the
ones who lose are the insects who are of course
being crushed by the elephants in the attempt
to evade them,” Lenin Moreno, Ecuador’s new
President said in regard to his country’s role in
the China-US trade war in a recent report by
the South China Morning Post.
An economist from Vietnam told the Global
Times that the Vietnamese government had

already issued a warning against the overheat-
ing investment market before it was targeted
by Trump. Vietnamese people want to do more
than just overtake the overcapacity in the US,
which will damage Vietnam’s “Industry 4.0”
plan.

‘Made in Vietnam’
The Vietnamese government has recently
started to draft laws to curb fake “Made in
Vietnam” labels, a decision that is largely due
to the fake-labeling incidents of famous home
appliances brand Asanzo.
It was recently discovered by customs au-
thorities that a large portion of Asanzo’s acces-
sories products, which it has been claiming are
made in Vietnam using cutting-edge technol-
ogy from Japan, were actually made in China.
The incident sparked outrage from Vietnamese

customers who have bee
products under the “Ma
Likewise, Bphone, a d
the Vietnamese technolo
also rejected by the Vietn
was revealed that its pro
with Chinese navigation
self-proclaimed Vietnam
was also found to use Ch
the pretense that they w
ucts.
As a developing coun
technology innovation, i
tion is all but inevitable
turing business. The he
tistics Office of Vietnam
incident that it has alrea
practice for companies t
products, and label them

Vietnam can hardly be


 Southeast Asian nation’s industry struggling to

Free download pdf