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Chipping away at trade gap
Viet Nam's trade deficit with China has increased in recent years but according to the latest report from the Ministry of Industry and Trade, exports from Viet Nam to China increased in the first two months of this year.
Bui Huy Son, Director of the Ministry of Industry and Trade's Asia and Pacific Department talked about the trade value between the two countries over past years and in the future.
The Vietnamese trade deficit with China has increased year after year. What are your views on this?
Viet Nam has often had a trade deficit with China, and it was pretty minimal in 2006, however it dramatically rose to US$12.7 billion in 2010 compared with just $189 million in 2001.
The figure reflected the fact that Viet Nam has a great demand for production inputs and consumer goods, with China meeting this demand.
Besides that, increasing of foreign invested projects has also created a high demand for equipment and technologies, which domestic producers have failed to meet.
There has also been an increase in the import of material transported between economic groups and multinational corporations who have investments on both sides of the border.
The large trade deficit is a great concern, isn't it? What solutions can you suggest to reduce it?
A large long-term trade deficit with China or any other country in the world can affect overall macro economic factors, so it is a problem that can't be ignored.
In fact, many countries have experienced this situation in the early stages of domestic production.
In terms of the Chinese market, Viet Nam will continue to have a trade deficit in the coming period, and an initial target is to reduce this.
To attain this target, the structure of imported goods from China should be changed and the proportion of imports to exports should reduce.
In the first two months of this year, Viet Nam saw a reduction in the trade deficit with China.
Exports from Viet Nam to China jumped almost 61 per cent to $1.34 billion, while imports from China to Viet Nam surged just 25 per cent to $1.23 billion.
That meant the proportion of imports to exports during the first two months fell from 50 per cent to 40 per cent against the same period last year.
Why did exports from Viet Nam to China increase in the first two months?
China has encouraged imports, but the country has not yet developed specific measures, excluding the devaluation of yuan.
So far, the devaluation has just had an indirect effect on the increase of imports from Viet Nam to China.
This is a new Chinese policy so it needs more time to have an effect on trade between China and other countries.
I generally think the increase in Chinese imports in the first two months is due to the efforts of Vietnamese companies in expanding their markets. They've developed production, distribution and good relations with Chinese partners.
In addition, Vietnamese producers have been able to compete with their Thai, Malay and Indonesian rivals in the Chinese market.
Bui Huy Son
vietnamnews
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