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China trade falls short of potential
China, an enormous market with a population of 1.3 billion, shares a common border with seven Vietnamese provinces. It is Viet Nam’s biggest export market and leading importer, with bilateral trade totalling US$20.18 billion last year.
Vietnamese businesses have not been able to fully tap these advantages. Exports were worth just $4.5 billion last year, compared to imports from China of $15.65 billion. The trade deficit topped $11.1 billion, 21 per cent higher than 2007.
The country expects to increase exports to China from $5 billion this year to $6.4 billion next year, said Deputy Minister of Industry and Trade Nguyen Thanh Bien, but this would still account for a small fraction of what China’s imports were worth last year.
Viet Nam’s exports to China accounted for only 7.2 per cent of its total exports, while just 0.4 per cent of China’s total imports during 2006-08 came from Viet Nam, according to ministry figures.
At the same time, imports from China have risen by an average of 32.6 per cent per year since 2006, with machinery and equipment, petroleum and chemicals continuing to be leading imports.
Most of Viet Nam’s exports to China, around 55 per cent, consists of raw material and agricultural, forestry and fisheries products with little added value. Manufactured goods still only account for about 10 per cent of exports to China.
Trade promotion in China is not strong enough. There are no systematic or co-ordinated trade promotion programmes for Vietnamese goods, even in areas sharing borders with Viet Nam, such as Yunnan, Guangxi, Guizhou and Sichuan.
Bordergate infrastructure was also inadequate, slowing the passage of goods into the Chinese market, said the vice chairman of the People’s Committee of northern border Cao Bang Province, Ly Hai Hau. Cao Bang has seven border gates that operate on a budget of VND20 billion ($1.1 million) a year, he said, and the barrier at border gate is made of a bamboo.
The bordergate at Lao Cai remains in an alarming condition, said provincial People’s Committee vice chairman Nguyen Van Vinh. National Highway 70, 5.5m wide, can satisfy just half of transport demand, and the Ha Noi-Lao Cai railway, despite carrying a large volume of cargo everyday, remains the same as it was 100 years ago.
The Government should map out a system of international and national bordergates to get appropriate funding, Vinh said, and he also urged the Ministry of Industry and Trade to co-ordinate trade promotion efforts in individual provinces.
Minister of Industry and Trade Vu Huy Hoang said all policies on trade promotion and investment would be improved and made more transparent, while further efforts to boost co-operation with China were already being made.
Viet Nam and China had agreed to establish a working group on Viet Nam-China co-operation to settle all trade issues that may arise.
Dang Tran Nhan, deputy head of the Ministry of Industry and Trade’s Asia-Pacific Department, said that, to boost exports to China, exports needed to be restructured to reduce the dominance of unprocessed and low-quality products and increase the amount of processed and manufactured goods sold to China.
Processed food items like bean cake, cashews, sweetened coconut, instant noodles, dried jackfruit, banana, and mango, frozen processed shrimp and fish, dairy products had recently taken a hold on the Chinese market, he noted.
"Cheap but special" had been the words characterising Vinamit products in China since 1998, said the company’s PR director, Nguyen Quoc Binh.
Vietnamese businesses should understand and take full advantage of all trade agreements signed between the two countries and between ASEAN and China, said Nhan, citing the ASEAN-China Free Trade Agreement, animal and plant quarantine regulations, and food hygiene and safety requirements.
He also urged Vietnamese businesses to take advantage of the tax breaks offered under the agreements on agricultural products like rubber, coffee, tea, pepper, rice, and fruits and vegetables.
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