Ambassador of Vietnam to China, H.E. Dang Minh Khoi, spoke about bilateral relations between the two countries.
■ What have been the achievements in bilateral relations between Vietnam and China, especially in terms of economics and trade?
Relations have seen many positive results in recent years. The two countries established a comprehensive strategic cooperative partnership in 2008 to expand and deepen cooperation in all fields, serve the interests of the two peoples, and contribute to peace, stability and development in the region. Every year, leaders from the two countries maintain regular exchanges of visits.
Vietnam and China share a long border and have many similarities in terms of their political system, culture, and society, as well as in economics. These are favorable conditions for economics, trade and people-to-people exchanges between the two countries. Over the last 12 years China has been Vietnam’s largest trading partner and is the second-largest export market. According to Vietnamese figures, bilateral trade turnover in 2015 reached $66.67 billion, an increase of 47.6-fold since 2000, while Chinese data puts the figure at $95.8 billion. Last year Vietnam became China’s largest trading partner among ASEAN countries.
Figures from Vietnam Customs show that as of November 2016, Vietnam’s exports to China stood at $19.6 billion last year, an increase of 27 per cent, which is the highest growth among Vietnam’s major export partners. Imports from China reached $45 billion, a decline of 0.06 per cent year-on-year. The trade deficit fell 14 per cent against 2015. The border areas between Vietnam and China, where trade activities are the most vibrant and account for 85 per cent of total trade turnover between Vietnam and its neighboring countries.
Chinese investment capital into Vietnam in the first nine months of 2016 reached over $1 billion, a three-fold increase year-on-year. As of October 2016, China has had 1,500 projects with total registered capital of $11 billion, ranking it eighth among countries and territories investing in Vietnam.
China is also the largest source of tourists to Vietnam, accounting for 25 per cent of the total number of foreign tourists. The figure stood at 1.8 million in 2015 then 2.6 million last year. Vietnam also ranked first among ASEAN tourists traveling to China, with 1.5 million. Twenty-three provinces in China have direct aviation routes to Vietnam, with 120 flights a week. More than 10,000 Vietnamese students are studying in China and 3,000 Chinese students are studying in Vietnam. Vietnam is among the Top 10 countries in the Eurasian region for student numbers in China. Vietnam and China are also actively participating in many multilateral economic cooperation mechanisms, that have been creating favorable cooperation opportunities for Vietnamese enterprises.
■ Why does Vietnam post a trade deficit with China?
Vietnam has recorded a trade deficit with China for many years. The government, ministries, and agencies are discussing and applying practical measures to improve the trade imbalance. In 2016 the deficit started to go down. In the first eleven months of the year it was down 14 per cent year-on-year, to $16.4 billion.
The trade imbalance is a difficult problem to resolve in the short term due to both structural and policy factors. Some Vietnamese and Chinese products are quite similar. Most of Vietnam’s exports are light industrial products, minerals, and agriculture, forestry and fishery products, which have low value. Vietnam, meanwhile, imports mainly heavy industry products, electronics, raw materials for manufacturing, light industrial products, and agricultural products, to serve its production and processing.
In general, it is hard for foreign products to access China’s market. Firstly, import products in general and Vietnamese imports in particular need to comply with the inspection and quarantine requirements of Customs and General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Secondly, Vietnam’s exports of agriculture and fishery products to China face strong competition from similar products in other ASEAN countries. Thirdly, as Vietnamese exporters rely mostly on cross-border trade, our products only reach bordering provinces in southwest China rather than its major cities and logistical hubs. Moreover, a lack of overall information about the Chinese market among Vietnamese enterprises and the language barrier are also obstacles in boosting Vietnam’s exports.
As the second-largest economy in the world and currently transforming its growth model to rely more on domestic consumption, China will present more business opportunities for Vietnamese enterprises in the future. China’s State Council aims to increase imports over the next five years by $2 trillion each year through many measures to boost imports, such as (i) the facilitation of imports and trade; (ii) promoting import facilities and the development of cross-border e-commerce; and (iii) expediting negotiations and signing agreements on inspection and quarantine with some countries regarding seafood, fruit, beef, and mutton, etc.
■ What are the challenges in bilateral relations between the two countries? What are the policies of the two Parties and governments to boost the development of the Vietnam-China economic partnership and bilateral trade?
The big challenge is to manage the differences in the East Sea so they do not affect confidence and bilateral cooperation between the two countries. Leaders from both countries have repeatedly spoken of issues in the East Sea and shared important common perceptions, including the Vietnam-China agreement on the basic principles guiding the settlement of sea-related issues. It is important that the two sides should respect the legitimate interests of each other according to international law, control disagreements well, and refrain from actions that complicate the situation and escalate the dispute.
Maintaining bilateral relations and sustainable development and ensuring peace and stability in the region is the most important platform for the development of economic, trade and investment relations between the two countries. Maintaining frequent exchanges of high-level delegations to strengthen friendly and comprehensive cooperative relations between the two countries is very important. This is also the purpose of planned high-level visits between leaders of the two sides in 2017, including the visit by Party General Secretary Nguyen Phu Trong to China.
Regarding economic cooperation, the Vietnamese Government has directed ministries, agencies and enterprises to actively work with Chinese authorities to identify measures to promote economic cooperation. Recently, Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh chaired a seminar on “Strengthening Economic Cooperation between Vietnam and China”. In the years to come the two countries should effectively implement the agreement to extend the five-year Guidelines for Vietnam-China economic-trade cooperation and the memorandum on cooperation in trade in agricultural products between the two countries, and promote the establishment of trade promotion offices. The two sides will also strive to achieve the target of bilateral trade reaching $100 billion.
Strengthening cooperative relations has always been a priority for the two neighboring countries, based on equality and mutual benefit and respect for each other’s legitimate interests. I think the two sides should make the efforts to show the peoples’ benefits from economic cooperation, avoiding problems such as poor quality investments or delaying economic cooperation agreements. Vietnam always welcomes and facilitates Chinese investors in long-term investments, especially those in high-technology and environmentally-friendly industries.
VN Economic Times