• Sunday, September 15, 2019

Latest escalation of US-China trade war threatens Vietnam

Discussion in 'China & Far East' started by long_, May 15, 2019.

  1. long_


    Jul 7, 2016
    +0 / 13,592 / -0
    Latest escalation of US-China trade war threatens Vietnam
    By Dat Nguyen May 15, 2019 | 08:12 am GMT+7
    Vietnam's imports from China rise and exports fall due to trade war impacts. Photo by Reuters/Kham

    The latest salvo in the U.S.-China trade war could intensify pressure on Vietnam, experts have warned.

    U.S. President Donald Trump last Friday raised tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent. A day later he ordered a tariff hike on almost all the remaining imports worth $300 billion.

    In response, China said it would impose higher tariffs on some $60 billion worth of U.S goods starting June 1.

    Economist Nguyen Tri Hieu said the U.S.’s aggressive move means China has to depreciate its currency to mitigate the damage.

    This would lead to a surge in cheaper imports from China, making it difficult for Vietnam’s domestic products to compete, he told VnExpress International.

    Vietnam would also struggle to export to China because of the weaker yuan, he added.

    The yuan has fallen by 2 percent against the greenback since the beginning of May to its lowest level since last December. Last year, due to the trade war, it had fallen by 7 percent. The dong has fallen by almost 1 percent since the beginning of this year.

    Data from Vietnam Customs supports Hieu’s warning. In the first quarter imports from China rose by 18.6 percent year-on-year, while exports fell by 7.8 percent.

    Another consequence experts fear is the labeling of Chinese goods as Vietnamese for export to the U.S. to circumvent the new tariffs.

    Trump said in a series of tweets on Monday: "Many tariffed companies will be leaving China for Vietnam and other such countries in Asia.

    "I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China."

    Vietnam has since last year seen an increase in Chinese companies setting up shop to avoid the U.S. tariffs.

    Of the six biggest registered foreign projects in Vietnam in the first four months, four were from mainland China and Hong Kong, according to the Ministry of Planning and Investment.

    Industrial parks in the northern Bac Ninh Province and provinces in the Mekong River Delta are reporting increased interest from Chinese, Taiwanese and Hong Kong investors.

    These companies plan to double or triple their head count by the end of this year as they seek to expand production, a recent report by recruitment firm Navigos said.

    Experts caution Vietnam about this. Le Dang Doanh, a former economic adviser to the government, said if this situation is not controlled, it could have grave consequences for Vietnamese companies since the U.S. might apply the same tariffs it does on China if it finds Chinese products labeled as Vietnamese.

    Pham Hong Hai, CEO of HSBC Vietnam, said that the trade war might also take away existing foreign investors from the country. This happened during the 2008 global economic crisis, when investors pulled out of Vietnam due to falling demand, lowering the economy’s growth, he said.

    Vietnam, with 200 percent trade as a percentage of GDP, is very dependent on the global supply chain, and will suffer if the global economy face challenges from the trade war, he added.

    The National Center for Socio-Economic Information and Forecast (NCIF) last year forecast that Vietnam’s GDP could drop by 0.09 percent this year and 0.12 percent next year because of the U.S-China trade tensions.

    Nevertheless, there are also some positives for Vietnam from the trade war. Now its goods like electronics, furniture, bags, and seafood are believed to be more competitive in the U.S. than those from China.

    In the first quarter Vietnam’s exports to the U.S. rose 28.8 percent year-on-year, making that country the largest importer of Vietnamese goods.
    • Thanks Thanks x 4
  2. TaiShang


    Apr 30, 2014
    +72 / 93,172 / -2
    Taiwan, Province Of China
    Trump making Vietnam great again. Chinese companies export from countries "friendly" to the US.

    Vietnam wins. The exporting company wins.

    Where is the US win?
    • Thanks Thanks x 2
  3. ZeEa5KPul


    Jul 13, 2017
    +1 / 3,483 / -7
    Well, when the elephants quarrel the grass gets trampled. But Vietnamese should look on the bright side: it's better to be trampled than sprayed with Agent Orange.
    • Thanks Thanks x 4
  4. cochine

    cochine FULL MEMBER

    Aug 19, 2015
    +0 / 395 / -0
    Viet Nam
    Viet Nam
    US-China trade tussle is creating winners in South-east Asia
    South-east Asia is shaping up as the one region which may notch some gains as the US and China exchange trade blows.PHOTO: REUTERS
    SEP 19, 2018, 10:19 AM SGT

    SINGAPORE (BLOOMBERG) - "No one wins from a trade war," is a standard refrain among economists. South-east Asian businesses are trying to prove that maxim wrong.

    The region is capitalising on a rush of new orders and production moves as firms reconsider their business in the US and China amid a deepening trade war.

    About one-third of more than 430 American companies in China have or are considering moving production sites abroad amid the tensions, according to survey results released on Sept 13 by AmCham China and AmCham Shanghai. South-east Asia was their top destination.

    Vietnamese furniture producer Phu Tai Corp is among those looking to cash in. The maker of home furnishings for Wal-Mart Stores outlets in the US is planning for a 30 per cent increase in its exports this year and in 2019, according to deputy general director Nguyen Sy Hoe. It'll invest about US$10 million to expand two factories at its base in Binh Dinh province and to upgrade production lines in two other factories in Dong Nai further south.

    "We see this as a great chance to boost our exports to the US as we're getting more orders from that market," Mr Hoe said by phone on Sept 4. "Given the escalating trade war between China and the US, many American importers are switching to buy from Vietnam."

    The 10-economy bloc of the Association of Southeast Asian Nations, or Asean, is a natural magnet for new factories thanks to low production costs and well-trodden manufacturing plants, solid growth with the five biggest economies expanding at about 5.3 per cent on average, and improving ease-of-doing-business rankings - not to mention geographical proximity to China.

    Hong Kong's Trade Development Council recognizes South-east Asia's clout. Nicholas Kwan, research director of the territory's statutory body that supports local firms, called South-east Asia "an economic powerhouse" and pointed Hong Kong businesses to the bursting region as a safe haven amid trade-war tensions in a press conference on Tuesday.

    Producer sentiment indicators around the world have shown negative impact from the tariffs on US$50 billion in goods the US and China have imposed on each other since July.

    With another US$200 billion in Chinese imports targeted and China announcing retaliatory tariffs against US$60 billion of US goods, trade-reliant South-east Asia will also be exposed to that overall drag. But unlike many developed economies, the alternative production bases also stand to gain as companies shift orders to them to avoid levies.

    Nguyen Thanh Phuong, chief executive officer of Kangaroo Group, a Vietnamese producer of home appliances, forecast a 10 per cent increase in sales to the US in the second half of 2018. His company has received orders from American clients who used to buy from Chinese makers, Phuong said in a Tuesday interview in Hanoi.

    "The new US tariff is helping our products become more competitive against Chinese ones," he said.

    Koratak Weeradaecha, finance director for Star Microelectronics Thailand, also has noticed fluctuations in orders that correlate with the trade tensions - first, a delay as some adjusted to new tariffs, he said in an Aug 24 interview. Orders have now increased by at least 15 per cent from 2017 and "we expect the trend to be more apparent later this year."

    "Orders came from companies that moved their production lines here, which helped boost the supply chain in Thailand," said Mr Koratak. "And we think there should be more as many companies should think about relocating their plants to neighboring countries, as staying in China may be too risky."

    Electronics manufacturers aren't the only ones in Thailand bound for a boost. Malayan Banking Bhd cites automobiles, seafood, rubber, and tourism all as markets that stand to benefit as Chinese goods become less attractive.

    The Thai government agrees that the seafood sector will win amid the US-China disputes, with those goods being targeted on both American and Chinese tariff lists, said Pimchanok Vonkorpon, director general for the commerce ministry's trade policy and strategy office.

    "Canned tuna should be a prime beneficiary sector," she said.

    Thailand makes up about 21 per cent of China's fruit imports, so that market stands to gain against US competitors that hold an almost 8 per cent share. Judging by the ability to offer substitute goods, Thailand is among the best-placed in the world to find opportunity amid the chaos, according to a July report from Krungsri Securities.

    While companies have been reluctant to act prematurely on production shifts, there have been some scouting areas in Thailand as potential factory sites, Nattapol Rangsitpol, director-general of the Ministry of Industry's Office of Industrial Economics, told reporters Aug. 28.

    It's a similar story in Malaysia. "We've got so many inquiries that our greatest problem is how to ramp up capacity," including in electronics, steel production and automation from both China and the US, Malaysian Finance Minister Lim Guan Eng told reporters on Sept 13 in Hong Kong. "Once they come in it is very hard to pull out."

    Malaysia could see the benefits both as a trans-shipment point and because it's a neutral country in which Chinese and American companies both would have an interest in investing.

    Malaysian billionaire Robert Kuok's Kerry Logistics Network Ltd is seeing "numbers are looking up a bit more" as companies divert distribution centers from mainland China and into places like Hong Kong and Taiwan, and parts of South-east Asia, according to the company's chairman, George Yeo.

    "They're thinking of the next factory, and they're less likely to put it in China," Mr Yeo, a former trade and foreign minister in Singapore, told Bloomberg Television on Sept 14. He acknowledged that some firms already were planning to move business to lower-cost manufacturing sites outside of China.

    The complication of calculating aggregate benefits for some economies is evident in Malaysia, which could score wins in some areas while also taking a hit to its parts-makers that sell heavily to China. For now though, South-east Asia is shaping up as the one region which may notch some gains as the US and China exchange trade blows.

    Vietnam has "more opportunities than challenges" from the US-China trade tensions, Prime Minister Nguyen Xuan Phuc told Bloomberg Television in a Sept 10 interview. The premier views the dramas as helping push Vietnam toward enhancing other trade relationships and embarking on domestic reforms to keep its development apace amid turbulent times.
  5. Viva_Viet


    Jun 26, 2011
    +0 / 1,802 / -4
    why always so rush ?? wait till 2023 CN chaos, my friend :cool: