Rising deficit only part of trading tale

A dramatic rise in exports has yet to rein in Vietnam’s large trade deficit with China.

The trade deficit with China stood at $1.73 billion in the first two months of this year, compared to $1.6 billion and $202 million in the same periods in 2010 and 2009, respectively, according to the Ministry of Industry and Trade (MoIT).

Vietnam imported $3.06 billion worth of Chinese products during January-February this year, up nearly 25 per cent year-on-year, while it exported $1.33 billion worth of goods to China, up 60 per cent – a record high in comparison with its other markets.

MoIT Asia-Pacific Market Department head Bui Huy Son said there had been a positive shift in the structure of Vietnamese goods sold to the Chinese market, with industrial and processing products making up an increasing portion, bringing about more stability and higher revenue.

In the first two months of the year, Vietnam exported some $302 million worth of industrial and processing goods to China, up 70 per cent in value on-year and making up 22.5 per cent of the country’s overall export revenue to China.

“As industrial products did not see any significant gains in price during the past months, the growth of Vietnam’s export revenue was almost entirely due to the rise in export volume to the Chinese market and distribution effectiveness,” Son said.

The January-February period also saw a double growth in Vietnam’s earnings from selling agricultural, forestry and fishery products to China, which stood at $633 million, up 113 per cent on-year and contributing 47 per cent to the country’s export value to China.

The shipment of fuel and mineral products to China, however, experienced a 3.12 per cent decline in value to $256 million, the MoIT reported.

Under the latest draft of China’s 12th five-year socio-economic development plan for 2011-2015, which has been delivered to local legislators for review, China would increase imports of consumer goods over the next five years.

Some Chinese experts considered a boost in imports would help ease pressures for the yuan’s appreciation, rein in inflation and provide more opportunities for foreign firms to access the Chinese market.

China, for the first time since March 2010, experienced a $7.3 billion deficit in foreign trade in February. A deficit is also forecast for March, 2011. “To some extent China’s import policy has resulted in the increase of exports from other countries to China. However, we have not yet seen any clear measures implementing the policy.

“It is not fair for Vietnamese producers and exporters to say that their increase in exports to China was the result of that import policy. It is clear that whatever the measure China may implement to open its market would be beneficial to all competitors, not only those from Vietnam. Therefore, the encouraging export result was almost due to constant efforts made by the Vietnamese firms to improve themselves and get a better access to the Chinese market during the past years,” Son told VIR.

Some well-known Vietnamese firms including Bitis and Vinamit have set up their offices and distribution networks in China to accelerate their sales and market shares.

Many Vietnamese firms actively joined the two big trade events the ASEAN-China Fair and the Western China International Fair held every year to increase networking with Chinese partners and boost exportation. “Vietnamese firms are now very active in building relationships with Chinese firms and clients,” Son said. On April 19, the China-Vietnam Joint Economic Committee meeting will open in Hanoi, where authorities of two sides will discuss further efforts and measures to help accelerate economic, trade, investment and tourism relationship between the two countries. – VIR

Tags: Vietnam trade deficit 2011