China largest trading partner, big investor of Vietnam

China is Vietnam's biggest trading partner and import market, and the Southeast Asian country's second largest export market, according to the Vietnamese Ministry of Industry and Trade.

China remained Vietnam's largest import market with an estimated turnover of $99.6 billion in 11 months, down 9% year-on-year,

The ministry estimated Vietnam's Jan-Nov 2023 exports to China at $55.98 billion, reversing a year-on-year decrease of 2.2% in 2022 to an increase of 6.2%, and accounting for 17.3% of the country's total export turnover. The trade deficit with China is $43.65 billion, down 23.1% year-on-year.

The U.S is Vietnam's largest export market.

The Chinese version of Global Times has noted that Vietnam has become China’s largest trading partner among the 10 ASEAN members and the fourth largest in the world after the U.S., Japan and South Korea.

Surging FDI flows

The flow of foreign direct investment (FDI) from China into Vietnam has also increased significantly in recent years. China was Vietnam’s third largest source of FDI capital after Singapore and Japan in the year to August 20. In the first half of 2023, China poured nearly $1.3 billion into 233 projects in Vietnam.

Currently, China ranks sixth among 143 countries and territories investing in Vietnam with 3,791 licensed projects and more than $25 billion in registered capital.

Many major Chinese companies like BEO Technology, Trina Solar, BYD, Sunny and Alibaba are planning to build factories and expand production in Vietnam.

According to a Reuters report, BOE Technology Group Co., Ltd., a screen supplier for both Apple and Samsung, intends to invest up to $400 million in building two new factories in northern Vietnam to supplement output for its relatively small factory in the South.

BOE Technology will rent 100 hectares of land to build a $150 million remote control system factory while the other $250 million will be invested in a screen manufacturing factory. It also plans to produce more complex organic light-emitting diode displays (OLED) at the new factory instead of liquid crystal displays (LCD).

Electric vehicle maker BYD Auto Co., Ltd., based in Xi'an, which boasts sales twice that of its rival Tesla in China, also plans to build a $250 million factory in Vietnam to produce car parts to serve its supply chain diversification and expand its presence in Vietnam.

China's Sunny Optical Technology Group Co., Ltd, has announced plans to invest up to $2.5 billion in developing an optical production complex in the northern province of Thai Nguyen province.

According to a memorandum of cooperation signed by Sunny Optical and the provincial authorities, after five years of construction, the complex will supply equipment to both electronics and auto industries.

Also in Thai Nguyen, Chinese solar panel manufacturer Trina Solar intends to invest an additional $420 million, bringing its total investment in Vietnam to nearly $900 million. Trina Solar, founded in 1997, is one of the largest solar panel manufacturers in Vietnam, currently operating two factories in Thai Nguyen.

Alibaba.com, China's global B2B e-commerce platform founded by Jack Ma, will also expand its investment in Vietnam.

According to Roger Luo, Alibaba’s Asia Pacific director, in the next three years, the platform will expand its presence from Hanoi and Ho Chi Minh City to the southern provinces of Binh Duong and Long An, the central city of Danang, and the northern localities of Bac Ninh and Hai Phong.

According to Luo, there are three factors that make Vietnam a very important part of Alibaba's e-commerce development map – a favorable foreign trade policy with many free trade agreements signed, low labor costs, and many special products.

Explaining the increasing FDI flow from China into Vietnam in many fields, experts have said that China is changing its strategy, encouraging domestic enterprises to invest abroad to bring home profits.

They say that the prospects and potential for economic, trade and investment cooperation between Vietnam and China remain huge, especially with both countries having complementary economies and the world moving towards carbon emissions reduction and a green, circular economy.

In the context of slowing global economic growth due to geopolitical instability and supply chain disruptions, senior leaders of Vietnam and China have been maintaining regular exchanges to ensure more positive cooperation results.

Most recently, at the 15th Meeting of the Vietnam-China Steering Committee for Bilateral Cooperation co-chaired by Vietnamese Deputy Prime Minister Tran Luu Quang and Politburo member, Director of the Communist Party of China Central Committee’s Foreign Affairs Commission Office and Minister of Foreign Affairs Wang Yi in Hanoi on December 1, the two sides reached agreement on promoting cooperation in many fields to the next stage.

They agreed to improve the effectiveness of economic, trade and investment cooperation; promote transport connectivity, especially in railway, road, and border gate infrastructure; and improve customs clearance efficiency to maintain smooth trade and ensure production and supply chains.

China’s Party General Secretary and President Xi Jinping began his two-day state visit to Vietnam on Tuesday. The visit is expected to elevate bilateral ties, especially economic times to a new level of development.

During the visit, which takes place as Vietnam and China celebrate the 15th anniversary of their "Comprehensive Strategic Cooperative Partnership" (June 2008-2023), bilateral relations will be upgraded in accordance with aspirations and common interests, contributing to peace and development in the region and the world at large, said Chinese ambassador Xiong Bo.