China’s reopening will have an impact on Vietnam's imports and exports, but not much, according to Can Van Luc, chief economist of major Vietnamese bank BIDV.
After three years of closure due to Covid-19, China reopened its borders and completely lifted Covid-19 restrictions from January 8.
Luc said that in 2022, when China applied its zero-Covid policy, Vietnam's exports to its neighbour still increased by nearly 8%. The figure may expand by 1-2% in 2023, depending on China's anti-pandemic measures.
“The reopening of China will make Vietnam’s international tourism better as Chinese tourists account for about 32% of international arrivals to Vietnam,” he said.
However, Luc noted Chinese spending in Vietnam is not much, only half that of visitors from the U.S. and Europe. Vietnam’s international tourism revenue is expected to increase by 8-10% provided that the number of Chinese arrivals is equivalent to 50% of pre-pandemic levels, he added.
Meanwhile, many other experts showed more optimism, saying Vietnam's imports and exports would greatly benefit from the reopening of the billion-strong market. A sharp increase in the number of Chinese tourists would help boost Vietnam’s GDP growth.
With China's full opening, if Vietnam can take advantages of industrial production, agriculture and services development, its GDP might expand by around 0.5-0.75% this year. However, Vietnam should not expect too much from China’s reopening, they argued.
Nguyen Viet Phong, director of the Department of Trade and Services Statistics under the General Statistics Office, said that import-export activities were a highlight of 2022 when Vietnam set a new record of $732 billion in trade turnover. It maintained a trade surplus for the seventh consecutive year with nine exports earning over $10 billion.
In that context, China’s reopening from January 8 is expected to help partially improve the slowing imports and exports of Vietnam due to the global recession from the fourth quarter of 2022.
According to Phong, last year, China was the country with the largest import-export turnover with Vietnam, $177.7 billion, an increase of 6.8% year-on-year. Of which, imports reached $58.4 billion, up 4.5% while exports $119.3 billion, up 7.9%. But these increases were lower than the general import-export growth of Vietnam.
When the Chinese market opens, the recovery of trade activities will have a positive impact on imports and exports. "However, the reopening of the billion-strong nation will also sharply increase the world's import and export demand, thereby affecting the prices of goods in the world and Vietnam in particular. This will negatively affect Vietnam’s import and export growth," he said.
In addition, the increase in commodity prices would hike inflation, thereby affecting the monetary policy of the world and Vietnam. "So basically, China's reopening will have both positive and negative impacts on the world economy," he added.