VietNamNet Bridge – A leading Vietnamese trade expert suggests that Vietnam seek alternate trade partners to reduce overdependence on China, and revise cross-border trade policy with its neighbour to optimise domestic value added exports.

In an interview granted to VOV, Professor Pham Tat Thang, a senior researcher of the Ministry of Industry and Trade, said it is crucially important to reduce reliance on the Chinese market, and to do so requires closer coordination and improved awareness by ministries, sectors, businesses and farmers of their role and importance on trade related matters.

Following are excerpts from the interview

What are difficulties Vietnam will meet if China closes its border gates and tightly controls border trade?

Undoubtedly trade ties between Vietnam and China have grown and flourished substantially since Vietnam introduced its open-door policy. Both countries benefit from booming trade growth, which has been increasing between 15-22% annually.  

Cross-border trade is the main trading method between Vietnam and China (Photo: ANTD)

However, after China illegally placed its drilling rig Haiyang Shiyou-981 deep inside Vietnam’s exclusive economic zone, there were unfounded rumours about Chinese closure of border gates with Vietnam. This is incorrect information, and the Ministry of Industry and Trade quashed the rumours.

Most recently, Chinese lychees were said to have entered Vietnamese border markets. Experts confirmed this was misleading information and did not originate from official sources.

The fact is that China is a leading trade partner of Vietnam, consuming one third of Vietnamese farm produce output annually. Notably, China imports 70-75% of Vietnamese rubber latex, 20% of cashew nuts, 100% of cassava, and 67% of dragon fruits. Therefore, Vietnam should develop contingency plans just in case China decides to impose restrictions on these imports.

Cross-border trade is the main trading method between Vietnam and China, posing a real risk to Vietnamese products. In your opinion, how will our border trade policy be adjusted to reduce overreliance on China?

After joining the World Trade Organisation (WTO), both Vietnam and China have desired to develop trade relations officially under signed agreements or contracts. It is undeniable that there are a number of border gates erected along the long border between the two countries, making it easier for informal cross-border trade activities every day, and this trading method will be maintained in the coming time.

The crux of the matter is how we keep a tight grip on such cross-border trade to minimise risks and optimise business operations that are in the best interest of Vietnam, as opposed to China. For example, Chinese dealers recently came and purchased lychees grown in Luc Ngan district, Bac Giang province. They asked Vietnamese farmers to pack boxes of lychees under their guidance in order to reduce customs procedure clearing and travel time.

Several experts say reducing reliance on China means reducing not only economic transactions but also the quality of economic relations. What do you think about this comment?

Our consistent policy is that the Vietnamese economy should not be highly dependent on any market, especially China. There is no denying the fact that China is a global economic power, and there are two sides of the coin, meaning that trading with China brings benefits to Vietnam, but poses numerous risks at the same time.

We need to keep a cool head in trade exchanges with China so that we can gain more benefits and simultaneously minimise dependence on this market. To do this, Vietnam should make a comprehensive change in terms of its management capacity and infrastructure investment.

As one example, China currently consumes 67% of Vietnamese dragon fruits. To diversify its export markets, Vietnam needs to comply with strict technical specifications set up by importers in other countries.  

The US, Japan and Australia, for example require all dragon fruits to pass rigid radiation tests.  That involves a huge investment on behalf of Vietnam in terms of labour force training and education as well as huge infrastructure investments.

It also requires closer coordination by ministries, sectors, businesses and farmers on trade related matters.

Similarly, if we do not diversify rubber products, to increase higher value added exports, we will only sell low value fresh rubber latex to China.

Thank you for the interview.

Source: VOV