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Are $20 billion of China goods unofficially entering Vietnam?

NA deputy Mai Huu Tin made a “shocking” speech at the National Assembly meeting on Monday about the trade deficit between Vietnam and China, an underground economy and the "protective coat" of the economy which is being torn.

VietNamNet Bridge – Dr. Mai Huu Tin, Deputy Chairman of the Vietnam Youth Union, a congressman from the southern province of Binh Duong, made a “shocking” speech at the National Assembly meeting on Monday about the trade deficit between Vietnam and China, an underground economy and the "protective coat" of the economy which is being torn.


Deputy Mai Huu Tin.

Figures from the General Statistics Office of Vietnam in recent years showed that the trade deficit of Vietnam with China is increasing, from $12.4 billion in 2010 to $16.3 billion in 2012 and up to $29 billion in 2014.

"The huge imbalance in trade with China has been discussed a lot but we have not had a truly effective solution. But I want to mention an issue that I think to be bigger, more dangerous to the economy of Vietnam. It is the arising disparities of export figures announced by the statistic offices of the two countries," Dr. Tin said in the speech that was broadcast live on TV on June 8.

In his view, the statistics of the two countries have been always different, in the direction of being increasingly unfavorable to Vietnam. According to the Chinese statistics office, Vietnam had a trade deficit with China of $43.8 billion in 2014 while it was only $29 billion as announced by the Vietnam General Statistics Office.

The data between the two statistical agencies is different because of differences on exchange rates, the cost of shipping and insurance ... but from the perspective of an entrepreneur, Tin said the difference in data was not logical. Tin is the chair of the U&I Investment Joint Stock Company and Deputy Chair of Kien Long Bank.

According to the General Statistics Office of Vietnam, the cost of transport and insurance accounted for about 6.6% of total export and import revenue. Tin said that with a long common border between the two countries, the cost of shipping and insurance cannot be larger.

Therefore, if Vietnam recorded $14.9 billion of export turnover to China, the Chinese figure would have been approximately $15.9 billion. But the official figure announced by China was $19.9 billion, about $4 billion higher than Vietnam’s statistics.

"Export-import activities across the border is not fully recorded and it certainly occupies a part of the $4 billion. What is the rest? The majority of this figure came from Vietnam’s illegally exported goods to China. Why did it happen when we encouraged exports? The logical explanation is that the illegally exported goods are those that are banned from export or being taxed. I think they are minerals," said Tin.

Regarding imports from China to Vietnam, Vietnam’s statistics, including transportation costs and insurance, should have been higher than China’s statistics but Vietnam recorded figures are lower than China’s of up to $20 billion in 2014 alone.

"It’s a huge number. Specifically, in 2014 alone, over $20 billion of Chinese goods entered into the territory of Vietnam but it was not recorded by Vietnamese authorities, i.e. the goods were not taxed and controlled,” deputy Tin said.

If using China’s statistics, Vietnam would not have trade surplus with China in 2012 - 2014 as it announced. The fast increase of the unofficial trade deficit figure not only caused difficulty and immense damage to the Vietnamese economy but also put tremendous pressure on the exchange rate, he added.

"We can absolutely trust data of the Chinese statistics office. But in some way they calculated the value of the underground trade between us and them. We cannot ignore the value of the underground part when designing our policies. No matter what the openness of an economy, it still needs an effective protective armor to ensure equal competition between enterprises and protect consumers of the country. It seems that for Vietnam, this armor is being torn in trade with China," he warned.

Answering Tin’s questions, the Minister of Planning and Investment, Bui Quang Vinh, confirmed the difference between import and export figures of Vietnam and China but he did not totally agree with Tin’s arguments.

He said the differences in import-export data occurs in China as well as other countries. "For example, in 2014, Vietnam’s export figures with Singapore were $9.8 billion, but Singapore’s was $16.1 billion. With Russia, our statistics were $3.5 billion, while theirs was $4.3 billion. For Portugal, Vietnam’s figure was $268 million, while theirs was was $340 million. Thus, there is a difference of calculation methods between Vietnam and other countries," the minister said.

Mr. Vinh also pointed out some main causes for the difference, including statistical methods of countries.

"From this, the statistics of countries varies greatly. The United Nations has already discussed how to narrow the gap, but the situation is still going on. We cannot deduce that the illegally exported goods to China are all the goods banned from exports, or ores as deputy (Dr. Tin) said. But actually, 2 million tons of rice and agricultural products were exported across the border and we did not calculate this," the Minister said.

Lam Hang


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