Pointing to the idle plot of land next to a factory in Tu Liem IZ in Hanoi, Nguyen Hong Linh, the owner of an aluminum enterprise, complained that his production expansion plan had to be postponed.

The gloomy market and the flood of cheap Chinese products have made it impossible to implement the plan, though he has arranged enough capital.

“My factory has had to cut output since the beginning of the year,” he said.

Many other aluminum manufacturers have also reduced output. Some enterprises reportedly are running at 30-40 percent of designed capacity.

Vu Van Phu, chair of Vietnam-France Aluminum, said that while domestically made products have to undergo inspection about origin, quality and production processes, Chinese imports do not have to bear any examination.

The higher VAT input tax refund for Chinese exports is also creating competition. Under the new policy, which took effect in September, the tax refund rate was lifted from 9 percent to 13 percent. As a result, domestic manufacturers cannot sell their products at prices high enough to cover production costs.

Experts said there is a wave of low-cost Chinese imports to Vietnam. Not only steel, but other industrial products such as coal and aluminum, have flooded Vietnam. The oversupply has prompted China to boost exports to neighboring markets, including Vietnam.

The World Aluminum Association estimates that China is supplying more than half of the total aluminum supply all over the globe.

In related news, in early December 2018, the US International Trade Commission (ITC) decided to impose anti-dumping duties of 96.3-176.2 percent on aluminum imports from China for five years.

IDC’s decision was made after an investigation that was initiated after the US Department of Commerce charged that the US manufacturers are suffering from Chinese products being dumped in the US market.

US aluminum imports increased by 750 percent over the last decade, and more than 90 percent in 2014-2017.

This is not the first time the US has applied safeguard measures against Chinese imports. In early 2018, the US raised the import tariff on Chinese products to 10 percent  to prevent cheap imports and unhealthy competition.

However, the US anti-dumping duty has raised worries among Vietnamese enterprises. 

They have been warned that Chinese products will go through Vietnam before heading for the US in order to have ‘Vietnamese origin’, which would allow Chinese firms to avoid high taxes.

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Thanh Lich