VietNamNet Bridge - China is now the largest trading partner of Vietnam with a total turnover of nearly $60 billion in 2014 and the ninth largest investor of the 105 countries and territories investing in Vietnam.

Lao Cai border gate between Vietnam and China.

Vietnam and China normalized relations in November 1991. Since then, bilateral trade and investment ties between the two countries have been restored and are growing quickly. 

The two countries signed a bilateral trade agreement and both are members of the ASEAN - China Free Trade Agreement. They are negotiating the Regional Comprehensive Economic Partnership (RCEP).

In the past 24 years, total trade turnover between Vietnam and China has increased more than 1,930 times, from $30 million in 1991 to $58.6 billion in 2014. In particular, the balance of trade is increasingly in favor of China. In the past 15 years, trade deficit with this country has been on the rise, from $190 million in 2011 to $28.8 billion in 2014 and up to $24.3 billion for the January-September period of 2015, according to the General Statistics Department.

Vietnam’s main export items to China include minerals such as crude oil, coal and some agricultural products like vegetables, rice, and cassava ... (equivalent to $5-6 billion in 2014). This figure is very small compared with tens of billions of US dollars that Vietnam paid for imported raw materials, machinery, and consumer goods from China. 

Chinese enterprises have also invested in many major projects in Vietnam. As reported by the Institute of Chinese Studies, China began investing in Vietnam in November 1991 and the first project was a joint venture between an enterprise of Guangxi and a partner in Hanoi to open Long Hoa Restaurant in Hang Trong Street, Hanoi. After nearly a quarter century, China is now the ninth investor in Vietnam.

In the first decade (1991-2001), China's FDI in Vietnam was very modest compared with its total overseas investment. As of December 2001, China had 110 projects with a total value of $221 million in Vietnam. At present, the number of valid projects in Vietnam is about 1,180, with total registered capital of $8.5 billion.

Previously China's FDI focused on the areas of hotel, restaurant and consumer goods production on a small scale. Recently it has shifted to manufacturing processing industry, electricity and real estate. The biggest project is the nearly-$2 billion Vinh Tan thermal power plant I. Yet, this country's investment only focuses on the usual lines, not having any hi-tech projects with huge investment.

On the opposite side, Vietnam had just 13 projects in China worth $16 million by 2014, according to Mr. Bui Tat Thang, Director of the Institute for Development Strategies.

Regarding development assistance (ODA), China ranks fifth among bilateral partners of Vietnam, with total ODA and preferential loans of over $395 million as of June 2015, mainly for the construction of the Cat Linh - Ha Dong urban rail in Hanoi. However, this project has been implemented slowly.

Due to the close geographical location, China accounts for the largest number of foreign visitors to Vietnam, reaching more than 1.4 million in the past 10 months of 2015, accounting for 22% of the total foreign travelers to Vietnam. 

The growth rate of Chinese tourists to Vietnam was over 20% annually for the period of 1995-2014. For the January-October period of this year the number of tourists from China decreased by 15% over the same period last year. However, Chinese tourists’ average spending in Vietnam is lower than others, with $711/person or about $90/day, equivalent to 63% of the average spending of international tourists in Vietnam.

Bui Tat Thang, Director of the Institute for Development Strategies, said that as Vietnam’s neighbor, China always has had influence on Vietnam's economy, varying in influence depending on the period. The economic relations between the two countries have fluctuated but basically remained stable. However, Vietnam should find solutions to improve its position in this relation.

Chinese President Xi Jinping is paying a two-day visit to Vietnam at the invitation of Party General Secretary Nguyen Phu Trong and President Truong Tan Sang. 

Na Son