VietNamNet Bridge - Instead of refusing Chinese capital, it would be better for Vietnam to receive capital flow in a tactical way to serve investment for development, experts say.

Chinese capital within reach

Chinese capital has been flowing to many countries, including Vietnam. According to the General Statistics Office (GSO), FDI to Vietnam from China (including Taiwan) increased by 2.7 times between 2011 and 2017 with the average growth rate of 18 percent per annum.

Chinese capital accounts for 12 percent of total FDI capital, lower than Japan (30 percent), South Korea (28 percent) and Singapore (19 percent).

With strong capital flowing to Vietnam in recent years, China has added its name among the top 10.

Bui Trinh, an economist, said this clearly shows the strategy pursued by the Chinese government.

“Since 2015, China has been among the 10 biggest foreign investors. It can see great potential in Vietnam to be brought by CPTPP membership,” he said.

International experts say that Chinese businesses have been encouraged by the Chinese government to make outward investments in the context of difficulties in the domestic market.

High-quality capital 

Analysts noted that though the Chinese capital is plentiful, Vietnam still cannot attract high-quality capital, or capital from large corporations poured into hi-tech fields.

This problem is occurring not only with capital from China, but from the EU and US as well. Twenty eight EU countries have registered $20 billion worth of FDI so far, while the US, which makes $300 billion worth of outward investment each year, has poured $10 billion only to Vietnam.

Twenty eight EU countries have registered $20 billion worth of FDI so far, while the US, which makes $300 billion worth of outward investment each year, has poured $10 billion only to Vietnam.

According to Nguyen Van Toan, deputy chair of VAFIEs, some ministries and agencies believe that there is no need to attract capital from China because Chinese technologies are outdated and polluting.

China also has advanced technologies. According to WIPO, Chinese new apps and patents soared from zero earlier this century to 928,000 in 2014, or 40 percent higher than the US (579,000) and three times higher than Japan (326,000).

What to do?

Former chair of VAFIE, Mai Thanh Hai, affirmed that FDI needs to serve the nation’s benefits in the most effective way.

“The government’s view is that Vietnam needs to respect FDI because this is a source that helps the country develop. If Vietnam has a wise strategy to lure FDI, the capital from China would also contribute to economic development,” Hai said.

Nguyen Chau Giang from Trade University also said that FDI will continue an important role in the national development, especially when preferential loans from ODA are on the decrease.

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