VietNamNet Bridge - According to many economists, China is importing many kinds of goods from Vietnam, and its reduction of growth rate needs to be studied and evaluated fully.

In addition, Vietnam has suffered a trade deficit in trade relations with China, especially in machinery and equipment imports, so Vietnam should be cautious with China’s policy of exporting outdated technology and machinery to third countries.

China’s "clever transformation"

Chinese goods flood the local market.

According to the World Bank (WB), since 2008 China has started to reduce GDP growth after a long period with the highest growth rate in the world (9% - 14% in 2002-2007). In 2010, China's GDP dropped to 10.5%, in 2011 to 9.3%, in 2012-13 to 7.7% and possibly in 2014 to 7.4%.

Dr. Pham Sy Thanh, director of the Chinese Economic Research Program of the Vietnam Economic Policy Research Institute (VEPR), said that from 2012 China has maintained a cautious growth policy which is limited to 7.7% - 7.4%. China has switched from overheating to sustainable growth and rebalancing growth and social benefits.

Experts said the transformation of China is "clever". They want to switch from the investment receiver to an investor. The extended arm of Chinese investors to the mining, road-bridge construction and light industry in Africa, Latin America, Southeast Asia and Russia has showed that policy.

However, the matter lies in two factors: this "painful" reform process causes many businesses that use old technology to go bankrupt. Where will the old machinery of China go? It has been coming to the 3rd countries through development assistance, procurement and overseas investment.

The second factor is in the process of reducing growth. Chinese workers will be unemployed and job creation will be critical for the country. In fact China is pushing a large number of workers to its investment projects around the world.

According to experts, China has used a new form of investment: transferring its technology and bringing its workers to overseas projects. This is different from investors of Japan, the US and the EU who only bring capital, technology, and skilled workers and experts to investment receiving countries.

Economist Bui Kien Thanh said: "Once the Chinese choose low growth, the old-fashioned and polluted machinery and technology will be removed mercilessly and they will be transferred to other countries, including Vietnam".

Trade deficit with China

According to the General Statistics Office, in the last four years, Vietnam’s trade deficit with China increased by 2.3 times in terms of turnover (in 2014 it is estimated at over $23 billion).

Since 2000, Vietnam has never had a trade surplus with China. Machinery and mechanical equipment always accounted for between 40% - 60% of the total value and quantity of imports from China.

So far, Chinese technology and machinery has been imported to Vietnam in large numbers, particularly to serve cement, sugar and steel producers because the price is cheap and Chinese partners rapidly learn the needs of Vietnamese clients to meet their requirements for a short time.

Dr. Le Xuan Nghia, director of the Institute of Business Development Studies (BDI), said: "There is a feature that Vietnam only suffers a trade deficit with China, not an investment deficit. China is not the major investor, major ODA partner and creditor of Vietnam. However, Chinese outdated machinery and technology still comes to Vietnam not through ODA and FDI but by the official imports of Vietnamese enterprises, although they know in advance about the warnings and consequences."

Experts said that Vietnamese enterprises purchase Chinese machinery and technology because they lack information, they have weak financial capacity, poor technology security and poor negotiation ability. Few Vietnamese businesses are highly regarded for financial capacity and technology security.

If having access to 2nd generation technologies of Europe, Japan and the United States, local firms must be able to keep secrets so the technology cannot fall into the hands of Chinese economic espionage.

Many countries have committed to transfer technology and equipment to Vietnam, through the agreement on the establishment of a Free Trade Area (FTA) and intergovernmental agreements such as India, Israel, Australia, New Zealand and ASEAN partners. Therefore, domestic enterprises should boldly abandon reliance on Chinese machinery.

Nam Son