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Possible US-China trade war could bring challenges, opportunities

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Vietnamese economists all believe the possibility of a US-China trade war outbreakis low, but, if it occurs, Vietnam would face both challenges and opportunities.

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is low, but, if it occurs, Vietnam would face both challenges and opportunities.

 

Nguyen Mai, Chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE):

International experts warn that if this occurs, high tariffs would be imposed, and the prices of goods to be imported from the two countries will increase. The materials that bear high tariffs will become more expensive, thus leading to higher production costs. As a result, the prices of goods to be made by Vietnam from input materials sourced from the US and China will be higher.

I can see these challenges. But I think opportunities would also come. Vietnam can take full advantage of the gaps in trade between the two countries (US-China two-way trade is worth $600 billion) to boost exports to the US and China.

Regarding foreign investment, I don’t think Vietnam would bear heavy influence. The US is the 10th largest foreign investor in Vietnam with estimated implemented capital of $7 billion, which only accounts for a small proportion of total $170 billion worth of implemented capital from all foreign investors.

Chinese investment would not see big changes because the Chinese market is large.

Vo Tri Thanh, former deputy head of the Central Institute of Economic Management (CIEM):

If the war breaks out, the world’s economic growth will certainly slow down. As Vietnam is an economy with high openness, the prosperity or recession of the global economy will surely have a positive or negative impact on Vietnam.

What Vietnam can do is prepare to survive the shocks, taking full advantage of new opportunities to mitigate negative impact.

Nguyen Tri Hieu, banking & finance expert

For Vietnam, the trade war, if it breaks out, will do more harm than good. However, there would be some advantages for Vietnam to exploit. 

For example, if China cannot sell products to the US because of the tariff barriers, it will have to seek new markets and think of selling goods to Vietnam. 

However, with its modest trade position in the global trade market, Vietnam would bear big negative impact.

The Vietnamese finance market won’t bear direct impact from the trade war, but it will see indirect impact through the commercial banks providing payment services to import/export companies.

Nguyen Duc Hung Linh, analyst from the Saigon Securities Incorporated (SSI)

The tensions in the economic relations between the two powers will have certain impact on foreign capital inflow to Vietnam in the immediate time.

EPFR Global has noted a trend of divesting from equity funds in Vietnam, which began in mid-February.

 

 

Source: VietNamNet

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