Chinese Investment in Vietnam Surges, While US Faces Decline
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According to official data from Vietnam, Chinese investment in the country has seen a significant increase, in contrast to a decline in US spending and trade. This surge in Chinese investment comes at a time when the world’s two largest economies, China and the United States, are competing for influence in Vietnam, a key manufacturing hub situated along the South China Sea.
During a visit to Hanoi in September, President Joe Biden worked to enhance diplomatic relations with Vietnam, a former enemy during the war. This visit marked a year of dedicated efforts by the US to elevate its diplomatic ties with Vietnam, aligning itself more closely with China in the competition for influence in the region.
Chinese President Xi Jinping is scheduled to visit Vietnam with the aim of further solidifying the relationship between the two countries. Speculation has arisen that the visit may lead to an official upgrade in diplomatic relations, signaling a potentially closer alliance between China and Vietnam.
Despite the symbolic and diplomatic implications, China maintains an economic advantage over the United States, due in part to US trade policy and recent sanctions against China. Statistics from Vietnam reveal that Chinese and Hong Kong investments in the country have more than doubled in the past year, surpassing the US as the largest investor in Vietnam.
Conversely, investment from the United States has decreased, falling to just $500 million this year. This decline, coupled with a lack of progress in trade negotiations, has resulted in a decrease in bilateral trade between Vietnam and the US.
In addition, while exports from Vietnam to the US have declined, exports to China have increased. This contrasts with ongoing territorial disputes in the South China Sea and anti-Chinese sentiments among the Vietnamese population, which have led to protests in the past.
The US’s diplomatic efforts come with promises of increased investment and improved trade relations, yet tangible progress has yet to be seen, according to experts. Despite these challenges, interest from US investors is growing, indicating potential for future investment in Vietnam.
With Chinese investment nearly doubling pre-COVID levels, and Chinese economic slowdown prompting investments abroad, the landscape of investment in Vietnam continues to shift. As the geopolitical competition unfolds, the implications for Vietnam’s economy and stability remain complex and multifaceted.
Reuters – Chinese investment in Vietnam has grown significantly this year. In contrast to the United States that slowed spending and trade Vietnam’s official data indicates As the world’s two largest economies compete for influence in the Southeast Asian country,
Vietnam, a manufacturing hub that stretches along the South China Sea It has become an important link in the global assembly supply chain. which often rely on components from China and users in the United States
The President of the United States, Joe Biden, managed to upgrade diplomatic relations with the former enemy of the war during a visit to Hanoi in September. After a year of dedicated diplomatic efforts to elevate the United States to be on par with China in ranking Vietnam’s diplomatic relations
Chinese President Xi Jinping will visit Vietnam next week. With the aim of strengthening the relationship even further. and the diplomat pointed out that he might agree to declare that the two countries share a common future. This could be interpreted as an official upgrading of diplomatic relations.
It is not clear which side of the symbolic lift carries more weight. But in economic terms China always seems to have the advantage. This is partly a result of US trade policy. Conflict between Washington and Beijing and US sanctions towards China in recent years Push China to increase investment in Vietnam.
According to statistics from Vietnam, Investment from China and Hong Kong Their combined value increased to $8.2 billion during the first 11 months of this year. This is more than double the same period last year, making them the biggest investor in Vietnam.
As for investment from the United States Instead, it fell to just $500 million this year from $700 million in 2022, making the United States the 10th largest investor behind Samoa and the Netherlands.
Moreover, bilateral trade also declined. Because US consumers are facing a cost of living crisis this year And there is no agreement to reduce taxes. It happened during Biden’s visit.
Vietnam’s data also indicates that exports from Vietnam to the USA fell by 15% to $79.25 billion in the first 10 months of the year. and imports from the United States also decreased while during the same period Vietnam’s exports to China rose 5% to nearly $50 billion.
Despite the strong economic exchange But relations with China remain complicated by territorial disputes in the South China Sea. Anti-Chinese sentiments are widespread among Vietnamese. and often lead to protests Including one time in 2018 when the Vietnamese people opposed the creation of special economic zones that could benefit Chinese companies.
The US diplomatic upgrade comes with promises from the White House to increase investment and make trade easier.
“Despite the fanfare during Biden’s visit, But we haven’t seen much tangible yet,” said Zachary Abuza, a professor of politics in Southeast Asia. of the National War College in Washington, DC, noting that foreign businesses face significant challenges in investing in Vietnam.
Several Vietnamese business consultants point out that the interest of US investors is increasing, but investment decisions take time.
Rapid growth in Chinese investment excluding Hong Kong This is almost double the pre-COVID level at $3.9 billion, partly due to companies’ risk mitigation strategies. Amidst the trade conflict between the US and China, Dezan Shira Business Advisors Partner Kyle Freeman said.
Chad Owell, an analyst at Mekong Capital, said China’s economic slowdown was also a factor in investment decisions.
“The poor short- to medium-term macroeconomic outlook in China is encouraging Chinese people to look for investment opportunities outside their own country,” said Chad Owell.
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