The more reducing dependency, the more strengthening sovereignty


As tensions are escalating in East Sea by China's deployment of the HD-981 oil rig in Vietnam's waters, there is necessity of getting rid of China’s economic dependence. National Assembly (NA) deputies on June 2 urged the government to take steps to lessen the country’s economic dependence on China as East Sea tensions with the northern neighboring country may leave adverse impact on the economy.
 A dispute over portions of the East (or South China) Sea has threatened the future economic relationship between the neighboring countries. Economists are urging Vietnam to diversify its trading partners as an over-reliance on the Chinese market may prove problematic as territorial tensions continue rise.
Given the low prices of Chinese manufacturing equipment and raw materials, they remain the preferred choice of many local producers. Vietnamese firms mainly export cheap products to China while risks in the market are always high, local firms have continued their exports to China. Vietnamese firms are heavily dependent on China as an export destination. Therefore, Vietnam is at a disadvantageous position.
To deal with the problem, Vietnam should take advantage of free trade agreements (FTAs) which are now under negotiation. Free Trade Agreements (FTAs) not only open up opportunities for Vietnam to stimulate the national economy but also reduce and gradually remove dependence on the Chinese market, towards ensuring a sustainable economic development.
 With its commitment to remove and at least reduce tariffs and technical barriers to the lowest levels in FTAs with the world’s leading partners in the future, Vietnam will have a good chance to import machinery, equipment, input materials, consumer  goods from the US, the EU, Japan, the Republic of Korea (RoK), Australia, New Zealand and Russia.
Vietnam can take advantage of these opportunities to attract investment in developing support industry, so as to reduce imported inputs in key business areas of the Vietnamese economy. Vietnam should identify strategic partners like Japan, Korea, Australia, India and ASEAN to build up long-term cooperation and decrease dependence on China.
Vietnamese companies are advised to improve cooperation to reduce their dependence on imported raw materials. It is not too late to develop the industry that produces raw materials. Companies should invest in technology, and produce raw materials at cheap prices if they can, this would enhance Vietnamese companies' competitiveness.
  Vietnam needs to reduce its dependency on China by boosting domestic production and exports, and increasing consumption of Made-in-Vietnam products, encouraging Vietnamese people to use Vietnamese goods. If a population of 90 million priotize using Vietnamese goods, it will help generate a huge turnover to thus reducing imports from China’s exports. The government should urgently develop supporting industries and adjust the farm produce market to support local farmers and avoid heavy reliance on China.
Anyway, Vietnam is the largest market of Chinese contractors in Southeast Asia and Chinese investors are profiting from projects in Vietnam. Therefore, China must consider carefully before taking any measures. It is necessary to look back at trade, investment, and credit relationships not only with China but also other countries to convert dependence into a win-win partnership.
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All comments [ 10 ]

Hoàng Lân 19/6/14 21:31

The Philippines engages in relatively little trade with China, while Vietnam is heavily dependent on Chinese trade—especially on imported materials that it uses to produce its own manufactured goods.

Hùng Quân 19/6/14 21:33

Vietnam should identify strategic partners like Japan, Korea, Australia, India and ASEAN to build up long-term cooperation and decrease dependence on China.

Huy Lâm 19/6/14 21:39

We need to change from using Made-in China goods to Made-in Vietnam products, ok!

Phạm Hiếu 19/6/14 21:44

Facing tensions with China, Vietnam needs to commit to changing its economic model, development path and ideology in governing its economy.

Quân Hoàng 19/6/14 21:45

On the plus side, the current dispute with China may be a great motivator for Vietnamese enterprises to accelerate their restructuring to reduce an unhealthy dependence on the market.

Vân Nhàn 19/6/14 21:47

Vietnam, a small-scale economy, could find other partners to reduce the export dependence on China.

Quốc Cường 19/6/14 21:50

When we don't depend on you economically, we'll not scare of you, China!

Huy Quốc 19/6/14 21:58

Local enterprises should expand their import markets as well as their material and equipment capacities to maintain production without relying on China.

Quốc Kiên 19/6/14 22:00

This picture looks very impressive, Mr. Minh has showed his spirit very scary.

Lê Tín 19/6/14 22:04

Vietnam must balance rising anger at China at home with the need to protect an economy heavily reliant on Chinese imports—and stay out of a military conflict we can't win.

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