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The more reducing dependency, the more strengthening sovereignty
The more reducing dependency, the more strengthening sovereignty
19/6/14
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 ]
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.
Vietnam should identify strategic partners like Japan, Korea, Australia, India and ASEAN to build up long-term cooperation and decrease dependence on China.
We need to change from using Made-in China goods to Made-in Vietnam products, ok!
Facing tensions with China, Vietnam needs to commit to changing its economic model, development path and ideology in governing its economy.
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.
Vietnam, a small-scale economy, could find other partners to reduce the export dependence on China.
When we don't depend on you economically, we'll not scare of you, China!
Local enterprises should expand their import markets as well as their material and equipment capacities to maintain production without relying on China.
This picture looks very impressive, Mr. Minh has showed his spirit very scary.
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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