LUẬN VĂN BẰNG TIẾNG ANH VỀ VIỆT NAM VÀ TRUNG QUỐC

TRADE DEFICIT
WITH CHINA
OF VIETNAM IN
THE LATE
2000S
LECTURER: DR. TU THUY ANH

FO R E IGN TR A D E UN IV E RS IT Y - H A NO I – S U M M ER 2 0 1 1


TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

Abstract
Trade deficit in general and trade deficit with China is one of the highly concerned
problems of Vietnam macro-economy because long-term trade deficit leads to the
situation of being dependent on foreign economies, the imbalance of BOP, hence, the
whole economy. Examining the severity of the situation and finding the solutions to the
problem is necessary for our sustained economic development. In our research, firstly, we
will analyze the real situation of trade deficit with China with related facts and figures.
Secondly, we explained the reasons for the huge trade deficit with China. Finally, we will
suggest some short-term and long-term solutions to the trade deficit problem. We do this
research in order to give readers the insights, to some extent, into the trade deficit with
China of Vietnam.

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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

TABLE OF CONTENTS
1

2

The situation of Vietnam’s trade deficit with China ............................................... 4
1.1

Trade deficit in Vietnam in general ....................................................................... 4

1.2

trade deficit with China ............................................................................................... 7

Reasons for the situation of trade deficit with China in Vietnam .................. 11
2.1

Exporting low-added value goods, importing high –value goods .......... 11

2.2 The inefficiency and ineffectiveness of domestic productions and
investments............................................................................................................................... 13

3

4

2.3

Chinese various in kinds and low in price goods .......................................... 14

2.4

The appreciation of Chinese currency ............................................................... 15

2.5

WTO and commitments ........................................................................................... 17

Solutions for the problem of trade deficit with China of Vietnam ................ 18
3.1

Exchange Rate Tool.................................................................................................... 18

3.2

Capital in-flow and out-flow control .................................................................. 19

3.3

Exporting Spurs ........................................................................................................... 20

3.4

Some other solutions ................................................................................................ 21

Conclusion ............................................................................................................................. 22

2

TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

TRADE DEFICIT WITH CHINA OF
VIETNAM IN THE LATE 2000S

Student
Phạm Thanh Hải
Nguyễn Thị Quỳnh Mai
Phan Thị Diệu Linh

ID
0851050064
0851050049
0851050046

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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

1 THE SITUATION OF VIETNAM’S TRADE DEFICIT WITH CHINA
1.1 TRADE DEFICIT IN VIETNAM IN GENERAL

Since opening the economy, Vietnam’s trade has increased rapidly. From 1995 to 2008,

in average, the amount of export increased by 18.7%/year while import increased by
20.1% /year. Total amount of import from only 39.3% of GDP in 1995 increased to
99.31% of GDP in 2008. Along with that, the trade deficit increased from 0.27 billion
USD in 1990 to 18.03 billion USD in 2008.
The increase in the export-import turnover make Vietnam’s economy more and more
widen. However, there are many potential risks. The sum of trade deficit in Vietnam from
1990 to 2009 was 84 billion USD, which was larger than GDP in 2008. The ratio trade
deficit over GDP is much larger than other countries in the world.

Year

Export (mill USD)

Import (mill USD)

GDP (mill USD)

1995

5448.9

8155.4

20736.2

1996

7255.9

11143.6

24657.5

1997

9185.0

11592.3

26843.7

1998

9360.3

11499.6

27209.6

1999

11541.4

11742.1

28683.7

4

TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2000

14482.7

15636.5

31172.5

2001

15029.2

16218.0

32685.2

2002

16706.1

19745.6

35058.2

2003

20149.3

25255.8

38867.1

2004

26485.0

31968.8

45404.4

2005

32447.1

36761.1

52426.9

2006

39826.2

44891.1

59716.0

2007

48561.4

62764.7

68435.2

2008

62685.1

80713.8

81269.6

2011

Sources: World Bank data, GSO Vietnam

Trade deficit in Vietnam (million USD)
20000
18000
16000
14000
12000
10000

Trade deficit

8000
6000

4000
2000
0
19951996199719981999200020012002200320042005200620072008

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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

Trade deficit in other countries in 2008 (million USD)
Vietnam
Japan
USA
China
Australia
Singapore
Taiwan
Germany
Thai
Korea
Malaysia
UK
France
-15000
France
Trade deficit

-56

-10000

-5000

0

5000

10000

15000

Malaysi
Germa
Singap Australi
Korea Thai
Taiwan
China USA
a
ny
ore
a
934
-823 -4912 -3248 298 -5132 -2172 1227 -11532 8346
UK

Vietna
m

-1176 18028
Japan

Source : World Bank
Import structure: Most of the imported goods of Vietnam are machinery and raw
materials; consumer goods make up less than 10%. Since 2000, imported consumer
goods make up 6-8%, while the number of raw materials is 60-67%. At the moment,
because of being a developing country, the need of raw material as well as machinery is
increasing year by year along with the raise of GDP.
Total

2005

2006

2007

2008

Mill.USD %

Mill.USD %

Mill.USD %

Mill.USD %

25.3

11040.8

24.6

17966.2

28.6

22566.7

29.3

64.4

28463.3

63.4

38822.4

61.9

49149.2

60.9

Machinery, 9285.3
instrument,
accessory
Fuels, raw 23663.9

20000

material
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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2992.5

Consumer

8.2

3508.4

7.8

4660.1

7.4

2011

6269.9

7.8

goods

Source: gso.gov.vn
1.2 TRADE DEFICIT WITH CHINA

In recent years, the amount of imported goods has increased sharply from 329 million
USD in 1995 to 15973 million USD in 2008. It made up more than 90% of the total
amount of trade deficit of Vietnam. However, it is only official figure. If the amount of
goods smuggled cross borders and goods imported by way of quota are counted, the
number will be higher. The problem here is that the rate of the increase in imported goods
from China is faster and faster while the amount of exported goods stays the same.

China Import and Export from 1995 to 2008
18000

Amount of goods (mill USD)

16000
14000
12000
10000
8000
6000
4000
2000
0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Export 361.9 340.2 474.1 440.1 746.4 1536.4 1417.4 1518.3 1883.1 2899.1 3228.1 3242.8 3646.1 4850.1
Import 329.7

329

404.4

515

673.1 1401.1 1606.2 2158.8 3138.6 4595.1 5899.7 7391.3 12710 15974

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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

Imports of goods by country and group
Amount of goods (mill USD)

80000
70000
60000
50000
40000
30000
20000
10000
0

China

USA

Japan

Germany

ASEAN

APEC

EU

2006

7391.3

987

4702.1

914.5

12546.6

37467.7

3129.2

2007

12710

1700.5

6188.9

1308.5

15908.2

52637.9

5142.4

2008

15973.6

2646.6

8240.3

1479.9

19567.7

67232.2

5581.5

In 2007, the trade deficit with China of Vietnam is 9.145 billion USD, making up 64% of
the total amount of trade deficit. In 2008, the figure is 11.16 billion USD and 61%
respectively. In 2010, trade deficit with China was raise to red alert: 12.6 billion USD,
which was equal 105% of the total amount of trade deficit in 2009. Therefore, Vietnam

has failed to decrease the unbalance in trade balance between Vietnam and China.
In 1991, Vietnam mainly traded with Soviet and the socialist countries of Eastern Europe,
through SEV. After the socialist countries collapsed, Vietnam has diverted trade to other
countries such as EU, USA, Australia, Canada, ASEAN, Japan, Korea, etc. A series of
commitments such as FTA, WTO, and AFTA were signed. After the diversion, trade
deficit has been increasing significantly. In 2000, trade surplus from China of Vietnam is
135 million USD. But in 2001, the trade balance switched to deficit of 200 million USD.
From then on, the imports from China have increased sharply. Chinese goods flood
Vietnamese market. Although Vietnam has trade relations with more than 200 countries
and territories, China supplies ¼ raw materials for Vietnam economy.

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TRADE DEFICIT WITH CHINA OF VIETNAM IN THE LATE 2000S

2011

In the late of 2009, according to the statistics of Ministry of Industry and Trade, Vietnam
exported mineral materials such as coal, rubber and crude oil to China; making up 55% of
the overall exports. However, the export of this commodity group has to be reduced to
ensure the energy security. In 2009, crude oil was decreased 24% and in 2010 coal was
decreased 50% compared to 2009.
Types

2009
Amount (Tons)

2010
Price

(1000 Amount (Tons)

USD)

Price

(1000

USD)

Crude oil

1,032,921

462,623.331

593,997

367,631.9

Coal

20,453,501

935,843.407

14,644,571

961,855.12

Rubber

510,245

856,712.92

464,372

1,420,788.726

Mineral

1,670,233

103,632.823

1,399,846

101,915.301

124,857.336

Aquatic

162,557.6

products
Coffee

17,396

Total

24,885.623
4,909,025.328

26,499

39,361.779
7,308,800.253

Main products exported to China

9