Trade deficit with China falls sharply

According to the General Statistics Office, in the first 8 months of 2016, the trade deficit with China reached 19 billion USD, down 13.3% compared to the same period in 2015, ending the series of increasing trade deficits with this market for many years.

Strengthening trade promotion to increase exports to the Chinese market through major fairs (Photo: Hoang Duan)

Just temporary?

The variety of goods in terms of types, quality and affordable prices is the advantage that makes Chinese goods favored by Vietnamese enterprises and increase imports. Continuously from 2001 to present, the trade balance of the two countries has been tilted towards a trade deficit with China with an increasing number.

However, this year, the trade deficit with China has continuously decreased and after 8 months, the trade deficit has decreased by 13.3% compared to the same period last year. Analyzing the reasons, Mr. Le Quoc Phuong - Deputy Director of the Center for Industry and Trade (Ministry of Industry and Trade) - said that due to the gloomy world economic situation, import demand has decreased in most markets, including Vietnam.

In addition, it is impossible not to mention the efforts of enterprises to diversify import markets, reducing dependence on some traditional markets. Instead of importing from China, enterprises are actively importing from other markets, typically South Korea. Also according to the General Statistics Office, after 8 months, import turnover from South Korea reached 20.3 billion USD, up 9.3% due to the sharp increase in imports of computers, components, electronics, etc.

Although it has decreased for many consecutive months, the current reduction in trade deficit with China is considered to be only temporary. Mr. Le Quoc Phuong emphasized: “With a close geographical location and highly competitive goods, Chinese goods will still be one of the top choices of Vietnamese enterprises. In the gloomy economic situation, the trade deficit may decrease, but when the economy grows again, enterprises regain production momentum, import turnover will increase again and more measures are needed to reduce the trade deficit and balance the trade balance with this country in a sustainable manner.”

Sustainable trade deficit reduction

Deputy Minister of Industry and Trade Do Thang Hai said that efforts to reduce trade deficit and gradually balance the trade balance with the Chinese market are a major policy and one of the key activities of the Ministry of Industry and Trade in recent times. In particular, the most important solution is to strengthen trade promotion to increase exports to this market.

Most recently, at CAEXPO 2016 held in Nanning, China, the Vietnamese delegation participated with the largest scale among ASEAN countries (after the host China), creating opportunities for Vietnamese goods to increase exports to this country after the fair ended. In fact, although the export situation has encountered many difficulties since the beginning of the year, the export turnover to the Chinese market after 8 months has reached 12.6 billion USD, an increase of 15%, higher than the average growth rate of the whole country. This is a positive sign showing the continuous efforts of the authorities to increase exports to China.

Deputy Minister of Industry and Trade Do Thang Hai shared that in the structure of goods that Vietnam is currently importing from China, the largest proportion belongs to machinery, equipment, and raw materials for domestic production. With the economy growing strongly as it is now, this is inevitable. In the long term, the Ministry of Industry and Trade is actively developing supporting industries; at the same time, strictly controlling the import of domestically produced goods as well as unsafe food products.

According to Baocongthuong