Vietnam & China Trade Booms Amid Strategic Shifts

Vietnam’s trade relationship with China continues to grow at an impressive pace, with China firmly established as Vietnam’s top trading partner and a leading investor. In recent years, annual trade between the two nations has surpassed the $100 billion mark. Its mostly driven by increasing demand for Vietnamese agricultural products, especially durian. In the first half of 2024 alone, China purchased over $1.2 billion worth of durians from Vietnam. This marks a 46% increase from the previous year.

This burgeoning trade relationship has seen significant developments, with new protocols signed between Vietnam’s Ministry of Agriculture and Rural Development and China’s General Administration of Customs. These agreements allow for the export of frozen durians and fresh coconuts. Vietnam expects it to generate an additional $400-500 million and $200-300 million, respectively, by year-end. The agricultural sector has seen robust growth, with Vietnam’s fruit and vegetable exports to China reaching nearly $2.2 billion in the first half of the year. This is a 33% year-on-year increase.

Beyond agriculture, Vietnam’s overall trade with China has expanded dramatically over the past decade. From $15 billion in 2013, Vietnam’s exports to China have skyrocketed to $61.2 billion in 2023. Electronics, rubber, and footwear stand out as key exports, while machinery, chemicals, and construction materials dominate imports. Vietnam now ranks as China’s top trading partner in ASEAN and the fifth largest globally.

Trade and Investments from both China and Vietnam

Investment from China has also surged, with a 77.6% increase in Chinese investments in Vietnam last year. High-profile projects, such as the $800 million Chery-Geleximco auto plant, highlight China’s growing interest in Vietnam’s manufacturing and technology sectors. As Chinese companies increasingly relocate operations due to the China Plus One strategy, Vietnam stands to benefit significantly from these supply chain shifts.

However, the growing trade and investment relationship comes with challenges. China’s stricter import regulations demand higher quality standards from Vietnamese exporters. To sustain this growth, Vietnam must enhance its infrastructure, regulatory framework, and labor quality to attract more Chinese investment and ensure long-term economic cooperation between the two countries.