Automobiles imported from China. Vietnam's deficit in trade with China reached over 22 billion USD in the first eight months of the year. (Source: nld)

The Ministry of Industry and Trade announced that Vietnam's trade deficit with China continued to grow, presently at 22.3 billion USD, and with another quarter of the year left to go.

The situation is not new however. The recently released figure predicts 2015 will result in a year-on-year increase of 29 percent. The 28.9 billion USD deficit in 2014 was 21.8 percent larger than that of 2013.

Independent economic expert Nguyen Tri Hieu, who holds a PhD in business management, told Vietnam News that the deficit in trade with China has existed for many years and keeps growing.

"Cheaper prices are one of the key reasons behind the widening trade deficit, particularly when China decides to devaluate its currency. Made-in-China products are then imported into Vietnam with cheaper prices, leading to a sharp increase in the amount of goods imported from China into the country," he said.

Vietnam has increasingly imported from China over recent years, rising from 28.78 billion USD in 2012 to 43.86 billion USD in 2014. The ministry forecasts that the figure could reach 35 billion USD this year.

The country's total import turnover from China so far this year is 32.7 billion USD, which is 29.8 percent of the country's total imports, reported Nguyen Tien Vy, head of the ministry's Department of Planning.

Vietnam's main imports from China are machinery, equipment, steel and fertiliser and exports crude oil, telephones and parts, rubber, rice, fruit, vegetables, seafood, minerals and raw materials.

A report from the ministry revealed that total export of a number of products such as rice, rubber and fisheries of Vietnam dropped drastically over the past few months, one of key reasons being China's across the board reduction of Vietnamese products.

Hieu explained some of the attractiveness of Chinese products, one being the countries' geographical proximity, which creates favourable and diverse conditions for transportation.

"Meanwhile, the devaluation of China's yuan has created more difficulties for Vietnamese exporters as Vietnamese products become more expensive in China's market," he said.

It should also be noted that a decline of China's economy led to a decrease in China's import demand from other countries, which included Vietnam, he said.

He stressed that the widening deficit in trade would create a growing dependency of the national economy on China which remains Vietnam's biggest import market.

The ministry reported that Vietnam's total trade deficit for this year now stands at 3.6 billion USD.

In order to narrow the deficit, the Government issued a plan on export market development for 2020. Vy from the Planning Department said it aims for an average annual export growth rate of 11 to 12 percent to achieve 300 billion USD in export value by 2020.

Under the plan, Vietnam will consolidate and expand market shares in its traditional markets in the Southeast and Northeast Asian regions, Australia and growing western frontiers.

The nation, however, will also focus on new markets with high potential in Africa, the Middle East and Latin America to reduce dependence on some key export markets.

Vy added that the Government encouraged improving export efficiency of products to markets with signed Free Trade Agreements with Vietnam.-VNA