Domestic businesses should closely monitor the market situation, prepare to adjust their operations and redefine export markets to avoid negative impacts from the US-China trade war. (Photo: ndh.vn) Hanoi (VNS/VNA) - Domestic businesses should closely monitor the marketsituation, prepare to adjust their operations and redefine export markets toavoid negative impacts and capitalise on opportunities from the US-China tradewar, officials and experts recommended.
AfterUS tariffs on 34 billion USD of Chinese imports took effect on July 6, China’scommerce ministry said it was forced to retaliate, meaning 34 billion USD worthof imported US goods including autos and agricultural products also faced 25 percenttariffs.
Accordingto experts, when the trade confrontation between the US and China ramps up, Vietnamwill be affected.
Vu TienLoc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said thatat the moment, the direct and immediate impacts on Vietnam’s exports will notbe much as goods subjected to the tariffs by both the US and China are limited(including Chinese technology products and some US agricultural products suchas maize, soybeans and meat, which aren’t Vietnam’s key export staples).
However,in the long run, it will be difficult to predict the impacts if the warcontinues to escalate and more tariffs are imposed, Loc said, explaining thatbeing a small economy with the US its largest export market and China itslargest import market, Vietnam will surely be affected by the confrontation.
On theother hand, Loc said Vietnamese businesses can take advantage of theopportunity to boost exports of products that the Chinese versions have hightax rates in the US, and vice versa in China.
However,facing difficulties entering the US market, Chinese goods will shift to other markets,including Vietnam. Vietnam, therefore, may suffer a trade deficit with China,Loc said.
Additionally,as exports to the US fall, more Chinese goods will be consumed in the localmarket, causing difficulties for Vietnam’s exports to China. The growth rate ofVietnam’s exports to China, which reached 30 percent in 2017, may be affected.
EchoingLoc, Tran Toan Thang, head of the World Economic Department of the NationalCentre for Socio-Economic Information and Forecast (NCIF) under the Ministry ofPlanning and Investment, said the conflict would give Vietnam a good chance toexport to the US.
However,on the other hand, if China could not export to the US, it would boost itsexports to other countries, including Vietnam, Thang said.
Accordingto Loc, at a broader level, the US-China trade war may cause global trade tochange, causing Vietnam’s exports to face fiercer competition in both otherforeign markets and at home.
Besides,the trade war could also affect investment flow, global supply and demand aswell as capital and securities markets, Loc said.
Accordingto PhD Doctor Pham Van Dai, the flow of foreign direct investment (FDI) capitalwill not abruptly change for the global production chain value. FDI capital andits production chain will move from China to Vietnam as the labour cost in Vietnamis cheaper than in China.
Tomitigate the impact, Loc suggested exporters closely monitor the marketsituation, not only in the US or China but also in other markets. They shouldprepare to adjust their production, business, supply and markets flexibly.
The firms should also seek other stable and more favourable export marketsbesides the US and China, especially those Vietnam had signed free tradeagreement with.
EconomistPham Chi Lan also suggested that Vietnamese firms expand their partnership toat least three markets to avoid dependence on a particular market.
Such astrategy will help Vietnamese firms survive and exploit new opportunities inthe context of a global trade war, she said, suggesting that Vietnamese firmsshould increase their influence in other markets outside the US and China, suchas the EU.
The establishment of the Comprehensiveand Progressive Agreement for Trans-Pacific Partnership without theUS’s participation is a good way to deal with the unpredictable policies of theUS and China at the moment, Lan said.
In thedomestic market, Loc suggested that local firms cooperate with each other to takeactions when necessary. For example, firms can use legitimate trade remediessuch as anti-dumping, anti-subsidy or safeguards to fight unfair foreign tradepractices.-VNS/VNA
VNA
