Analyze the trade performance (including trade volume, trade value, commodity structure, market

share, balance of trade) between Vietnam and China over the last 10 years, and make recommendations
to the Vietnamese government on how to decrease the trade deficit with China for the next coming
years?

PART 1
Analyze the trade performance (including trade volume, trade value, commodity structure, market
share, balance of trade)

1. Trade volume

1.1. Definition

Trade volume, or volume in trading, is the number of completed trades in a single security or across a
whole market in a given time period. 

1.2. Example

For example, if shares in a security are traded 50 times in a day, the volume for the day is 50. But if a
number of traders took positions in the security during the day and closed them out by the end of the
session, the trading volume can be greater than the total of positions open at either the start or close of
the day's trading.

Imagine that a market is made up of two traders; Joe and Sarah. Joe buys 250 shares of stock ABC and
sells 250 shares of stock to XYZ. Sarah buys the 250 shares of XYZ and sells 500 shares of stock DEF
to Joe. The total volume of trades is 750 (250 shares of XYZ and 500 shares of DEF).

1.3. What needs to be known about trade volume

When a company is in the news, regardless of whether it is for good or bad reasons, trade volume tends
to go up. Because traders are responding to the news by either buying or selling the company's shares.

The volume of trade at the world's biggest stock exchanges is incredible. In the 30-minute period
before the New York Stock Exchange (NYSE) closes for the day, it is common to see over 200-300
million trades. The total amount of trades made per day at the NYSE is in the billions.

Technical analysts use trading volume data to assess the strength of a price movement and whether it'll
stay at its new level for very long. When the price of a stock goes up, technical analysts check if
volume rose as well if it did, then these analysts consider the price movement more significant and
more likely to stick. However, high trading volume can also indicate a price reversal.

2. Trade value

2.1. Definition
Trade value is the total amount of buy and sell trades taken place at a time. It can be majored at any
time but mostly it is taken into account on a day to day basis to track the overall stock market trend or a
particular stock trend.

Thin trade value in the overall market can give an indication that people are not confident about the
trend. Whereas heavy traded value in the overall market can give an indication that people are
confident about the trend whether it is bullish or bearish.

It can also be used to show daily activities of anyone. Like how much trades an individual does in a
day, the total amount of buy and sell is called total trade value by an individual.

2.2. Example

Suppose you enter a stock at INR 560 and purchase 250 shares. The stock has hit your target of INR
585 by 2 pm and you have sold these 250 shares at 585 per share. So your trade value will be:

 Buying value: 560 x 250 = 140000

 Selling value: 585 x 250 = 146250
 Total traded value is 140000 + 146250 = 286250

This is the total trade in value meaning in terms of an individual trade. Many people do multiple trades
within a day so the total of all the trades are considered a total trade value.

2.3. The importance of trade value

Trade value is a very important factor in doing analysis:

2.3.1. Fundamental analysis

For all market players, daily total value is critical. This is due to the ease with which a counter with a
little trade value can be manipulated (mostly called an illiquid counter).

Long-term investors, particularly institutional investors such as mutual funds, frequently steer clear of
companies with insufficient trading value.

2.3.2. Technical analysis

Technical analysis tools are only useful if the share has a big number of investors because they are
developed to monitor the collective psychology of investors. That implies that before investing in any
company, investors must ensure that the trading activity is large enough.

2.3.4. Average value

Value, unlike stock prices, can fluctuate dramatically in a brief length of time. On one day, a counter's
traded turnover may be merely a few hundred shares, but on another day, it may be in the lakhs.

Traders can get a good understanding of the volatility of a counter by utilizing an average, such as a
10-day average. In both the value and volume charts, the 10-day average is fairly stable.
 3. Commodity structure

3.1. Definition
The commodity structure enables you to categorize items, services, and supplier branch information
in a hierarchical tree structure. After you set up the commodity structure, you create relationships for
commodities. The system uses commodity relationships to provide default information for
requisitions. Commodity relationship information is eventually passed to Enterprise Performance
Management, where you can perform spend analysis.
3.2. Setting Up the Commodity Structure
To set up the commodity structure, we need follow step
 Add a commodity.
 Enter an item number.
 Enter a UNSPSC code.
 Enter a supplier relationship for the commodity.
 Enter a supplier's commodity code.
 Enter a G/L account number.
 Set up a UNSPSC code for an account number.
 Run the Populate F4311 Commodity/UNSPSC program (R43910).
After you add each commodity, you can cut and paste the commodities into the appropriate level of
the hierarchy. You can create up to three levels in the structure. And The Commodity Structure
program is enabled with record locking. Record locking prevents a user from making any changes to
the commodity structure when another user is updating the structure, ensuring data integrity. If your
business practices require that multiple users have access to the commodity structure at one time, you
can disable the record locking feature for this program by removing the P40500 program from user-
defined code table 00/RR.

4. Market share

4.1. Definition

A market share is a percentage or portion of the market earned by a company. In a nutshell, a

company’s market share is the ratio of its total sales to the total sales of the industry in which it
operates.

Market share gives a perspective on a company’s product or service competitiveness in its industry. 

It is an indicator of a company’s size compared to its market and competitors. An entity with the
biggest market share in an industry is the market leader.

Market share is calculated by comparing a company’s total sales over a specific time period to the total
sales of its industry over that same time period. 

The period to examine can be a fiscal year, a calendar year or several years.
4.2. Example

Suppose that the whole purchase activity of consumers is 1 million cans of soda drink, and a specific
manufacturer sells 700,000 cans. It suggests that the company controls 70% of the market.

4.3. How can a company grow its market share?

A company can grow its market share by offering innovative products, lowering prices, boosting
customers loyalty, improving quality, and putting efforts into advertising and acquisitions.

 Innovation: Companies can expand their market share by offering innovative products or
services, launching new technologies that their competitors do not offer. Innovation can provide
a competitive advantage to a company against its rivals.

 Discount: Lower prices could attract more customers and widen the customer base, leading to
increased sales and eventually the market share. 

 Maintaining customer loyalty: Companies safeguard their existing market share and ensure
that their customer base is not lost due to competition by improving their ties with customers.
Improved consumer satisfaction leads to a growth in customer base through word-of-mouth
marketing – the process of encouraging organic discussion about the brand among customers.

 Advertising: While advertising could be expensive, it is an effective way to increase market

share. In a highly competitive market, advertising can give a company an edge over its
competitors.

 Improved quality: Customers are getting increasingly conscious of the quality of a product in
addition to its price. By ensuring higher quality standards, a company can increase its market
share.
  Skilled employees: Hiring qualified and committed personnel can help a company save money
on turnover and training. Companies can entice employees to stay by offering competitive
compensation and benefits.

 Acquisition: A company can gain access to a new consumer base, lessen competition, and
increase market share by acquiring a competitor.

5. Balance of trade

5.1. Definition 
The balance of trade is a current account entry of the balance of international payments. The balance of trade records
the changes in a country's exports and imports over a given period (quarter or year) as well as the difference between
them (exports minus imports).

5.2. Factors affecting balance of trade

 Imports: tends to increase as GDP increases and it grows even faster. The increase in imports as GDP
increases depends on the marginal propensity to import (MPZ). MPZ is the fraction of extra GDP that people
want to spend on imports. In addition, imports depend on the relative prices of domestically produced goods
and foreign-made goods. If domestic prices increase relative to international market prices, imports will
increase and vice versa.
 Exports: mainly depends on what's going on in other countries because one country's exports are another's
imports. So it mainly depends on the output and income of the trading countries. Therefore, in economic
models, it is often considered that export is a self-determining factor.
 Exchange rate: is a very important factor for countries because it affects the relative prices of domestically
produced goods and goods on the international market. As the exchange rate of a country's currency rises, the
price of imported goods becomes cheaper while the price of exports becomes more expensive for foreigners.
Therefore, an increase in the domestic currency exchange rate will be detrimental to exports and favorable to
imports, resulting in a decrease in net exports. Conversely, when the domestic currency exchange rate falls,
exports will have an advantage while imports are disadvantaged and net exports will increase.
 Impact of Income As domestic income increases, so does the demand for imported goods. Meanwhile, when
the foreign economy grows, they also increase the need to import goods from other countries and make the
exports of the trading partner increase accordingly.
 Exchange Rate The exchange rate represents the price a country is willing to pay for imported goods at its
export price. In other words, it is the ratio between the export price and the import price.
 Trade policies and economic development Tax policies, protecting domestic goods also strongly affect the
balance of trade. These barriers restrict the import of certain items to improve the balance of trade. Other
policies related to economic development and import and export will strongly affect the balance of trade. In
addition, the balance of trade also depends on the structure of the economy and the country's industrial
development strategy

PART 2
I, Overview about the trade of Vietnam and China
 The trade relationship between Vietnam and China has been a topic of interest in recent
years. According to economic theory, trade between nations will develop well if they can
supplement what each other lacks to create mutual benefits and a foundation for the economic
community in East Asia. We can evaluate the trade situation between Vietnam and China using
statistical methods and synthesising data, including trade volume, trade value, commodity
structure, market share, and balance of trade.

From the table of statistics and analysis above, we can see that the trade between
Vietnam and China has had many changes in the past five years. However, we can observe that
the trend of increasing trade value between the two countries is still maintained, despite some
internal and external drivers such as the US-China trade war and the Covid-19 pandemic.
Additionally, Vietnam is increasingly becoming one of China's important partners in the
Southeast Asian region.

II, Situation about the trade between Vietnam and China before COVID - 19 pandemic
1. Trade value
The trade value between Vietnam and China has been growing steadily over the past 8
years. The trade value between Vietnam and China has been increasing steadily, with a
significant increase from 41.65 billion USD in 2012 to 117.07 billion USD in 2019. 

Year Vietnam's Export to Vietnam's Import from Balance of Trade

China (in billion USD) China (in billion USD) (in billion USD)

2012 13.02 28.63 41.65

2013 13.72 36.49 50.21

2014 14.67 43.55 58.22

2015 16.58 49.62 66.2

2016 21.26 45.19 66.45

2017 35.46 58.23 93.69

2018 41.99 64.68 106.67

 2019 41.46 75.47 117.07

The consistent increase in the trade value between Vietnam and China has been driven
by Vietnam's export growth to China. This export growth has been facilitated by China's One
Belt, One Road initiative, which aims to promote infrastructure development and trade between
China and countries along the trade route.

In conclusion, the trade value between Vietnam and China has been increasing steadily,
with Vietnam's export growth to China being the primary driver.  The trade relationship
between Vietnam and China has had significant economic implications for the region, and the
growth of the trade value reflects the strength of their economic relationship.

2. Commodity structure
The commodity structure of Vietnam-China trade has changed significantly over the
past 8 years. Vietnam's top exports to China were textiles and garments, footwear and seafood
in the early years, but have shifted towards high-tech products, mainly computers, electronics
and components, in recent years. On the other hand, China's exports to Vietnam have been
relatively stable.
Top 5 exports from Vietnam to China:

Year 1st Top 2nd Top 3rd Top 4th Top 5th Top
Export Export Export Export Export

2012 Textiles Footwear Seafood Electronics Machinery

(21.5%) (11.1%) (6.9%) (6.1%) (4.8%)

2013 Textiles Footwear Seafood Electronics Machinery

(17.9%) (12.4%) (8.5%) (5.9%) (5.2%)

2014 Textiles Footwear Seafood Electronics Machinery

(17.1%) (11.9%) (8.8%) (6.1%) (5.7%)

2015 Computers Textiles Footwear Seafood Phones

(23.4%) (18.1%) (11.5%) (8.8%) (6.3%)

2016 Computers Textiles Phones Footwear Machinery

 (24.1%) (16.5%) (13.9%) (10.9%) (4.7%)

2017 Computers Textiles Phones Footwear Machinery

(30.2%) (13.3%) (9.4%) (8.4%) (4.7%)

2018 Computers Textiles Phones Footwear Machinery

(31.3%) (13.9%) (10.3%) (7.8%) (4.8%)

2019 Computers Phones Textiles Footwear Machinery

(30.8%) (17.2%) (16.7%) (9.9%) (4.4%)

Top 5 imports from China to Vietnam:

Year 1st Top 2nd Top 3rd Top 4th Top 5th Top
Import Import Import Import Import

2012 Electronics Machinery Chemicals Metals Fabric

(34.7%) (13.2%) (6.8%) (5.3%) (4.3%)

2013 Electronics Machinery Chemicals Metals Plastic

(34.2%) (13.4%) (6.1%) (5.3%) (4.7%)

2014 Electronics Machinery Chemicals Plastic Metals

(34.7%) (13.3%) (6.9%) (4.2%) (4.0%)

2015 Electronics Machinery Phones Plastics Chemicals

(24.3%) (17.3%) (15.7%) (3.6%) (3.1%)

2016 Electronics Machinery Phones Plastics Fabric

(27.9%) (15.1%) (12.6%) (4.4%) (2.4%)

2017 Electronics Machinery Chemicals Plastics Metals

(29.2%) (15.4%) (3.5%) (5.2%) (4.1%)

2018 Electronics Machinery Chemicals Fabric Plastics

 (27.3%) (15.8%) (4.3%) (2.3%) (4.6%)

2019 Electronics Phones Machinery Textiles Plastics

(25.3%) (16.8%) (15.9%) (11.5%) (4.6%)

From the tables above, the shift in commodity structure highlights Vietnam's efforts to
transform into a technology and innovation-driven economy.

China's top exports to Vietnam have consistently been electronics and machinery, with
small variations in other commodities such as plastics and chemicals.

3. Balance of trade

Vietnam has consistently run a trade deficit with China over the past 10 years. The
deficit was at its lowest in 2012, with a value of -15.61 billion USD, and its highest in 2019,
with a value of -34.01 billion USD.

Year Vietnam's Export to Vietnam's Import from Balance of Trade

China (in billion USD) China (in billion USD) (in billion USD)

2012 13.02 28.63 -15.61

2013 13.72 36.49 -22.77

2014 14.67 43.55 -28.88

2015 16.58 49.62 -33.04

2016 21.26 45.19 -23.93

2017 35.46 58.23 -22.77

2018 41.99 64.68 -22.69

 2019 41.46 75,47 -34.01

As seen from the table above, the balance of trade (BOT) between Vietnam and China
has been negative throughout the years analysed. This indicates that Vietnam has been
importing more from China than exporting to them.

The negative BOT can be attributed to Vietnam's dependence on Chinese goods for
consumption and production, lack of diversity in its export base, and low technology capacity.

To sum up, the trade relationship between Vietnam and China has been imbalanced, as
Vietnam has been importing more than exporting to China. This has produced negative BOT,
which could affect Vietnam's economic development and growth. Vietnam could enhance its
technology capacity, upgrade its industrial structure, and promote exports to balance its trade
with China in the long term.

III. Situation about the trade between Vietnam and China before COVID - 19 pandemic
(2020 and 2021) 

As a country with a long border with China, right from the beginning of the Covid-19
epidemic (early 2020), Vietnam's epidemic prevention and control has always been at a higher
level than the recommendations of the Health Organization. World (WHO). The
implementation of a series of tough and strict measures to prevent the spread of the disease,
such as: restricting entry and exit, suspending cross-border resident exchange, isolating cities,
and restricting traffic communication in most localities of China and no customs force, delivery
and delivery at the border gates leads to the possibility of a great influence on Vietnam's
exports to China, in the immediate and most direct way. is the export of seasonal agricultural
products (such as dragon fruit, watermelon). The impact on production and export activities
depends on how long the epidemic lasts. Imports from China also tend to decrease because
production activities are stalled.
1. Trade value
As seen from the table above, in 2020, Vietnam exported goods worth 48.91
billion USD to China and imported goods worth 84.19 billion USD from China,
resulting in a total trade value of 133.1 billion USD. In 2021, Vietnam's exports and
imports to China increased respectively to 56.01 billion USD and 109.87 billion USD,
resulting in a total trade value of 165.88 billion USD.

The data shows that both the export and import values have fluctuated between
Vietnam and China, which could be attributed to the COVID-19 pandemic and the
ongoing trade disputes between the two countries. However, it is noteworthy that the
total trade value between Vietnam and China remains significant, indicating the
importance of their economic relationship.

2. Commodity structure
In both 2020 and 2021, phones were the top export commodity from Vietnam to
China, followed by computers.
The export of phones from Vietnam to China increased from 12.7 billion US
dollars in 2020 to 18.4 billion US dollars in 2021, marking a significant growth of over
44%. The export of computers also rose by around 65% during the same period, from
7.1 billion US dollars in 2020 to 11.7 billion US dollars in 2021.
Textiles, electronic equipment, and footwear were also significant export
commodities from Vietnam to China in both 2020 and 2021.
 China's major export commodities to Vietnam in 2020 and 2021 included phones,
textiles, electronic equipment, and footwear. In 2021, the export of phones from China
to Vietnam increased by 62.5% compared to 2020, while the export of textiles and
electronic equipment also showed a noticeable growth.
.

Commodity Vietnam's Vietnam's China's China's

Exports to Exports to Exports to Exports to
China 2020 China 2021 Vietnam 2020 Vietnam 2021

Phones 12.7 18.4 17.8 28.9

Computers 7.1 11.7 10.5 16.6

Textiles 3.7 4.8 31.3 40.0

Electronic 3.2 4.5 11.7 16.3

equipment

Footwear 2.3 3.0 5.1 7.0

Iron and steel 2.2 2.8 1.1 2.0

The commodity structure of exports between Vietnam and China remained relatively
stable between 2020 and 2021, with phones and computers dominating Vietnam's exports to
China, and China exporting a range of consumer goods to Vietnam.

Therefore, the main drivers of trade between Vietnam and China can be implied:

Electronic and technological products: Electronic products, such as phones and

computers, are the most traded commodity between the two countries. Both Vietnam and China
are major manufacturers of electronic and technological products, hence their strong trade
relationship in this area.

Textiles and apparel: Textiles and apparel are another significant driver of trade between
Vietnam and China. Vietnam is a major textile manufacturer, while China is a major exporter
of textiles and apparel, creating a complementary trade relationship between the two countries.
 Agriculture and food products: Agricultural and food products are also important drivers
of trade between Vietnam and China. Vietnam is a major exporter of rice, while China is a
major importer of rice, providing an essential trade opportunity. Additionally, Vietnam and
China have strong trade relationships in other agricultural products such as fruits, vegetables,
and seafood.

Machinery and equipment: Vietnam imports various types of machinery and equipment
from China, including construction machinery, industrial machinery, and transportation
equipment. The two countries have close economic ties in this sector because Vietnam is still
developing its manufacturing industry, and China has competencies in heavy machinery.

Energy: China is one of the largest importers of crude oil globally, and Vietnam is a
major exporter of crude oil. Vietnam's proximity to China and its increasing production of oil,
provides China key trade routes for crude oil.

In summary, Vietnam and China's trade relationship has multiple drivers, including
electronic and technological products, textiles and apparel, agriculture and food products,
machinery and equipment, as well as energy. These relate to the complementary economic
strengths of both countries; Vietnam has a fast-growing economy, while China is a global
manufacturing and trading powerhouse.

3. Balance of trade
Vietnam's trade deficit with China has increased during the pandemic. Vietnam's exports
to China in 2020 increased by 7.45 billion compared to 2019, and imports increased by 8.72
billion. In 2021, Vietnam's exports to China continued to increase by 14.5% compared to the
same period in 2020, and imports increased by 30.5%.
The impact of the pandemic on Vietnam-China trade can be attributed to disruptions in
global supply chains and reduced global demand. However, both countries are working to
strengthen trade ties and mitigate the impact of the pandemic. And since then, the strengths and
weaknesses of the trade relationship between the two countries have also been exploited later.

Strengths in the trade relationship between Vietnam and China include:

Complementary Economies: Vietnam and China have complementary economies, in
which Vietnam is a major exporter of products such as textiles, fish and electronics, while
China is an exporter. major exporter of machinery, electronics and textiles. This allows both
countries to specialize in specific areas and to exchange goods that benefit both countries.
Geographical proximity: Vietnam and China share a long border, making it easier for
goods to move between the two countries. This geographical proximity also helps to overcome
transportation and communication barriers, thereby promoting trade between the two countries.
Free Trade Agreements (FTAs): Vietnam and China have signed many free trade
agreements to promote trade, investment and economic cooperation. This has helped reduce
trade barriers and facilitated increased mutual investment and economic cooperation.
 Large and growing market: China is the largest electronics market in the world and
Vietnam has a growing demand for electronic goods, thus creating significant trade potential
between the two countries.

Weaknesses in the trade relationship between Vietnam and China include:

Trade imbalance: The trade balance between Vietnam and China is severely unbalanced,
China imports more than it exports to Vietnam. This is a big problem for Vietnam as it
becomes more and more dependent on Chinese imports, and thus creates a disproportionate
trading relationship.
Competition in some industries: There is fierce competition between Vietnam and
China, especially in the fields of textiles, footwear, and agriculture. This competition can lead
to disputes and tensions around trade and market access policies.
Disputes: Vietnam and China have had disputes related to political, territorial and
diplomatic issues leading to tension in trade relations between the two countries. These
disputes can lead to disruptions in commercial relations, affecting the overall stability and
predictability of commercial transactions.
Sourcing and Quality Issues: At times, Vietnam and China face problems around
sourcing raw materials or producing high-quality goods, which can lead to product quality and
reliability issues.
In summary, the trade relationship between Vietnam and China has a number of
strengths such as complementary economies and close geographical distance, but also
significant weaknesses such as trade imbalance, competition. harshness in some industries,
geopolitical disputes, sourcing and quality issues. Addressing these weaknesses requires the
two countries to work together to resolve their differences and build more stable and
sustainable economic and trade relationships.

In general, the epidemic has negatively affected the trade balance between Vietnam and
China, but both countries continue to take measures to promote trade and cooperation. When
the global economy recovers from the pandemic, it is likely that the trade balance between
Vietnam and China will improve in the near future.

IV. Export and import structure

The structure of Vietnam's exports to and imports from China, as well as China's exports
to and imports from Vietnam and the types of goods that are being traded between the two
countries.

Vietnam's Exports to China:

Vietnam's exports to China are dominated by electronic products and machinery, in

addition to agricultural products, textiles and garments, and minerals:
 Electronic products: phones, computers, and components make up a significant
proportion of Vietnam's exports to China. In 2020, phones alone accounted for 19% of
Vietnam's total exports to China, with a value of $16.1 billion.

Machinery and equipment: Vietnam exports various machinery and equipment to China,
including textiles and clothing machinery, and industrial machinery such as cranes and
excavators.

Agricultural products: Vietnam is a major exporter of agricultural products, including

seafood, vegetables, fruits, and coffee to China. In 2020, agricultural products accounted for
about 16% of Vietnam's total exports to China.

Textiles and garments: Vietnam exports both raw materials and finished goods to China,
including garments, yarns, fibers, and fabrics. This sector has seen significant growth in recent
years.

Minerals: Vietnam is also a major exporter of minerals such as coal, iron ore, and other
metals to China.

Vietnam's Imports from China:

Vietnam's imports from China are led by electronic products, machinery, and other
manufactured goods, as well as raw materials:

Electronic products: Vietnam imports a wide range of electronic products from China,
including computer peripherals, home appliances, and components such as LEDs and LCDs.

Machinery and equipment: Vietnam imports machinery and equipment from China for
various industries, including agricultural, textiles, and construction.

Organic chemicals: Vietnam imports a significant amount of organic chemicals from

China, including plastic materials, synthetic fibers, and resins.

Iron, steel, and metal products: Vietnam imports substantial amounts of metal products
from China, such as coils, plates, and sheets.

Plastics and rubber: Vietnam imports plastics and rubber materials and products from
China for various applications, including packaging and construction.

China's Exports to Vietnam:

China's exports to Vietnam are dominated by manufactured goods such as electronic

products, machinery, and textiles:
 Electronic products: phones, computer components, and accessories make up a
significant proportion of China's exports to Vietnam. In 2020, phones alone accounted for 32%
of China’s total exports to Vietnam, with a value of $20.5 billion.

Machinery and equipment: China exports various machinery and equipment to Vietnam,
including construction machinery, industrial machinery, and agricultural machinery.

Textiles and garments: China is a major manufacturer and exporter of textiles and
apparel, and this sector accounts for a significant proportion of China's exports to Vietnam.

Iron, steel, and metal products: China exports significant amounts of metal products
such as iron and steel, along with other metal-based products such as aluminum and copper to
Vietnam.

Plastics and rubber: China exports plastics and rubber materials and products to
Vietnam, including resin, plastic packaging materials, and synthetic rubber.

China's Imports from Vietnam:

China's imports from Vietnam are again dominated by raw materials and manufactured
goods, including textiles, agricultural products, and minerals:

Textiles and garments: China imports significant amounts of textiles and garments from
Vietnam, including materials like cotton yarns and fabrics.

Agriculture and seafood: China import a significant amount of agriculture products such
as rice, vegetables, fruit, and seafood from Vietnam.

Minerals: China imports minerals such as iron ore, coal, and copper concentrate from
Vietnam.

Chemicals: China imports various chemicals such as natural rubber, fertilizer, and
plastics from Vietnam.

Timber: China imports significant amounts of timber and other wood products from
Vietnam.

In summary, Vietnam's exports and imports to and from China are dominated by
electronic products, machinery, textiles, and raw materials. Meanwhile, China's exports and
imports to and from Vietnam are largely centered on manufactured goods, textiles, agricultural
products, and raw materials.
V. Impact of trade on the economy
The trade relationship between Vietnam and China has played a significant role in
shaping the economies of both countries. Here are some of the macroeconomic indicators that
reflect the economic impact of the trade relationship between Vietnam and China:

Contribution of Trade to GDP:

Trade has been a significant contributor to the GDP of both Vietnam and China, and the trade
relationship between the two countries has contributed to the growth of both economies. Here
are some key data points:

 According to the World Bank, Vietnam's GDP was $342 billion in 2020, and exports
contributed 81.6% of the country's GDP growth in 2020.
 In China, according to the General Administration of Customs, exports account for over
18% of the country's GDP in 2021.
 Vietnam and China's trade relationship contributes significantly to both countries' GDP,
with trade accounting for around 20% of Vietnam's GDP.

Employment and Labor Force Participation:

Trade between Vietnam and China has also had a significant impact on employment and the
labor force participation in both countries. Here are some key data points:

 According to the International Labor Organization (ILO), the manufacturing industry is

responsible for much of Vietnam's exports, contributing to employment growth and
reducing poverty rates in the country.
 The ILO also reports that the number of jobs in the manufacturing sector in Vietnam has
increased from 3.3 million in 2010 to 8.9 million in 2019, reflecting the growth of the
manufacturing industry in Vietnam stimulated by trade with China.
 Similarly, the manufacturing industry is a significant source of employment in China,
employing around 280 million of China's workforce, around 25% of the country's total
workforce.

Investment Flows:

Trade between Vietnam and China has also led to significant investment flows. Here are some
key data points:

 According to the United Nations Conference on Trade and Development (UNCTAD),

China was Vietnam's third-largest foreign direct investor in 2020, with a total
investment of $5.1 billion.
 China is also one of the largest foreign investors in Vietnam's textile and garment
industry, accounting for almost 40% of the industry's foreign investment, according to
the Vietnam Textile and Apparel Association.
  Vietnam has responded to China's investment interest in the country, by becoming
China's primary offshore production base, and promoting significant Chinese investment
in manufacturing and infrastructure projects.

The trade relationship between Vietnam and China has been critical to the growth and
development of both countries. Trade contributes significantly to both countries' GDPs and has
led to significant job creation, poverty reduction, and increased investment flows between the
two countries. Nevertheless, the trade relationship also poses challenges, including trade
imbalances, competition, and geopolitical issues. However, addressing these challenges can
help to promote sustainable and robust trade and economic relationships between Vietnam and
China.

VI. Trade policy

The trade policies of Vietnam and China have played a significant role in shaping the
trade relationship between the two countries. Here is an overview of the trade policies of both
nations, along with recent developments and changes that have affected the trade relationship
between Vietnam and China:

Vietnam's Trade Policies:

Vietnam has pursued an open trade policy over the past few years, with a focus on
expanding its export markets and attracting foreign investment. Here are some of the main
trade policies of Vietnam:

1. Free Trade Agreements: Vietnam has signed multiple free trade agreements (FTAs) with
various countries and trading blocs, including the EU, South Korea, Japan, and ASEAN.
These agreements have helped to open up new markets for Vietnamese products and
attract investment into the country.
2. Market-opening Reforms: Vietnam has implemented significant market-oriented
reforms in recent years, including the simplification of customs procedures, reduction of
tariffs, and the elimination of non-tariff barriers to trade. These reforms have made it
easier for foreign companies to do business in Vietnam and have stimulated economic
growth in the country.
3. ASEAN Economic Community: Vietnam is a member of the ASEAN Economic
Community, which aims to create a single market for trade and investment in Southeast
Asia. This has provided Vietnamese companies with access to a broader market and has
facilitated trade with other ASEAN member countries.

China's Trade Policies:

China has also pursued an open trade policy, with a focus on expanding its export
markets and attracting foreign investment. Here are some of the main trade policies of China:
 1. Belt and Road Initiative (BRI): China's BRI is a massive infrastructure and investment
project aimed at boosting economic ties with countries across Asia, Europe, and Africa.
The BRI has provided China with new trade routes and investment opportunities,
including in Vietnam.
2. Free Trade Agreements: China has signed multiple free trade agreements (FTAs) with
various countries and trading blocs, including ASEAN and Australia. These agreements
have helped to open up new markets for Chinese products and attract investment into the
country.
3. Market-opening Reforms: China has implemented significant market-oriented reforms
in recent years, including the simplification of customs procedures, reduction of tariffs,
and elimination of non-tariff barriers to trade. These reforms have made it easier for
foreign companies to do business in China and have stimulated economic growth in the
country.

Recent Developments and Changes:

Recent developments and changes have also affected the trade relationship between
Vietnam and China. One of the most significant changes is the ongoing trade war between the
US and China, which has led to an increase in Chinese exports to Vietnam as companies try to
avoid US tariffs. This has led to a trade imbalance between the two countries, with China
importing significantly less from Vietnam than it exports to Vietnam.

Moreover, the COVID-19 pandemic has had a significant impact on the bilateral trade
relationship. The pandemic disrupted global supply chains, leading to a decline in trade
between Vietnam and China in 2020. Additionally, China's suspension of fruit imports from
Vietnam due to COVID-19 concerns led to a significant decline in Vietnam's fruit exports to
China.

Furthermore, there have been tensions between Vietnam and China related to territorial
disputes in the South China Sea. These tensions have led to changes in trade policies, with
Vietnam reportedly seeking to reduce its reliance on Chinese imports and promote economic
development through diversification.

In conclusion, Vietnam and China have both pursued open trade policies over the past
few years, focusing on expanding their export markets and attracting foreign investment.
Recent developments and changes, including the US-China trade war, the COVID-19
pandemic, and territorial disputes, have impacted the trade relationship between the two
countries. However, Vietnam and China are expected to continue pursuing open trade policies
and strengthening their economic ties in the future.
PART 3
A. Addressing structural issues
1. Encouraging export diversification
Encouraging export diversification means promoting the expansion of Vietnamese firms'
export markets beyond China to reduce their reliance on the Chinese market. This would
make Vietnamese exports less vulnerable to fluctuations in demand from China and
reduce the impact of any changes in Chinese trade policies on Vietnam's economy.
To achieve export diversification, the Vietnamese government can provide incentives to
firms that expand their export destinations, such as tax breaks or subsidies. The
government can also work with industry associations and chambers of commerce to
provide information and resources to firms that are interested in exploring new export
markets.
One potential strategy for diversifying export markets is to focus on other fast-growing
markets in the region, such as India, Indonesia, or Thailand. These countries have large
and growing consumer markets and may offer opportunities for Vietnamese firms to sell
their products. Another strategy is to focus on markets that have a demand for specific
types of products that Vietnam is good at producing, such as high-quality seafood or
textiles.
Another approach to export diversification is to promote the development of new
industries that have export potential. This could involve identifying sectors where
Vietnam has a competitive advantage, such as renewable energy or information
technology, and providing support for the development of those industries.
Overall, encouraging export diversification is a long-term strategy that may take time to
yield results, but it could help to reduce Vietnam's reliance on the Chinese market and
increase the resilience of its economy.
2. Promoting value-added exports
Promoting value-added exports means encouraging Vietnamese firms to move up the
value chain and produce higher value-added products that can command higher prices in
the global market. This would help to increase the revenue earned from each unit of
exported goods, thus contributing to a reduction in the trade deficit.
To promote value-added exports, the Vietnamese government can provide support for
research and development activities through tax incentives or grants. This would help to
encourage firms to invest in innovation and develop new products or improve existing
ones.
 The government can also provide training and education programs to help Vietnamese
firms acquire the skills and knowledge needed to move up the value chain. This could
involve partnering with universities or vocational schools to offer specialized training
programs or apprenticeships in high-tech fields.
In addition, the government can support the development of key industries that have the
potential for high value-added production. This could involve providing infrastructure or
other forms of support to firms in sectors such as electronics, biotechnology, or
aerospace.
One potential strategy for promoting value-added exports is to focus on producing
products that are designed and branded in Vietnam. This would help to create a distinct
image for Vietnamese goods in the global market and increase their perceived value.
3. Developing domestic industries
Increasing investment in domestic production means focusing on developing the
domestic manufacturing sector and increasing the production of goods within Vietnam,
rather than relying on imports from China. This would help to reduce the country's
dependence on Chinese imports and increase the production of goods for export, thereby
reducing the trade deficit.
To increase investment in domestic production, the Vietnamese government can provide
incentives for domestic firms to invest in new manufacturing facilities or expand
existing ones. This could include tax breaks, subsidies, or low-interest loans to help
firms finance new investments.
The government can also provide support for the development of key industries that
have the potential for high domestic production. This could involve investing in
infrastructure such as roads, ports, and airports, as well as supporting the development
of the necessary supply chains and logistics networks.
Another approach to increasing investment in domestic production is to promote the
development of small and medium-sized enterprises (SMEs). SMEs are often important
drivers of domestic production, as they are typically more flexible and adaptable to
changes in market conditions than larger firms. The government can provide support for
SMEs by offering access to financing, technical assistance, and business development
services.
Overall, increasing investment in domestic production is a long-term strategy that may
require significant investments in infrastructure, support for SMEs, and other forms of
government intervention. However, it has the potential to help reduce the country's
 reliance on Chinese imports and increase the production of goods for export, thereby
contributing to a reduction in the trade deficit with China.
B. Improving trade facilitation
1. Streamlining customs procedures
Negotiating for better trade terms means seeking to renegotiate existing trade
agreements or establish new ones that are more favorable to Vietnamese firms. This
could involve negotiating lower tariffs on Vietnamese exports to China or better access
to the Chinese market for Vietnamese firms.
To negotiate for better trade terms, the Vietnamese government can engage in bilateral
or multilateral negotiations with the Chinese government or other trading partners. This
could involve seeking to renegotiate existing trade agreements, such as the ASEAN-
China Free Trade Area agreement, or pursuing new agreements that offer better terms
for Vietnamese firms.
The government can also work with industry associations and chambers of commerce to
identify the specific issues that are affecting Vietnamese firms' ability to export to China
and advocate for their interests in trade negotiations.
Another approach to negotiating for better trade terms is to promote the development of
regional value chains. This would involve working with other countries in the region to
develop production networks that span multiple countries and offer opportunities for
Vietnamese firms to participate in higher value-added activities.
Overall, negotiating for better trade terms is a strategy that requires active engagement
with trading partners and a willingness to pursue long-term objectives. While it may not
yield immediate results, it has the potential to help Vietnamese firms access new
markets and reduce the trade deficit with China over the longer term.
2. Improving transport infrastructure
Diversifying export markets means expanding the range of countries that Vietnamese
firms export to, rather than relying primarily on exports to China. This would help to
reduce the country's dependence on the Chinese market and increase the revenue earned
from exports, thereby reducing the trade deficit.
To diversify export markets, the Vietnamese government can provide support for firms
to enter new markets by offering market research, matchmaking services, and other
forms of assistance. The government can also negotiate new trade agreements with
countries that have potential for increased exports from Vietnam.
 Another approach to diversifying export markets is to promote the development of new
export industries. This could involve identifying sectors with high growth potential and
providing support for firms to develop new products or expand existing ones. For
example, the government could provide incentives for firms to invest in industries such
as renewable energy, high-tech manufacturing, or tourism.
The government can also provide support for Vietnamese firms to participate in
international trade fairs and exhibitions, as these events offer opportunities for firms to
showcase their products and make new business contacts.
Overall, diversifying export markets is a long-term strategy that requires significant
investments in market research, industry development, and government intervention.
However, it has the potential to help Vietnamese firms reduce their dependence on
exports to China and increase the revenue earned from exports, contributing to a
reduction in the trade deficit.
3. Enhancing trade promotion
Promoting the development of service exports means expanding the range of services
that Vietnamese firms offer to other countries. This would help to reduce the country's
dependence on exports of goods and increase the revenue earned from exports, thereby
reducing the trade deficit.
To promote the development of service exports, the Vietnamese government can
provide support for firms to expand their service offerings, such as by providing training
programs, consulting services, and other forms of technical assistance.
The government can also work to improve the regulatory environment for service
exports, such as by reducing barriers to entry or improving intellectual property
protection. This could involve working with other countries to establish standards for
the recognition of professional qualifications or to harmonize regulations for services
such as telecommunications or e-commerce.
Another approach to promoting the development of service exports is to promote the
development of the tourism industry. Vietnam has a rich cultural heritage and natural
beauty, which has significant potential for tourism development. The government can
provide support for the development of tourism infrastructure and attractions, as well as
promote Vietnam's image as a tourist destination through marketing campaigns and
other forms of promotion.
Overall, promoting the development of service exports is a long-term strategy that
requires significant investments in training, industry development, and government
intervention. However, it has the potential to help Vietnamese firms reduce their
 dependence on exports of goods and increase the revenue earned from exports,
contributing to a reduction in the trade deficit.
C. Addressing non-tariff barriers
1. Reducing technical barriers to trade
Promoting domestic production and reducing imports means encouraging Vietnamese
firms to produce more goods domestically, rather than relying on imports from China.
This would help to reduce the country's dependence on imported goods and increase the
revenue earned from domestic production, thereby reducing the trade deficit.
To promote domestic production, the Vietnamese government can provide support for
firms to develop new industries or expand existing ones. This could involve providing
tax incentives, subsidies, or other forms of financial support. The government can also
provide training programs, technical assistance, and other forms of support to help firms
improve their production processes and increase efficiency.
Another approach to promoting domestic production is to reduce the barriers to entry for
new firms. The government can streamline the process for starting a new business,
reduce regulatory barriers, and provide support for small and medium-sized enterprises
(SMEs) to enter new industries.
To reduce imports, the government can implement measures such as import tariffs,
quotas, or other forms of trade restrictions. These measures would increase the cost of
imported goods and encourage firms to produce more goods domestically.
Overall, promoting domestic production and reducing imports is a long-term strategy
that requires significant investments in industry development, training, and government
intervention. However, it has the potential to help Vietnamese firms reduce their
dependence on imports from China and increase the revenue earned from domestic
production, contributing to a reduction in the trade deficit.
2. Addressing sanitary and phytosanitary (SPS) measures
Promoting the development of high-value-added exports means focusing on exporting
goods that have higher profit margins and offer more value to the global market. This
would help to increase the revenue earned from exports and reduce the trade deficit.
To promote the development of high-value-added exports, the Vietnamese government
can provide support for firms to develop new products or improve the quality of existing
ones. This could involve providing funding for research and development or offering tax
incentives for firms that invest in new technology. The government can also provide
support for firms to upgrade their production processes and adopt international quality
 standards. This would help Vietnamese firms to compete with higher-quality goods
produced in other countries.
Another approach to promoting the development of high-value-added exports is to
encourage Vietnamese firms to participate in global value chains. This would involve
identifying opportunities for Vietnamese firms to provide components or services to
larger firms in other countries, thereby increasing the value of Vietnamese exports.
Overall, promoting the development of high-value-added exports is a long-term strategy
that requires significant investments in industry development, research and
development, and government intervention. However, it has the potential to help
Vietnamese firms increase the revenue earned from exports and reduce the trade deficit
with China.
3. Addressing other non-tariff barriers
Diversifying export markets means expanding the range of countries to which
Vietnamese firms export their goods, reducing dependence on any single market,
including China. This would help to reduce the country's reliance on the Chinese market
and increase revenue from other markets, thereby reducing the trade deficit.
To diversify export markets, the Vietnamese government can provide support for firms
to explore new markets, such as by organizing trade missions or providing market
research services. The government can also work to improve trade relations with other
countries, such as by negotiating trade agreements or improving diplomatic relations.
Another approach to diversifying export markets is to focus on exporting goods that are
in high demand in other markets. This could involve identifying emerging trends in
global markets and developing goods that align with those trends.
The government can also provide support for firms to adapt their production processes
to meet the requirements of other markets, such as by providing training programs or
other forms of technical assistance.
Overall, diversifying export markets is a long-term strategy that requires significant
investments in industry development, market research, and government intervention.
However, it has the potential to help Vietnamese firms reduce their reliance on the
Chinese market and increase revenue from other markets, contributing to a reduction in
the trade deficit.