Chinese President Xi Jinping Visits Hanoi to Talk Trade and Investment

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The leader of Vietnam’s northern neighbor has been in Hanoi for two days to discuss a range of issues including trade and investment. In this article, Vietnam Briefing provides an overview of what trade looks like between these two countries.


The President of the People’s Republic of China, Xi Jinping, arrived in Hanoi yesterday for the first time in six years. His visit is part of ongoing moves to shore up the relationship between the two countries in issues of trade, investment, and security, among many others. Of note, Vietnamese state media reported that a total of 36 agreements have been signed. This includes:
  • Four relate to politics and foreign affairs;
  • Four relate to security and defense, crime prevention, maritime cooperation and the judiciary;
  • Four relate to cooperation between localities in the two countries; and
  • A further 24 documents related to cooperation between the two governments.
Local media has also reported that in a meeting with Vietnamese Party General Secretary Nguyen Phu Trong, the two leaders agreed to bolster security and defense cooperation as well as to boost cooperation in trade and investment.

Vietnam Briefing looks at the current state of trade and investment between these two Asian manufacturing powerhouses.

Trade relations between Vietnam and China

Vietnam and China engage in a huge amount of bilateral trade, which is governed by two key agreements. These are:
  1. The ASEAN – China Free Trade Agreement (ACFTA)
Signed in 2003, the ACFTA governs trade between China and the 10 Southeast Asian nations that make up the Association of Southeast Asian Nations (ASEAN).
  1. The Regional Comprehensive Economic Partnership (RCEP)
The RCEP agreement officially came into force on January 1, 2022, for Vietnam. This regional agreement promises to build on already existing agreements between its members to further enhance trade in Asia and Oceania. Countries party to the agreement are Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.

Chinese FDI in Vietnam

As of the end of 2022, China was the second biggest source of foreign direct investment (FDI) in Vietnam with 3,567 registered projects since Vietnam started keeping records, worth US$23.5 billion, and spread across multiple sectors.

Innovation Precision

China’s Innovation Precision has plans to in central Vietnam’s Nghe An province. The plant will have the capacity to produce 100,000 tonnes of aluminum annually and to create 1,500 high-skilled jobs. Nghe An is a popular investment destination, with the Dong Nam Economic Zone and the WHA Industrial Zone- being two well-established manufacturing centers here.

Luxshare-ICT

Chinese firm Luxshare-ICT is set to expand its operations in Vietnam’s . This will bring its investment in Vietnam to US$504 million. Luxshare-ICT makes cables for various electronic devices.

Sunny Optical

China’s Sunny Optical is reportedly considering an investment of US$2.5 billion in the . While specific details about the lines of production in Vietnam have not been disclosed, the company manufactures a variety of optical goods, including lenses, camera components, and headlights, to name just a few.

China’s exports to Vietnam

In 2022, China exported nearly US$90 billion worth of goods to Vietnam. This reflects increasing integration in supply chains between the two countries. It is common for parts of different products to be made in China but shipped to Vietnam to be assembled. Notably, computers, electrical products, spare-parts, and components thereof were Vietnam’s biggest imports from China in 2022.

China exports to Vietnam, 2022

Description Value (US$)
Computers, electrical products, spare-parts, and components thereof 18,854,754,636
Machine, equipment, tools and instruments 18,090,627,737
Fabrics 6,810,922,811
Telephones, mobile phones and parts thereof 5,924,826,793
Other products 4,644,555,593
Iron and steel 4,444,373,983
Plastic products 3,293,838,540
Chemical products 2,805,943,185
Iron and steel products 2,769,097,883
Textile, leather and footwear materials and accessories thereof 2,537,948,238
Chemicals 2,395,885,065
Other base metals 1,894,677,090
Plastics 1,778,780,505
Other base metal products 1,347,854,014
Insulated wires and cables 1,221,730,028
Yarn 1,090,736,967
Glass and glassware 912,236,944
Still image, video cameras and parts thereof 820,062,468
Parts and accessories of motor vehicles 759,861,424
Petroleum products 737,470,989
Fruits and vegetables 639,583,170
Wood and wooden products 606,227,137
Electric consumer products and parts thereof 576,285,489
Paper 539,598,795
Fertilizers 520,852,629
Paper products 439,314,802
Insecticides, rodenticides and materials 336,483,421
Motor vehicles 318,603,345
Rubber products 314,779,947
Pharmaceutical materials 247,637,888
Animal fodders and animal fodder materials 229,068,842
Rubber 218,902,764
Fishery products 176,992,105
Liquefied petroleum gas (LPG) 162,571,083
Other petroleum products 155,026,774
Other means of transportation, parts and auxiliaries 138,616,148
Ores and other minerals product 123,294,951
Other edible food preparations 101,829,101
Pastrycooks, sweets and cereal products 90,596,725
Essential oils and resinoids; perfumery, cosmetic 84,417,115
Coal 78,137,866
Pharmaceutical products 33,256,452
Tobacco materials 30,761,814
Precious stones, precious metal and articles 26,000,144
Animal, vegetable fats and oils 13,115,650
Cotton 315,134
Total

89,338,454,185

Source: Vietnam General Department of Customs

Vietnam’s exports to China

In 2022, Vietnam exported goods totaling nearly US$49.6 billion to China, resulting in a trade deficit of US$50.4 billion with its northern neighbor. This trade imbalance aligns with the nature of integrated supply chains, wherein Vietnam primarily plays a role in the assembly and testing of products, while the advanced manufacturing is carried out in China.

Vietnam exports to China, 2022

Description Value (US$)
Telephones, mobile phones and parts thereof 13,154,563,852
Computers, electrical products, spare-parts and components thereof 11,008,926,570
Still image, video cameras and parts thereof 3,312,375,229
Fruits and vegetables 3,185,168,521
Machine, equipment, tools and instruments 2,518,368,412
Yarn 1,932,106,890
Rubber 1,681,828,152
Footwear 1,516,893,612
Wood and wooden products 1,410,027,976
Other products 1,368,657,235
Fishery products 1,144,356,516
Manioc and manioc products 929,571,606
Textiles and garments 899,266,120
Insulated wires and cables 727,454,079
Cashew nuts 522,321,255
Rice 510,630,318
Animal fodders and animal fodder materials 496,284,925
Other base metals and other base metal products 424,902,224
Paper and paper products 398,061,792
Chemicals 362,088,565
Chemical products 354,539,720
Other means of transportation, parts and components thereof 334,286,729
Plastics 244,014,166
Textile, leather and footwear materials, and accessories thereof 165,124,254
Plastic products 145,618,288
Petroleum products 144,676,788
Handbags, purses, suit-cases, headgear and accessories 120,416,342
Coffee 112,971,525
Toys and sports requisites; parts and accessories 105,079,241
Rubber products 60,486,940
Pastrycooks, sweets and cereals products 57,515,430
Iron and steel products 50,665,245
Ores and other minerals product 50,444,367
Clinker and cement 30,641,980
Crude oil 24,537,562
Tire cord fabrics and other fabrics for technical 17,089,621
Glass and glassware 15,893,773
Ceramic products 15,074,546
Furniture of other materials, other than of wood 9,952,062
Tea 7,626,380
Iron and steel 7,233,372
Bamboo and rattan products 6,096,601
Coal 230,815
Total

49,584,069,601

Source: Vietnam General Department of Customs

Future trade between China and Vietnam

Xi Jinping’s visit to Hanoi is in line with the close political and economic ties shared between China and Vietnam. These two nations and their economies are becoming increasingly integrated with huge volumes of trade crossing their border every day. Furthermore, as firms seek to mitigate supply chain risks by diversifying out of China, cross-border investment is becoming more common. That said, effectively managing the reworking of supply chains to ensure they are as efficient as possible and produce real value for a company takes a thorough understanding of both the Vietnam and China markets. Firms looking to make the shift should contact the experts at , which has offices throughout both China and Vietnam and over a decade of experience in both markets.

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