China is Vietnam’s biggest trading partner. However, the two countries are competitors in international trade. Now, Vietnam is taking steps to deal with China’s surprise decision to devalue its currency. Vietnam is also making an effort to increase its exports in a very competitive part of the world.
In August, the value of China’s money fell by 3.5 percent against other currencies in foreign exchange markets. In recent months, the value of the Japanese yen, the Korean won and other Asian currencies also fell. That made exports from those countries less costly.
Vietnam let the value of its currency, the dong, go down two times earlier this year. The idea was to gain more foreign investment in the country.
Manufacturing is an important part of Vietnam’s economy. In fact, the manufacturing sector grew by nearly nine percent last year. However, Vietnam faces strong competition from its trading partners. Vietnam also could face a flood of Chinese imports as China seeks new markets for its goods. The reason for those imports: slowing demand for goods in China.
Pham Luu Hung is with SSI Research in Hanoi. He says low taxes and problems in China are resulting in more shipments of Chinese trucks and steel to Vietnam
“We share a border with China, so we import a lot from China, so if the economy is slowing down, I think cheap Chinese products would be easier to come in to flood the market here.”