Vietnam-China Bilateral Trade Crosses US$100 Billion Mark in H1 2024

In the first half of 2024, bilateral trade between Vietnam and China approached the US$100 billion mark, with Vietnam exporting US$27.8 billion worth of goods to China, a 5.3 percent increase from the previous year.

Imports from China reached US$67 billion, resulting in a trade deficit of US$39.2 billion for Vietnam, a 67.9 percent increase. Despite global economic challenges, trade between the two countries is recovering well.

Trade

China has emerged as a significant trading partner and investor for Vietnam, with China becoming one of Vietnam’s top investors over the past five years. In the first half of 2024, Vietnam exported US$1.2 billion worth of durians to China, marking a 46 percent increase from the previous year. Fresh durian and coconut exports are expected to surge further due to new trade protocols signed between the two countries.

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China is Vietnam’s largest trading partner and second-largest export market after the U.S., with trade between the two nations growing from US$20.8 billion in 2008 to nearly US$172 billion in 2023. By mid-2024, trade had already surpassed US$112 billion. Key Vietnamese exports to China include electronics, agricultural products, and footwear, while imports from China consist of machinery, chemicals, and construction materials.

Vietnam-China bilateral trade figures: H1 2024 and 2023

In June 2024, Vietnam imported US$11.57 billion worth of goods from China, marking a 34.53 percent increase from June 2023. Over the first six months of the year, imports from China totaled US$66.73 billion, representing a 34.1 percent increase (nearly US$17 billion more) compared to the same period last year. China accounted for 37.3 percent of Vietnam’s total import turnover. Key imports included electronic components, machinery, textiles, and consumer goods, with imports of computers and electronic products alone reaching nearly US$16 billion.

Vietnam’s exports to China during the same period amounted to US$27.8 billion, a modest 5.3 percent increase. Major exports included electronics, phones, machinery, and wood products. Due to the higher growth in imports compared to exports, Vietnam’s trade deficit with China widened significantly, reaching nearly US$39 billion by the end of June, up from US$23.36 billion in the same period last year. Bilateral trade is expected to reach above US$200 billion in 2024, following significant progress in the first half of the year. The sum might reach US$190 billion if H1 growth trends spillover into the next months; in fact, it could even exceed US$200 billion if the rebound is stronger.

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In 2023, Vietnam had 12 export item groups to China exceeding US$1 billion each, with phones and components leading at US$16.87 billion, followed by computers and electronic products at US$13 billion. These items contributed significantly to Vietnam’s total export turnover to China, which was over US$62 billion, and the overall bilateral trade, which nearly reached US$172 billion.

Vietnam exported around US$2.2 billion worth of durians in 2023, with US$2.1 billion (nearly 500,000 tonnes) going to China. The growth in exports to China is expected to continue throughout 2024, supported by the potential inclusion of more agricultural products like fresh coconuts, frozen vegetables, and citrus fruits in the Chinese market. Currently, Vietnam exports 14 agricultural products to China.

FDI

In the first seven months of 2024, China led all countries in terms of the number of new foreign direct investment (FDI) projects in Vietnam, accounting for 29.7 percent of the total.

Chinese FDI in Vietnam has increasingly shifted from traditional sectors like manufacturing and food processing to high-tech industries, including electronics, automobiles, and green energy. Notably, Beijing Oriental Electronics Group (BOE) invested US$277.5 million in a smart terminal factory in Ba Ria-Vung Tau, set to be operational by 2026 and Chery’s US$800 million auto plant.

Guidance for trade and commercial enterprises and regional investors

1. Trade optimization strategies: Businesses in Vietnam should leverage new trade agreements and the growing demand from China, especially in the agricultural sector. Companies should focus on enhancing product quality and adhering to international standards to maximize export opportunities.
2. Investment diversification: Vietnamese enterprises should explore partnerships with Chinese investors in high-tech sectors like electronics and renewable energy. These collaborations can offer access to advanced technologies and capital, boosting local industry capabilities.
3. Sustainable growth planning: Companies should align their growth strategies with the long-term economic partnership between Vietnam and China. Focusing on industries that are likely to benefit from continuous investment, such as renewable energy and electric vehicles, can ensure sustainable growth in a changing global economy.
4. Market intelligence and FDI opportunities: Businesses and investors should stay informed about shifts in Chinese FDI trends and seek opportunities in emerging high-tech sectors in Vietnam. Understanding China’s strategic investment priorities can help Vietnamese businesses position themselves as attractive partners.

Conclusion

The economic relationship between Vietnam and China has strengthened, leading to significant growth in bilateral trade and FDI. Despite global economic challenges, trade between the two countries remains robust, with expectations that bilateral trade may exceed US$200 billion by the end of 2024. However, Vietnam’s trade deficit with China has widened due to stronger import growth, particularly in electronic components, machinery, and consumer goods. On the export front, Vietnam’s agricultural products, notably durians, are in increasing demand in China, supported by new trade agreements that enhance export opportunities.

Chinese FDI into Vietnam is increasingly directed towards high-tech industries such as electronics, renewable energy, and electric vehicles, reflecting China’s strategic investment focus and solidifying its position as one of Vietnam’s leading investors. The relationship between the two nations is marked by mutual economic benefits, with growing trade and investment ties paving the way for sustained long-term growth. As both countries navigate the shifting global economic environment, their partnership and strategic investments indicate a promising future.

(With inputs from Melissa Cyrill.)

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