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Chinese language corporations are fuelling virtually one in three new investments in Vietnam, in an indication of how they’ve relocated operations overseas to keep away from Donald Trump’s commerce battle with Beijing.
However this shift is prone to enhance Vietnam’s vulnerability to tariffs as Trump targets international locations which have racked up massive commerce surpluses with the US.
Vietnam has been one of many greatest beneficiaries of commerce tensions between the world’s two largest economies. Its surplus with the US reached a document $123.5bn final 12 months, the third-largest after China and Mexico.
A part of that has been pushed by the exports of corporations akin to Apple and Intel, which have moved manufacturing traces from China to Vietnam to unfold provide chain dangers and keep away from punitive tariffs.
However Vietnam can be more and more getting funding from Chinese language corporations, accounting for 28 per cent of recent tasks final 12 months, up from 22 per cent in 2023.
“Chinese language capital is pressured to come back to Vietnam, regardless that it isn’t low cost any extra,” stated Meir Tlebalde, chief government of Sunwah Kirin Consulting Vietnam, which advises international traders.
She stated many Chinese language shoppers had been underneath strain from consumers within the US and Europe to maneuver out of China.
Most Chinese language manufacturing investments in Vietnam had been being made to keep away from US tariffs and safe a unique “certificates of origin” for items produced by Chinese language corporations, she stated.
Nevertheless, Vietnam’s provide chain remains to be extremely reliant on China. “Not less than half of the uncooked supplies come from China,” stated Tlebalde.
Within the first month of 2025, Chinese language corporations accounted for 30 per cent of tasks, in keeping with the latest authorities information. Chinese language investments additionally got here by way of Hong Kong and Singapore, the latter of which was the highest investor in greenback phrases in Vietnam final 12 months, analysts stated.
The surge in Chinese language investments in Vietnam and its dependence on Chinese language uncooked supplies may appeal to renewed scrutiny from the Trump administration, which has accused Beijing of circumventing tariffs by sending merchandise by third international locations.
Vietnam, as with many different international locations, can be extremely uncovered to Trump’s threats of reciprocal tariffs on US buying and selling companions. He has additionally threatened to levy 25 per cent tariffs on metal imports, which may additionally hit Vietnam, the US’s fifth-biggest provider of the metallic.
Excessive tariffs would have a big effect on Vietnam’s economic system, deterring funding and placing a damper on one of many quickest progress charges on the planet. The US accounts for almost 30 per cent of Vietnam’s exports.
“There are some considerations that the US may see that [increased Chinese investment] as oblique tariff avoidance by Chinese language corporations, they usually may examine extra items coming from Vietnam,” stated Jack Nguyen, chief government of Incorp Vietnam, which advises international traders within the nation.
Most Chinese language funding in Vietnam is in meeting and low-to-mid-end manufacturing, from vehicles to photo voltaic panels. China’s strict curbs in the course of the Covid-19 pandemic additionally pushed some corporations to diversify outdoors the nation.
A small proportion of Chinese language items had been additionally relabelled “Made in Vietnam” with none value-added and rerouted to the US, consultants stated, a apply that’s unlawful.
Hanoi had already elevated due diligence on Chinese language merchandise and investments, Nguyen stated. “They’d not permit Vietnam for use as a transshipment nation to the US on the threat of the US coming down laborious on Vietnam.”
Vietnam’s Prime Minister Pham Minh Chinh acknowledged dangers to his nation, telling an viewers in Davos final month that Hanoi was creating “political and financial options” to sort out its commerce imbalance.
He added that Vietnam would buy between 50 and 100 planes from Boeing within the subsequent 10 years in addition to different high-tech US tools — and agreed to golf with Trump “all day lengthy” if wanted.
This month, commerce minister Nguyen Hong Dien stated Vietnam was prepared to extend agricultural imports from the US and that it will not impose any measures that will prohibit commerce with the US.
Vietnam may additionally need to step up strain on the rerouting of Chinese language merchandise. Hung Nguyen, a provide chain skilled on the RMIT College Vietnam, stated Hanoi may push Chinese language corporations to put money into higher-value manufacturing and tighten native content material necessities to pressure them to arrange a provide chain within the nation.
“I anticipate [Vietnam] will use technical limitations to reject some Chinese language investments,” he stated.
However Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute, stated Vietnam must “stroll a positive line” between China and the US, its two largest buying and selling companions.
“I might not count on Vietnam to overtly push again towards Chinese language funding,” stated Giang.
Further reporting by Haohsiang Ko in Hong Kong
