Background 21 Brief overview of the US-China trade war 2a Origins 2b Recent developments 42 Brief overview of Vietnam’s economic development 4a Economic development after the Vietnam War
FOREIGN TRADE UNIVERSITY REPORT THE EFFECTS OF THE US-CHINA TRADE WAR ON VIETNAM‘S ECONOMY : 05 Group Class : KTE204E(GD2-HK2-2223)61CTTTKT.1 Course : Principles of Macroeconomics Instructor : Hoang Xuan Binh (Assoc Prof., PhD.) GROUP MEMBERS Khong Manh Duc (Coordinator) 2212140022 Tran Xuan Truong 2212140081 Trinh Nhat Minh 2212140060 Nguyen Dang Quang Minh 2212140057 Le Nguyen Anh Minh 2212140055 Tran Trong Dat 2212140097 Duong Ngoc Khanh 2212140042 Nguyen Hai Anh 2211140205 Vu Dinh Huan 2213140035 Hanoi, 2023 I Introduction II Background 1) Brief overview of the US-China trade war a) Origins b) Recent developments 2) Brief overview of Vietnam’s economic development a) Economic development after the Vietnam War b) Economic development after Doi moi 3) Key industries in Vietnam 4) The importance of international trade to Vietnam’s economy III Effects of the US-China Trade War on Vietnam 1) Positive 2) Negative IV Response of Vietnam a) Avoiding the negative effects b) Gaining benefits from the trade disputes V Conclusion VI References 2 2 4 10 11 11 13 16 16 18 21 22 I Introduction The US-China trade war, which started in 2018, has had a lasting effect on the economy of the world The policies implemented by these two countries have directly impacted the global economy, especially foreign trade Vietnam, as one of the most important business partners of these two countries, is no exception As students studying economics, this subject has caught our interest and hence, we decided to conduct research on the topic of “ The effects of the US-China trade war on Vietnam's economy” which we believe will further improve our knowledge and understanding on macroeconomics For the scope of the study, our research was limited to the developments of the Us-China trade war during the 2018-2022 time period and its effect on Vietnam’s economy The study was conducted through research published papers and analysis of the Us-China trade war In the following research paper, the contents of the trade war during the 2018-2022 time period was analyzed, through which the effects of the war on Vietnam’s economy, both negative and positive effects, were examined Furthermore, the paper also studied the policies implemented by the Vietnamese government to avoid the negative effects and also gain benefits from the trade war II Background 1) Brief overview of the US-China trade war a) Origins Prior to the trade war As a businessman running for president, Trump often focused on trade practices and economic policies Trump especially focused on China both as a target and a means to forward his presidential campaigns In May 2, 2016, Trump said “Wecan’tcontinuetoallowChinato rape our country and that’s what they’re doing It’s the greatest theft in the history of the world.” (Diamond, 2016; Wong & Koty, 2022) This is one of his many statements regarding China’s trade practices throughout his campaigns for presidency (Tiezzi, 2016) In addition, Trump often stated his opinions and criticism of China on the social media Twitter even before running for president In 2011, Trump tweeted “Chinaisneitheranallyorafriend—theywantto beat us and ownourcountry” It was clear that Trump would make significant revisions of the U.S' trade relationship with China should his campaigns succeed When Trump became POTUS, he focused his rhetoric on reversing China’s domination on trade, renegotiating the US-China economic relationship, and eliminating “unfair” policies The trade war erupts From July 2018, US President Donald Trump followed through on months of threats to impose sweeping tariffs on China for its alleged unfair trade practices (Wong & Koty, 2022) A full-scale trade war between the two countries began (ISDP, 2020) The US aimed to mitigate China’s overall influence on trade, reduce bilateral trade deficit, create more jobs, reduce imports of manufactured goods, and etc (Amadeo, 2022; Huang & Slosberg, 2023) In response, China has made many retaliations in trade policies, such as imposing a 25 percent tariff on 545 American goods (ISDP, 2020) b) Recent developments The US accuses China of unfair trade practices that may affect the global order (Paszak, 2021) In January 2020, the two sides signed a phase one trade deal that expired in December 2021 with China failing to meet its targets for US imports The trade war has not significantly improved under the Biden administration (Mullen, 2022) Under Biden’s administration: President Biden has taken a different approach to the trade war than his predecessor He has focused on working with allies to put pressure on China instead of imposing tariffs In November 2021, President Biden and President Xi Jinping of China held a virtual summit where they agreed to work together on issues such as climate change and the COVID-19 pandemic However, the trade war between the US and China is still ongoing and there are no signs of it ending soon (Morollo, 2021) 2) Brief overview of Vietnam’s economic development (1975-Present) a) Economic development after the Vietnam War 1975: After the war, Vietnam’s economy was one of the poorest in the world (U.S Library of Congress, 1987) Vietnam’s annual GDP in 1975 was only billion dollars (countryeconomy.com, n.d.), which amounted to approximately 0.23% of US’ GDP ($1.6 trillion) (countryeconomy.com, n.d.) and 2.38% of China’s ($163 billion) (countryeconomy.com, n.d.) Worse, Vietnam saw a GDP per capita of $83 (countryeconomy.com, n.d.) For reference, Cambodia’s GDP per capita during 1975 was $107 (countryeconomy.com, n.d.) 1981-1985: Vietnamese government launched Five-Year Plans in agriculture and industry focusing on post-war recovery and building a socialist nation Family economy and collective economy were encouraged while capitalist economy was restrained Foreign trade and assistance depended mainly on the Soviet Union and its socialist allies (Ta & Ta, 1978) => The economy did not experience any significant growth yet saw alarming stagnation By the mid-1980s, per capita GDP was stuck between $200 and $300 (Vanham, 2018) Furthermore, the economy remained dominated by small-scale production Lack of innovation and technologies also meant inefficient production and thus worsened the conditions of Vietnam’s post-war economy (Cima, 1989) 1986: Prior to Doi Moi, this year marked the peak of hyperinflation within our economy: a staggering annual rate of inflation of over 700% In addition, exports were not even a half of imports, and there was no foreign direct investment (FDI) (Van Arkadie & Mallon, 2004) Changes and reforms were obligatory to ensure Vietnam’s successful emergence from an economically catastrophic war The government thus launched a political and economical renewal campaign called “Đổi mới” to gradually shift a command economy into a “socialist-oriented market economy” (Beresford, 1988) b) Economic development after Doi moi Economic reforms since the launch of Đổi Mới in 1986, coupled with beneficial global trends, have helped transform Vietnam from being one of the world’s poorest nations to a middle-income economy Between Document continues below Discover more from: Macroeconomics Trường Đại học Ngoại… 570 documents Go to course Đề thi cuối kì KTVM Macroeconomics 100% (30) Bai kinh t vi mo - 25 tập kinh tế vi mô Macroeconomics 97% (32) Đề Kinh tế vĩ mô - ngày thi 21/11/2021 Macroeconomics 61 100% (9) Macroeconomics Note Lecture notes Macroeconomics 100% (7) Ly thuyet macroeconomics 36 Macroeconomics 100% (7) 900 câu trắc nghiệm vĩ mô1 184 Macroeconomics 100% (6) 2002 and 2021, GDP per capita increased 3.6 times, reaching almost US$3,700 Poverty rates (US$3.65/day, 2017 PPP) declined from 14 in 2010 to 3.8 percent in 2020 Thanks to its solid foundations, the economy has proven resilient through different crises GDP growth is projected to ease to 6.3 percent in 2023, down from 8% in 2022, due to the moderation of domestic demand and exports (The World Bank, 2023) Vietnam's economic growth is expected to rebound to 6.5 percent in 2024 as domestic inflation could subside from 2024 onward This will be further supported by the accelerating recovery of its main export markets (U.S., Eurozone, and China) Growing at 2.5 to 3.5 percent per year over the past three decades, the agriculture sector has supported economic growth and ensured food security It contributed 14 percent of GDP and 38 percent of employment in 2020 while earning more than US$48 billion in export revenues in 2021 during the peak of the COVID-19 pandemic Health outcomes have improved along with rising living standards Infant mortality rates fell from 32.6 per 1,000 live births in 1993 to 16.7 in 2020 Life expectancy rose from 70.5 to 75.5 years between 1990 and 2020 Vietnam’s universal health coverage index is at 73—higher than regional and global averages—with 87 percent of the population covered by the national health insurance scheme Vietnam’s average duration of (learning-adjusted) schooling is 10.2 years, second only to Singapore among the Association of Southeast Asian Nations countries Its human capital index is 0.69 out of a maximum of one, the highest among lower middle-income economies Access to infrastructure services has increased dramatically As of 2019, 99.4 percent of the population used electricity as their main source of lighting, up from just 14 percent in 1993 Access to clean water in rural areas has also improved—up from 17 percent in 1993 to 51 percent in 2020 Vietnam has grown bolder in its development aspirations, aiming to become a high-income country by 2045 To achieve this goal, the economy would have to grow at an annual average rate of 5.9% per capita for the next 25 years Vietnam also aims to grow in a greener, more inclusive way, and has committed to reducing methane emissions by 30 percent and halting deforestation by 2030 while achieving net zero carbon emissions by 2050 Vietnam: Gross domestic product (GDP) per capita in current prices from 1987 to 2027* (in U.S dollars) (O'Neill, 2023) 3) Key industries in Vietnam In 2022, the agriculture, forestry, and fishery sector accounted for 11.88%; industry and construction accounted for 38.26%; the service sector accounted for 41.33%; product tax minus product subsidies accounted for 8.53%(General Statistics Office of Vietnam, 2023) According to the General Statistics Office of Vietnam, in 2022, the agriculture, forestry, and fishery sectors continue to be the foundations of Vietnam’s economy With agriculture rising up by 2.88%, contributing