(Tiểu luận) international economics group 8 topic vietnam and china

ECONOMICS AND FINANCE

INTERNATIONAL ECONOMICS

Group 8

Topic: Vietnam and China

Lecture: Tran Minh Nhan

Members:

Bui Thi Thuy Trang – 205014110

Nguyen Dang Huyen Nhi – 205017323

Nguyen Le Kim Oanh – 205013419

Tran Ngoc Tram Quyen – 205043243

Ho Chi Minh City – 12/ 2022

Table of Contents

I INTRODUCTION 4

II MAIN PART 4

Question 1 What are bilateral relations? How is the bilateral relationship between Vietnam and China? 4

1 What are bilateral relations? 4

2 How is the bilateral relationship between Vietnam and China? 5

Question 2 What opportunities and challenges for Vietnam in economic and trade relations with China? 11

1 Opportunities for Vietnam in economic and trade relations with China 11

2 Challenges for Vietnam in economic and trade relations with China 12

Question 3 How does the Zero-covid policy affect the economy of Vietnam and China? 13

1 China's Zero-covid policy impacts the domestic economy 13

2 China's zero-covid policy affects the Vietnamese economy 23

III CONCLUSION 32

IV REFERENCES 33

Table of Figure Figure 1 Vietnam's trade turn over to and from China (2012 - 2022) 6

Figure 2 The main products that the two countries import and export 7

Figure 3 Vietnam is an attractive investment destination for Chinese businesses 8

Figure 4 The amount of Covid-19 vaccine China provided to Vietnam 9

Figure 5 Statistics on the number of international students between the two countries 10

Figure 6 Statistics on the number of international students between the two countries 10

Figure 7 Beautiful scenery in Sanya - China 14

Figure 8 Beautiful scenery in Sanya - China 15

Figure 9 Job seekers line up to attend a job fair in Shanghai 18

Figure 10 Vietnam's garment and footwear industry 26

Figure 11 Foxcom factory in Bac Giang 31

Figure 12 Xiaomi factory in Thai Nguyen 32

Table of Table Table of Table Table 1 China's inflation index from 1-11, 2022 16

Table 2 China's unemployment rate from 1/2020 to 10/2022 17

Table 3 China's retail sales from 1/2020 to 11/2022 18

Table 4 China exports by countries in U.S dollars in 2021 20

Table 5 Values of China's exports by country in US dollars in 2021 20

Table 6 China’s exported from 1/2020 to 11/2022 21

Table 7 China's imported from 1/2020 to 11/2022 22

Table 8 Foreign investment in China from 11/2021 to 10/2022 22

Table 9 Import and export turnover of goods in the first 4 months of 2022 Vietnam (billion USD) 23

Table 10 The proportion of some main imported products from China in 2021 24

Table 11 The proportion of some main export products of China in 2021 25

Table 12 Export of vegetables and fruits of Vietnam over the months of 2020-2022 (million USD) 28

Table 13 Seafood export turnover to China from 2021 to March 2022 29

Vietnam and China Group 8

I INTRODUCTION

Vietnam and China normalized relations in November 1991, and since then, trade and investment between the two countries have been restored rapidly and are growing Vietnam - China relations maintain a stable and positive trend The two sides signed a Declaration of comprehensive cooperation in many fields, bringing bilateral relations to a new height As a neighboring country, China has always influenced Vietnam's economy in each period to different degrees The evolution of the relationship although there are ups and downs, the economic relations are sustainable, stemming from historical reasons and actual needs

II MAIN PART

QUESTION 1 WHAT ARE BILATERAL RELATIONS? HOW IS THE BILATERAL RELATIONSHIP BETWEEN VIETNAM AND CHINA?

1 What are bilateral relations?

Bilateral relations are political, economic, or cultural relations between two sovereign states

When countries recognize each other as sovereign states and agree to diplomatic relations, they create a bilateral relationship Countries with bilateral relations will exchange diplomatic agents, such as ambassadors, to facilitate dialogue and cooperation

Economic agreements, such as a free trade agreement (FTA) or foreign direct investment (FDI), signed by two countries are excellent examples of a bilateral relationship

Most economic agreements are signed according to the specific characteristics of countries to give preference to each other, not on a general principle Thus, through bilateralism, states can obtain appropriate agreements and obligations for the country itself

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Furthermore, if an influential state wants to control small states from a liberalist perspective, building a series of bilateral agreements with small states can increase that state's influence

2 How is the bilateral relationship between Vietnam and China?

Essential milestones in bilateral political cooperation between Vietnam and China

• 1950: Establish diplomatic relations • 1991: Normalization of relations with China • 1999: Sign the Land Border Treaty

• 2000: Sign the Agreement on Delimitation and Agreement on Fishery

Cooperation in the Gulf of Tonkin

• 2008:

o Establish Comprehensive Strategic Cooperative Partnership based on the 16 golden words motto "neighbor of friendship, comprehensive cooperation, long-term stability, looking ahead" (1999); and 4 good relationships “good comrades, good friends, good neighbors, good partners” (2005)

→ This is the highest level of cooperation and has the most profound implications for Vietnam's relations with countries worldwide (China was the first to establish this level of cooperation with Vietnam)

o Complete border demarcation and landmark planting on land

• 2009: Sign 3 documents on land border management

• 2011: Sign the agreement on basic principles guiding the settlement of

sea-related issues

• 2017: Sign the memorandum on promoting the connection between the “Two

Corridors, One Belt” framework and the “Belt and Road” initiative

è These are important events of historical significance and the premise for building a loyal Vietnam-China border of peace, stability, and development,

contributing to strengthening the friendship and cooperation between the two countries

Regarding the disagreements and different perceptions related to the disputes in the East Sea, the senior leaders of the two parties and the two countries have repeatedly negotiated to reach many important common perceptions on controlling disagreements and maintaining peace and stability in the East Sea

The two parties and states exchange and maintain high-level contacts in various flexible forms regularly to provide critical orientations to promote bilateral relations stable, healthy, and sustainable development Cooperation and exchange through Party channels, diplomacy, defense, police, and border localities of the two countries make a vital contribution to enhancing political trust between the two countries

Vietnam and China cooperate bilaterally in many other fields Commercial field

• Since 2004, China has become Vietnam's largest trading partner

• China is the largest import market and Vietnam's second largest export market -• Vietnam is China's largest trading partner in ASEAN, the 7th largest trading partner, the 5th largest export market, and the 9th largest import market of China in the world

Figure 1 Vietnam's trade tủn over to and from China (2012 - 2022)

According to the General Department of Vietnam Customs statistics, in the first nine months of 2022, Vietnam - China's import and export turnover reached 132.38 billion USD, up 10.21% over the same period in 2021 The scale and growth rate of imports are more significant than exports, creating a trade deficit of nearly 50 billion USD in Vietnam from China

Figure The main products that the two countries import and export 2

Items commonly exported to China include agricultural products, Fisheries, Wood and wood products, Electronic components, Fiber, and textile fibers

Both countries import and export: Phones and components, Computers and components, Machines and spare parts

In the past six months, China has been the most significant market supplying raw materials for the textile and garment industry to Vietnam, accounting for 53%, with a turnover of 7.76 billion USD, up 11 7% over the same period in 2021

Computers, new electronic products, and components are the goods with the most significant import value in the past six months, with 12.5 billion USD, up 29.3% (compared to 2021) Import of other machinery, equipment, tools, and spare parts reached 11.9 billion USD

Investment field

Figure 3 Vietnam is an attractive investment destination for Chinese businesses

According to data from the Foreign Investment Department (Ministry of Planning and Investment) By the end of August 2022, China is the 6th largest investor in Vietnam, with a total capital of up to 22.42 billion USD, with about 3453 projects

Chinese investment projects are present in most of Vietnam's provinces and cities, mainly in border provinces with border-gate economic zones, coastal areas, and urban centers that attract a large population and labor force, good infrastructure, and are convenient for importing and exporting goods and traveling between Vietnam and China

In addition, Chinese investors also poured capital into joint ventures and contributed money or technology and machinery in enterprises in Vietnam in all fields China's capital flows into many areas, such as textiles, footwear, yarn, thermal power, and mining…

Moreover, Long-term preferential credits and grants from the Chinese Government to Vietnam also contribute to the socioeconomic development of many Vietnamese localities

Cooperation against the Covid-19 epidemic

Figure 4 The amount of Covid-19 vaccine China provided to Vietnam

Since the new epidemic broke out in China and several other countries, the Party and the State of Vietnam have donated goods and medical supplies worth 0.5 million USD to China; The Vietnam Red Cross Society also mobilized 100,000 USD in aid, calling on seven northern border provinces to help the Chinese people (January 2020)

During the fight against the Covid-19 epidemic, China provided Vietnam with about 17.3 million USD doses of the Covid 19 vaccine In addition, Vietnam also -imported 45 million USD doses of vaccine from China Not only that, China supports Vietnam with 3 million USD to purchase medical equipment and supplies to cope with Covid-19 (December 12, 2021) China is one of the countries that provide the most vaccines, effectively contributing to the prevention, control, and control of the epidemic in Vietnam

The two countries continue to cooperate and exchange measures to prevent Covid-19, discuss ensuring the maintenance of trade and economic cooperation activities and facilitate customs clearance procedures for Vietnamese goods

Cooperation in education, culture, and tourism

Figure 5 Statistics on the number of international students between the two countries

The education sectors of the two countries signed many documents and agreements to develop the two countries education The content of cooperation agreements includes: "exchange of delegations, exchange of teachers, exchange of international students, cooperation in scientific research, organization of academic activities, encouragement of direct collaboration between educational research institutions and schools of the two countries

Figure 6 Statistics on the number of international students between the two countries

In terms of tourism, China is an essential source of visitors to Vietnam, leading for many years in the number of visitors to Vietnam (accounting for one-third of the number of tourists) The growth rate of visitors is always at a high level

Vietnamese tourists are also increasingly choosing China as their travel destination

Due to the Covid-19 epidemic, from February 2020 to now, tourism cooperation between the two countries has been temporarily interrupted

QUESTION 2 WHAT OPPORTUNITIES AND CHALLENGES FOR VIETNAM IN ECONOMIC AND TRADE RELATIONS WITH CHINA?

1 Opportunities for Vietnam in economic and trade relations with China

In economic and trade relations, Vietnam and China are partners, customers - and competitors

• Vietnam is a neighboring country, sharing a border with China

• Some vital traffic routes, roads, and railways in the border area of the two countries continue to be renovated and built

→ Create favorable conditions for the transportation and exchange of goods between the two countries

• Vietnam-China trade activities can be conducted in many ways, such as official quotas, cross border trade, temporary import- - -re export, transit, border-gate transit, and goods exchange between border residents

• As early as November 2002, the leaders of ASEAN countries, including Vietnam and China, signed the "China - ASEAN Comprehensive Economic Cooperation Framework Agreement"

→ This will be an opportunity for many Vietnamese products to boost exports to China

• Natural rubber, coffee, tea, pepper, cashew, agricultural products, wire and cable, footwear, seafood, textiles, wood, plastic, vegetable and animal oils, cassava chips, starch, cakes, candy, and cereal products…

• Establish a 10 billion USD worth of investment and credit support funds for ASEAN countries to support countries in the region to cope with the global financial crisis or future economic difficulties

• The two countries' governments regularly meet, exchange, adjust and supplement the content of agreements in the fields of economic and trade cooperation to improve economic cooperation and trade exchange between the two countries

2 Challenges for Vietnam in economic and trade relations with China

Trade deficit

• A trade deficit is an unfavorable trade balance, a deficiency in the proportion of trade that occurs when the value of a country's real exports (i.e., exports of goods) is less than the value of its imports Its tangibles Such a trade deficit may not be a direct concern if it is offset by a surplus generated somewhere in the balance of payments

• China is the 2nd largest economy in the world by GDP- the market VN imports largest

• In the past 4 months, machinery, equipment, and spare parts were imported the most, with a turnover of 7.45 billion USD, an increase of nearly 3 billion USD compared to the previous year The second place is computers and components, with a turnover of more than 6.3 billion USD, an increase of nearly 3 billion USD • Vietnam's exports to China still have many difficulties At the end of 2021, the congestion in customs clearance of goods in the border area caused damage to people and businesses

• Border trade activities are unstable and unfavorable because smuggling, counterfeit goods, and poor quality- goods are still quite common throughout the border

Development Level

• China owns many big technology companies (Chinese tablet and smartphone manufacturing company…)

• China is increasingly far from Vietnam in terms of the development roadmap This can be reflected in the technological capacity of Chinese enterprises in terms of quantity and types of high-tech goods of Chinese origin consumed on the world market

AFFECT THE ECONOMY OF VIETNAM AND CHINA?

The first cluster of pneumonia patients was detected at the end of December 2019 in Wuhan, Hubei province, and a public notice of the outbreak was issued on December 31, 2019

On January 23, 2020, the Chinese government banned travel to and out of Wuhan and began implementing strict lockdown measures in Wuhan and other cities across China The policy Zero-Covid has put nearly 400 million people in 45 cities in China under partial or total lockdown In cities across China, major roads are mostly empty Businesses are closed and delivery drivers are overloaded with bags of food and items On the street, there are only silhouettes of workers spraying disinfectant

China's strict COVID-19 measures to limit outbreaks caused by omicrons, especially in financial hub Shanghai, have taken a toll on the world's second-largest economy

Over the past six months in China, mass inspections, curfews, travel restrictions, and quarantine measures have affected economic activities and social life due to the epidemic in cities, and major cities such as Shanghai, Beijing, and Tan Tan, which were densely populated

It remains unclear how China will adjust its combat strategy over time, while other countries have largely normalized

1 China's Zero-Covid policy impacts the domestic economy

Reality

A COVID-19 vaccine has been developed and distributed However, China still controls the epidemic situation strictly to reduce the mortality rate radically, and the successes they have achieved are impressive Although the World Health Organization declared that the pandemic was ending, China maintained its strict Zero-COVID This containment strategy has saved many lives but has also slowed the country's economy, exacerbated supply chain disruptions, and left millions in lockdown for months

Tourism

The beach resorts in Sanya, on the island of Hainan, known as the Hawaii of China, welcome many Chinese tourists every summer However, tens of thousands of tourists were confined to hotel rooms over the weekend when Chinese officials unexpectedly shut down the entire city due to an outbreak of the virus sub variant -BA.5 Omicron It has affected tourists and more than a million local residents It is the closest example of China's imperfectly implemented Zero-COVID policy, severely damaging its economy and clouding its future

Figure 7 Beautiful scenery in Sanya China-

Figure 8 Beautiful scenery in Sanya - China

The Chinese leadership modified the lockdown strategy somewhat, but only on the sidelines During the outbreak, local governments in China have continued to enforce rigid movement restrictions Zero-COVID increases social and financial costs, exacerbate the economy's overall uncertainty and hurts investment and consumption

Road and rail freight in China are down 36% (according to supply chain analytics firm FourKites) At a time when the world's air travel is improving, air traffic in and out of China is virtually empty The number of people moving across the border has also decreased significantly Thousands of international students studying at Chinese institutions have been barred from entering for more than two years because they could not obtain Chinese visas

China is becoming less competitive and less attractive to foreign companies and foreign and international students who are isolated during the COVID-19 pandemic It could accelerate China's separation from the rest of the world

Inflation

The Chinese economy has been in its worst shape since early 2020 after barely expanding in the second quarter of 2022 from the same quarter in 2021

Table 1 China's inflation index from 1-11, 2022

China's annual inflation rate fell to 0.9% in the first two months of 2022 from 1.5% a month earlier, compared with market forecasts of 1% This is the lowest level since September, as food costs fell the most in 4 months since December 2021 (specifically, it reduced to -3.8% compared to -1.2%) amid a more profound drop in pork prices

In April, consumer prices rose 2.1% year- -on year and producer prices rose 8% The rise in consumer prices was influenced by disruptions caused by their constraints in the supply chain

In July 2022, this rate increased to 2.7% compared to the market forecast of 2.9% This was the fastest increase in consumer prices since July 2020, mainly due to a sharp increase in food prices, with pork prices rising sharply again after production cuts and a strong recovery in demand This is the result achieved after the Chinese government loosened anti-epidemic measures In November, the inflation rate in China was again reduced to 1.6%

In a world of rising inflation, China's score is much lower This reflects poor consumer demand China's government is using its old plan to revive the economy by spending more on infrastructure, which could have some positive effects But the hard truth is that the shutdowns have taken a toll on the economy More spending on

infrastructure will not do much to revive downstream industries and services that have been affected by the shutdowns but will only waste resources

Unemployment

Immediately after the epidemic outbreak in early 2020, China's unemployment rate reached 6.2 percent

Table 2 China's unemployment rate from 1/2020 to 10/2022

China's surveyed urban unemployment rate rose to 6.1% in April 2022 from 5.8% in the previous month This is the highest level since February 2020 and violates the government's target of a 5.5% unemployment rate this year Several major cities, such as Shanghai and Beijing, for months of closed have paralyzed large employers of migrant workers in service industries

Meanwhile, the youth unemployment rate hit a record high of 19.3% in June 2022, much worse than in previous graduation seasons This year, the job market is especially competitive for young Chinese graduates, with a record 10.8 million university graduates entering the labor market Due to the epidemic's impact, companies' ability to receive jobs has decreased Youth job search channels are also hindered in limited conditions

Figure 9 Job seekers line up to attend a job fair in Shanghai

China's private sector, which typically accounts for four-fifths of urban jobs, has borne the brunt of China's weak growth in the first half of this year and is providing fewer jobs Chinese tech giants such as Alibaba, Tencent, and Didi are among the highest-paying employers in China, having laid off many employees due to increased regulatory pressure affecting profits Beijing is now asking government agencies and state-owned enterprises to hire more young graduates, but job opportunities in the state sector are insufficient And the incentives the government is offering private sector employers to recruit new workers are too limited to be effective

Domestic consumer demand

Table 3 China's retail sales from 1/2020 to 11/2022