What Are Vietnamese Comparative Advantages To Chinese How Do We Trade “Win-Win” With Chinese.pdf

Facing the crisis in the real estate market, which is said to be an important market affecting the steel production industry in China, causing the Chinese economy to be negatively affect

GROUP ASSIGNMENT

ECO201_IB1808_FA2023

TOPIC:

“ WHAT ARE VIETNAMESE COMPARATIVE ADVANTAGES TO CHINESE? HOW DO WE TRADE “WIN-WIN” WITH CHINESE?”

Lecturer: Le Phat Minh

Class: IB1808

Subject: International Economics (ECO201)

Group members:

4 Vu Hoang Truc Quynh SS170122

TABLE OF CONTENTS

I VIETNAM EXPORT RICE TO CHINA:……….…3

II VIETNAM IMPORTS STEEL FROM CHINA:

1 Vietnam imports steel from china……… …6

2 Why does the steel industry in vietnam also have great potential but china can still penetrate it?……… …7 III COMPARATIVE ADVANTAGE:

1 Comparative advantage of vietnam's rice exports………7

2 Comparative advantage of vietnam's steel imports……… ……8

IV INFLUENCING

AGENTS:……….……9

V WHAT CAN VIETNAM DO TO INCREASE RICE EXPORTS?

1 Government support……… 10

2 Promote vietnamese rice to international friends……… …….10

3 Improved transportation……….……10

VI WHAT CAN VIETNAM DO TO DECREASE IMPORT STEEL?…11 VII HOW TO INCREASE EXPORTS AND REDUCE IMPORTS?

1.Exploiting steel export sales from china to vietnam……… ….…12

2 Reduce rice imports from vietnam to china……… ….…12 VIII REFERENCE:……… 13

I VIETNAM EXPORT RICE TO CHINA.

Many businesses continuously negotiate new export contracts According to the General Department of Customs, the average price of rice exported to China in the first 3 months of the year reached 589 USD/1 ton, an increase of more than 18% over the same period last year China is also the market with the average price of rice This item is the highest among Vietnam's three largest export markets

The reason is said to be that China has announced to reopen imports In addition, the country is also in need of new alternative sources of supply for low-grade rice as raw materials for animal feed

Assessing the potential for exporting rice to the Chinese market in the coming time, many businesses believe that China will continue to be a potential market The reason is that the prolonged drought caused the country's 2021 - 2022 crop production to decrease by 2%

Therefore, China is expected to increase rice imports by 6 million tons in the 2022 - 2023 crop year In a recent report, Fitch Solutions said the global rice market will record the largest shortage in two decades in 2023 Fitch Solutions is a macro research unit and an affiliated company of the global credit rating agency Fitch Ratings

Accordingly, the report forecasts that in the 2022 - 2023 crop year, there will be a global shortage of 8.7 million tons of rice, the largest deficit since the 2003 - 2004 crop year This is

a great opportunity for Vietnam's rice exports next time

According to data from Chinese Customs, in the first 4 months of this year the country imported 1.36 million tons of rice worth 704 million USD, down nearly 40% in volume and 26.5% in value compared to the same period last year period last year

In particular, China reduced rice imports from some main markets such as India (-75.8%), Pakistan (-79.7%) and Thailand (-44.1%)

However, rice imports from Vietnam increased sharply by 93.2% in volume and 116% in value over the same period last year, reaching 445,237 tons with a value of 260 million USD With this result, Vietnam has risen to become the largest rice exporter to China in the first 4 months of 2023, far ahead of other markets such as Myanmar, India or Thailand

Data from the General Department of Vietnam Customs shows that China is currently our country's second largest rice export market after the Philippines Vietnam's rice exports to this market in the first 4 months of this year reached 507,066 tons, the highest in the last 5 years and accounting for 17.5% of the country's total rice export volume

Vietnam's rice exports to China have rebounded since the beginning of this year after the country lifted strict disease control measures and reopened the economy after nearly 3 years

of anti-epidemic closure COVID

At the Conference to evaluate rice exports in 2022 and forecast rice exports in 2023 taking place in February this year, Mr Phan Van Chinh, Director of the Import-Export Department (Ministry of Industry and Trade) said that China is opening its market The return

of the market is a positive signal for rice export businesses thanks to the ability to absorb goods when there are large contracts

"With China opening its market after the COVID-19 epidemic, it is forecast that import demand will return as usual Along with that, the quality of Vietnam's exported rice is increasingly improving, and other countries are There is a need to import from Vietnam," said

a representative of the Import-Export Department

Regarding demand, currently sticky rice and fragrant rice such as ST21, ST24, DT8 are still the most exported types to the Chinese market

In the first 4 months of the year, sticky rice accounted for more than 48% of Vietnam's total rice export volume to China with more than 244 thousand tons, an increase of 90.3% over the same period last year Next was fragrant rice with 191.4 thousand tons, an increase

of 49.3% and accounting for 37.8% of the proportion

The volume of white rice exported to China also increased by 86.3% to 70 thousand tons

In addition, businesses also export Japanese rice varieties, brown rice, and micronutrient rice

to China, but the volume is not much, only about 500 - 675 tons

The price of rice exported to China has also increased quite sharply in recent times with sticky rice increasing by 20.8% to an average of 536 USD/ton; white rice increased by 25%, reaching 555 USD/ton; Fragrant rice increased by 1.8%, reaching 637 USD/ton

The leading rice exporting enterprises to the Chinese market in the first 4 months of the year can be mentioned as: Duong Vu Company Limited, Tan Dong Tien Joint Stock Company, INTIMEX Group Joint Stock Company, Tan Company Limited Thanh An, Kien Giang Trading Joint Stock Company…

II VIETNAM IMPORTS STEEL FROM CHINA.

1 Vietnam imports steel from china

China exported 66.8 million tons of steel globally in the first 9 months of 2023, an increase of 31.8% over the same period in 2022 Meanwhile, steel imports decreased to 5.698 million tons, a decrease of 31 7% due to low domestic demand Facing the crisis in the real estate market, which is said to be an important market affecting the steel production industry

in China, causing the Chinese economy to be negatively affected, alarming the financial system in this country The weakening of the Chinese economy also means reduced demand for many products, including steel

Therefore, exporting is considered a solution to the problem of increasing inventory as production increases According to the China Steel Association (CISA), the country's crude steel production in the first eight months of 2023 reached 712.9 million tons, up 2.6% over the same period in 2022, while finished steel products of all kinds reached 626,000 tons 5 million tons, an increase of 2.5% In the last week of September, the level of blast furnace capacity mobilization of 247 Chinese steel factories reached a maximum of 93.08%

Overall situation, the Chinese government and local authorities at all levels continuously apply measures to stimulate and create a favorable export environment for all products, including steel In addition to the advantages of large-scale production, low costs and price support policies, the decline of China's renminbi against the US dollar makes it difficult to maintain competitiveness for China's steel exports China in the coming stages

Chinese steel is mainly exported to regions with few trade barriers, such as Southeast Asia, South Asia, the Middle East and Central America Among these, the Vietnamese market has many advantages, including close geographical location and reduced transportation costs compared to other markets In addition, Vietnam has removed trade

protection measures for many steel products, including galvanized steel, colored steel, steel pipes and high-strength steel, thereby enhancing the market's attractiveness This market is for Chinese steel exports

2 Why does the steel industry in vietnam also have great potential but china can still penetrate it?

In Vietnam, businesses such as Hoa Phat, Hoa Sen Steel Sheet, Dong A Steel Sheet produce a variety of products from construction steel, hot rolled steel coils, cold rolled steel sheets, galvanized steel sheets to meet the needs of the industry countries and exported to America, Europe, Canada, Japan, and Korea Vietnam's steel industry production capacity is around 29 - 30 million tons/year, exceeding domestic demand

According to the Vietnam Steel Association (VSA), in the first five months of 2023, finished steel production of enterprises in the association reached 11 million tons, down 21.8% over the same period last year However, Chinese steel imported into Vietnam still increased very strongly, according to VSA, reaching more than 2.65 million tons, accounting for more than 52% of total imported steel output

The problem is that according to Vietnam's regulations, steel is not included in group 2 items that cause unsafety, so there is no requirement to declare conformity or inspect imported products and goods Most imported steel enjoys a tax rate of 0%, while Vietnamese steel exported to many countries is subject to very high taxes

Furthermore, trade defense measures such as steel billet self-defense have been removed, other steel products such as galvanized steel sheets, color steel sheets, hot rolled steel coils (HRC), steel pipes, prestressed steel are not subject to any trade remedy measures

A large enterprise in the steel industry emphasized that Vietnamese steel exported to other countries must have product certificates according to each country's own standards, which are quite strict Meanwhile, Vietnam still accepts standards compiled and published by businesses themselves

III COMPARATIVE ADVANTAGE

1 Comparative advantage of Vietnam's rice exports

Vietnam is an agricultural country, with the second largest rice growing area in the world Our country has favorable natural conditions for rice production, with a humid tropical

The country's rice land fund in the next 5 years is stable at 4 million hectares, the planted area tends to be stable at above and below 7.3 million hectares/year and the trend is gradually decreasing

+ Technical factors for rice cultivation: 100% of rice land is irrigated, of which the rate of irrigated rice land is stable at over 60%

+ Domestic fertilizer production is gradually increasing because Phu My fertilizer factories have come into operation, and soon the Ca Mau gas - electricity - fertilizer project will come into operation along with phosphate fertilizer factories, Superphosphate increases capacity to ensure stable domestic supply

+ Widely apply scientific and technical advances, especially new varieties, to production to implement rice intensive farming measures to increase productivity and quality

In recent years, Vietnam's rice exports to China have maintained a stable growth rate In

2022, Vietnam's rice export turnover to China will reach 1.5 billion USD, an increase of 22% compared to 2021

According to a report from the General Department of Customs, by the end of September

2023, the country exported nearly 6.42 million tons of rice, reaching a turnover of 3.54 billion USD, an average value of 551.5 USD/ton, an increase of 19% 5% in volume (up 35.9%) and an increase of 13.7% in average value compared to the same period in 2022

Specifically, in the first 9 months of 2023, China accounts for 13.3% of the total volume and accounting for 14% of the total turnover, reaching 858,848 tons (equivalent to 495.78 million USD), reaching an average price of 577.3 USD/ton, a sharp increase of 37.2% in volume and a 55.2% increase in turnover Prices increased by 13.1% compared to the first 9 months of 2022

2 Comparative advantage of Vietnam's steel imports

China is a leading steel producer in the world, with crude steel output accounting for about one-fifth of global crude steel output Chinese steel has competitive prices due to low production costs and large production scale

Vietnam is a developing country, the demand for steel for construction, industry and other fields is increasing However, Vietnam's steel production capacity still cannot meet domestic demand Therefore, Vietnam still has to import a large amount of steel from countries, including China

In recent years, Vietnam's steel imports from China have maintained a stable growth rate

In 2022, Vietnam's steel import turnover from China will reach 15.2 billion USD, an increase

of 13% compared to 2021

In the report of the General Department of Vietnam Customs on the steel import situation

in 2022, it is clearly stated that Vietnam imports steel mainly from China, Korea, and Japan This is because these countries are geographically close to Vietnam, helping to reduce transportation costs, thereby reducing the price of imported steel

According to statistics from the General Department of Customs, in September 2023, Vietnam imported 1.4 million tons of iron and steel worth 996 million USD, an increase of 9.1% in volume and 6.3% in value respectively price compared to August 2023 Compared

to the same period last year, volume and value increased by 89% and 40%, respectively In the first 9 months of 2023, Vietnam imported iron and steel mainly from the Chinese and Japanese markets Of which, 5.5 million tons of iron and steel were imported from China with a turnover of 3.88 billion USD, up 38% in volume but down 4.1% in value over the same period last year The volume and value of iron and steel imports from China account for 59% and 51% of Vietnam's total imports, respectively

IV INFLUENCING AGENTS

However, these two comparative advantages can also be affected by a number of factors such as:

+ Natural factors: Climate change may affect rice production in Vietnam, leading to reduced rice output and prices

+ Economic factors: The development of the steel industry in Vietnam may reduce the need to import steel from China

+ Political factors: Trade policies between Vietnam and China may change, affecting import and export between the two countries

These factors may change over time, affecting rice exports and steel imports between Vietnam and China as follows:

+ Natural factors: Climate change may cause rice production in Vietnam to decrease, leading to a decrease in rice exports to China Natural disasters and epidemics can also affect steel production in both countries

+ Economic factors: China's economic development may increase the demand for rice imports from Vietnam However, if inflation in China increases, it could reduce the value of the yuan, making Vietnamese rice more expensive, affecting exports

+ Political factors: If trade policies between Vietnam and China change, it may affect import and export between the two countries For example, if Vietnam and China sign a Free Trade Agreement (FTA), it could lead to reduced tariffs, boosting the two countries' rice and steel exports

production to decrease by 2.5% compared to 2021 This has led to a decrease in exports export rice to China, Vietnam's largest rice import market

+ Economic factors: China's economic development in recent years has boosted the country's need to import rice and steel China's economic development in recent years has boosted the country's demand for rice and steel imports China is one of the world's largest economies, with a large population and rising per capita income This has led to an increase

in consumer demand for essential commodities such as rice and steel

+ Political factors: The Bilateral Trade Agreement between Vietnam and China (BTA) signed in 2008 has contributed to promoting Vietnam's rice and steel exports to China This agreement eliminated tariffs on many Vietnamese exports to China, including rice and steel This has helped reduce the cost of these items when imported into China, thereby promoting Vietnam's exports

In general, the two comparative advantages of rice export and steel import between Vietnam and China have remained sustainable in recent years However, Vietnamese businesses need to pay attention to monitoring the factors affecting this comparative advantage to have appropriate business plans

V WHAT CAN VIETNAM DO TO INCREASE RICE EXPORTS?

1 Government support

To increase Vietnamese rice exports to China, the Government has implemented many trade promotion policies and programs The Ministry of Industry and Trade organizes trade events between the two countries, and Vietnam focuses on Chinese provinces to meet local needs

Besides, Vietnam also promotes the image of high-quality Vietnamese rice and cooperates directly with large Chinese corporations and Vietnamese rice retailers To promote rice imports, the Ministry of Foreign Affairs and the China Food Association have created a special program Chinese traders were invited to visit Vietnam's main rice growing areas and get acquainted with the quality of Vietnamese rice As a result, the two companies signed a contract to export 84,000 tons/year

2 Promote Vietnamese rice to international friends

Similar to the recent 6th International Rice Congress taking place in Manila (Philippines), the Minister acknowledged that "there is no reason for a rice power like Vietnam not to dare

to express itself" and The 2023 International Rice Industry Festival opens an opportunity for Vietnam to introduce its potential, production strengths as well as the quality of its homeland rice grains