How Vietnam Should Act to Prevent the Deluge of Chinese Products?

Diep Nguyen

15:31 23/07/2018

BizLIVE -

Many experts and economists expressed worries that China will push the export of garments, leathers and furniture products to Vietnam.

How Vietnam Should Act to Prevent the Deluge of Chinese Products?

Photo: BusinessWorld

For more than a month, China seemed to be enjoying the advantage of exchange-rate depreciation without the global backlash and panicky capital outflows that accompanied the bout of yuan weakening in 2015. Surely, Donald Trump did not choose to stand still.
The U.S. President’s charges that China is “manipulating” a currency that’s been “dropping like a rock” came at the end of a six-week slide in the yuan that took it to its lowest level in more than a year against the dollar.
Under this circumstances, many experts and economists expressed worries that China will push the export of garments, leathers and furniture products to Vietnam. Worsely, when the Vietnam dong is too high compared to the China’s peer, many other economic sectors of Vietnam will suffer. Bizlive has consulted the comments from some Vietnamese economists and banking specialists.
According to Le Dang Doanh, the leading economist, the lower yuan will make the Chinese goods already cheap will become cheaper; thus this will lead to the hugh influx of Chinese goods into Vietnam. Vietnam should be highly aware of this.
Le Dang Doanh highly recommended the business community to have strategies to deal with the new reality. He said there should be mechanism to control the border area between China and Vietnam and to strictly control the goods flow into Vietnam.
Besides, there are also worries that Chinese goods may be disguised and relabeled into Vietnamese goods then re-exported to the United States. If that is the case, the reputation of Vietnamese companies and Vietnamese companies’ relations with international community will be harmed. 
China’s yuan devaluation should not be the reason for the Vietnam’s devaluation, said Can Van Luc, the leading economist and banking analyst. In the interview with Bizlive, Luc said that there are two reasons behind China’s yuan. Firstly, China wants to raise exports. Secondly, the value of yuan went up during the first quarter of 2018, then now the adjustment to be lower can be justified. 
Recently, the Vietnam’s exchange rate has been adjusted in accordance with the changes in the market and the supply-demand balance. However, Luc does not think that China’s devaluation should be taken as the reason for Vietnam to devaluate the Vietnam dong more, even at 2-3%. 

DIEP NGUYEN

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