VEPR Warns of Side Effects from Chinese Investment Inflow

Trung Mến

12:05 12/04/2019

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Though the China capital inflow brings along positive effects for employment and economic growth but at the same time it can bring along some risks in environment and foreign labor management.

VEPR Warns of Side Effects from Chinese Investment Inflow

Photo: Independent

When the US – China trade was is still intense and show no signs of abating, economist Pham The Anh felt worried about the side effects. In the first quarter of 2019, China has surpassed other countries to become the biggest FDI investor in Vietnam with total investment capital worth $ 932.2 million. 
Singapore ranks second and South Korea, Japan and Hong Kong sit next respectively. This is predicable since many months ago because many economists said that some investors will move production to Vietnam to avoid the high tarriffs in China and switch to Vienam for building production base. 
This has become the trend with many foreign companies. CEO of Xuan Hoa Company in Vietnam in a recent interview with Bloomberg share that in the 1st quarter this year, he got at least 10 phone calls from foreign companies seeking to move production to Vietnam. Ikea also change the supplier with some parts from Chinese supplier to Xuan Hoa. 
The parts of Xuan Hoa is a little bit cheaper than the same products from the Chinese provider, but when taking into account the big quantity, the money saved can be big sum. 
Vietnam has the advantate of staying beside China and sharing the border, thus it is much easier for companies to transport necessary materials and parts from China to Vietnam. 
Anh remarked that though the China capital inflow brings along positive effects for employment and economic growth but at the same time it can bring along some risks in environment and foreign labor management. 
Anh cautioned that it is now the time for Vietnam government to review the land policy and tarriff policy with the FDI companies in general to create more equal environment for both the FDI companies and local ones. 

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