Growth of exports to China slows down

Vietnamese exports to China have slowed down after two years of spectacular growth, due to changes in the strategies of foreign-invested enterprises and Chinese demand, according to Saigon Securities Incorporation (SSI).

During the first half of this year, exports from Việt Nam to mainland China and Hong Kong reached a year-on-year growth rate of 28 per cent and 9 per cent, respectively. Those figures were lower than the growth rate in the same period of last year, at 62 per cent and 24 per cent respectively.

Of out 13 goods items with an export value to China of more than US$1 billion in 2017, only textiles and footwear products maintained the same growth rate at the start of 2018.

Another 11 items had reductions in export growth. Growth was negative for machines, rubber and rice.

The product having the highest growth rate in exports during the first six months of this year was telephones at 267 per cent. However, this figure was lower than the 792 per cent growth seen in the first half of 2017.

The national exports of machines and cameras remained stable in the first six months but the growth of exports to China was slower than over the same period last year. The growth rate of camera exports decreased from 26 per cent to 16 per cent while the growth rate of machinery dropped from 34 per cent to 17 per cent. China is the fourth-largest export market for Việt Nam’s machinery, after the US, India and Japan, reported ndh.vn website.

The growth rate of fruit and vegetable exports to China reached an average of over 70 per cent each year during the period of 2014-17. However, in the first six months of this year, the growth rate dropped to 18 per cent.

SSI researchers attributed the slowdown to the fact that some foreign-invested enterprises in Việt Nam changed their production strategies for telephones and electronics. Another factor behind the slowdown was the excessively high growth rate of exports to China in previous years, according to the SSI Research.

As China’s economic growth slows down and the value of the renminbi falls, China’s commodity demand is likely to shrink, directly affecting the exports of Vietnamese goods, said SSI Research.