Weakening yuan underpins surge in Chinese exports to Vietnam

By Dat Nguyen   August 26, 2019 | 09:00 pm PT
Weakening yuan underpins surge in Chinese exports to Vietnam
Containers are loaded at a port in Ho Chi Minh City. Photo by Reuters/Kham.
Vietnam’s imports from China rose by 18.4 percent year-on-year in the first seven months as the yuan weakened amidst the trade war.

They were worth $42.5 billion, or 29.5 percent of the country’s total imports, according to Vietnam Customs. 

Machinery, equipment and parts topped the list with over $8 billion worth, a 49 percent rise, followed by computers and electronics with $7 billion, up 66 percent and textile feedstock at $6.7 billion, up 11 percent.

China was the largest exporter of metals in Vietnam in the first seven months with $2.2 billion, up over 10 percent, and also of chemicals and chemical products at $1.8 billion, up 8.1 percent.

Securities brokerage KB Vietnam said in a note the reason for the jump in imports was the depreciation of the yuan against the dollar amid the worsening trade tension between China and the U.S.

In China's onshore market, the yuan fell to 7.15 per dollar, the lowest since February 2008, according to Reuters.

With Vietnam’s exports to the U.S. rising by over 27 percent in the first seven months to $33 billion, experts have expressed concern about Chinese goods being shipped through Vietnam to the U.S. to evade the trade tariffs.

Le Trieu Dung, head of the Trade Remedies Authority of Vietnam, said both the U.S. and China would seek to export to other markets because of the trade war, and Vietnam is one of them.

Vietnam is taking steps to avoid being hit by U.S. tariffs on goods suspected of having fraudulent origins. The Ministry of Trade and Industry is drafting a policy that will define a product as "made in Vietnam" if it has domestic manufacturing value addition of 30 percent of its price.

Prime Minister Nguyen Xuan Phuc has signed a decision to prevent the circumvention of trade defense measures.

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