US-China trade crisis affecting Vietnam Direct impact is not much but indirectly unpredictable!

Vietnam's trade activity in the immediate future has not been significantly affected by the recent escalating trade tensions between t...

Vietnam's trade activity in the immediate future has not been significantly affected by the recent escalating trade tensions between the United States and China, as the taxed goods are mostly high tech, relatively feudalism.

 Last week, the United States announced a list of imports from China to impose additional import duties. Beijing immediately declared retaliation. US President Donald Trump asked the US Trade Representative office to clarify the list of imported goods from China worth about US $ 200 billion in the morning of June 19 to impose additional duties. %, if China reacts retaliation.Trade wars in the two continually escalating concerns raised many concerns in trade policies and activities of many countries, including Vietnam. Trí Thức Trẻ had a talk with Mr. Nguyen Anh Duong, Head, Macroeconomic Policy Department, Central Institute for Economic Management (CIEM) on this issue.What is the basis for taxation of 34 billion goods from China?
 
 Observations show that in the long run, the United States is always trying to hold back China's trade, but it's usually just "soft", so why is the relationship so stressful now?
The trade between the United States and China has taken place many years ago. But commercial friction only really increased in the last 4-5 years. Among the items affected (direct or indirect) to date are steel, washing machines, solar fuel cells, ... Besides, after a period of controversy between the two sides, the United States still resolved It has not recognized China as a market economy in October 2017.
In April this year, after a period of investigation, the United States issued a draft list of about 1,300 items imported from China for comments on the imposition of a 25 percentage point tax. For example, items with a 0% import tax will be subject to a 25% duty, while a 5% tax will increase to 30%. On June 15, the United States announced a list of officially levied goods from July 6, with an estimated taxable value of $ 34 billion.
The list of goods subject to duty from 6/7 is chosen by the United States on the basis of a non-disruptive criterion in the supply of goods, or an increase in tariffs that are not significantly tied to the process.
In this period, the list of goods that the US announced, most of the goods belong to the high-tech group. One reason is expected to respond to China's policy on technology transfer, intellectual property rights under the "Made in China 2025" strategy.
It should be noted that this decision is based solely on the first assessment of China's policy, technology transfer and intellectual property. The ability to add other items to the existing tax levy. Action, confrontation, and the United States are also heavily dependent on China's moves.

 So it looks like the war will be wrapped up in the two countries and may have little effect on other economies.
In the immediate future, the US decision will increase the price of imported goods from China, and US consumers will be influenced. The reason is that many of these items are subject to taxation is quite specific, there is no significant substitute in a short time from other markets.
However, if China does not give in, retaliation measures are applied to the United States, the range of goods affected may be greater. At the same time, third countries are also experiencing difficulties because of uncertainty in trade policy in these two markets.
Does the war really take place or is it just a "blow"?
The US may stop and consider if China has a positive move, especially in trade talks between the two sides. However, as I said earlier, if China continues to retaliate, the United States may add new items.
It should be noted that the decision to impose additional taxes from July 6 is based solely on US investigations of intellectual property. No other issues could be considered by the US such as environment, exchange rate ...
In my opinion, it is likely that the two countries will consider and get a negotiated result to ease the tensions that are taking place in 2018. This is even more important to the United States in the midst of the midterm elections. come close.
If the war really broke out, not taking into account the external impact, the two economies themselves suffered losses. Looking at the bilateral trade deficit, the United States has reason to ask China to export less or import more or both. But this thinking also hurt the US business.
Negotiations on trade between the two countries, if any, could be more profitable for the US in the short term. Still, the path to this result remains uncertain, especially in the context of the US trade deficit with China (more than $ 375.5 billion in 2017 and more than $ 119.0 billion in four months). in early 2018).Impact on Vietnam in the context of US-China trade tensions

 
 As discussed above, despite the tensions ahead for the United States and China, the Vietnamese economy is highly open, both of which are also Vietnam's major trading partners. What is happening?
In the short term, the direct impact on Vietnam is not much, but the indirect impact is quite unpredictable.
For example, it affects the flow of capital of investors. The world financial market after the statement of the US - China has more or less fluctuated. Investors sometimes react too quickly and excessively, making their investment decisions affected. Meanwhile, the world is seeing a trend of withdrawal from emerging and emerging markets, putting pressure on the markets of countries, including Vietnam. Conversely, some investors may switch from China to Vietnam, if one can seize the opportunity.
In the long term, Vietnam is relatively small in size compared to China. Vietnam is not subject to the United States for direct action. However, current mechanisms such as imposition of anti-dumping duties and some other trade remedies are enough to make Vietnam a "headache". Part of the reason is not recognized by the US market economy.

 
 Chinese goods that have been imposed by the United States on July 6 are difficult to get to Vietnam for tax or sales, as they are high tech. However, if the US-China trade tension increases on a large scale, affecting many commodities such as steel, crude oil, etc., Vietnam may be affected.
Due to the difficulty in trade relations with the United States, it does not rule out the possibility that China will actively restrict imports from third countries. China's higher quality requirements for imports from Vietnam - in recent times - are partly due to that thinking.
Vietnam is also considering policies to take advantage of the Industrial Revolution 4.0. Lessons from the recent US tax cycle on Chinese goods need to be considered in the design of technology transfer policies and intellectual property.
In the face of these unpredictable events, what policies should be put in place?
Firstly, we need to develop scenarios to cope with global economic turmoil, including the trade policy and the exchange rate of China and the US.
Secondly, it is important to revise its policy regulations, ensure that there are appropriate tools and resources to guide imports and respond to unfavorable movements in the world market.
Third, constantly contact, strengthen the confidence of foreign investors. It is necessary to select FDI projects in line with Vietnam's sustainable development needs, but it is necessary to avoid one-sided, over-discriminatory views on FDI.
Presidents of the United States have been involved in the marketing of goods, but Donald Trump has pressured his buying partners. This is also an important lesson that we need to consider in order to adjust trade policy in order to better deal in the current context.
Thank you, sir!

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High Tech Brain: US-China trade crisis affecting Vietnam Direct impact is not much but indirectly unpredictable!
US-China trade crisis affecting Vietnam Direct impact is not much but indirectly unpredictable!
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