What is the underlying meaning behind it?, Vietnamese Prime Minister Pham Myung cheong's First Visit to China's Industrial Chain | Vietnam | He Shenyi

From June 25th to 28th, Vietnamese Prime Minister Pham Myung sung was invited to visit China. This is his first official visit to China since taking office as Prime Minister, and also the first visit by a Vietnamese Prime Minister to China in 7 years. In four days, it can be said that the itinerary is full.

What are the highlights of Fan Mingzheng's trip? Behind the visit to China, Vietnam was once considered to be the next world factory. What are the differences in manufacturing between China and Vietnam? What is the potential for cooperation between both parties?

What is the significance of the Premier's visit to China?

On the afternoon of June 25th, Fan Mingzheng arrived in Beijing and began his first visit to China since taking office as Prime Minister.

On the morning of June 26th, Premier Li Qiang held talks with Fan Mingzheng at the Great Hall of the People. During the meeting, Fan Mingzheng expressed his willingness to learn from and draw on China's valuable experience to further deepen the comprehensive strategic partnership between Vietnam and China. We are willing to deepen exchanges and cooperation with China in areas such as economy, trade, investment, infrastructure construction, health, science and technology, and humanities, strengthen multilateral coordination and cooperation, and achieve common development and prosperity.

After the meeting, the two prime ministers jointly witnessed the signing of multiple bilateral cooperation documents, including maritime cooperation, market supervision, and port construction.

On June 27th, at the opening ceremony of the Summer Davos Forum, Fan Mingzheng stated that countries around the world need to strengthen unity and achieve global supply chain diversification to solve the problems we face.

On the same day, at the "Facing Challenges: Restarting Growth in a Fragile Environment" sub forum, Fan Mingzheng stated that in order to solve global challenges in the future, we need to unite. There are several key directions, including restoring business and manufacturing development as soon as possible, restoring employment opportunities, accelerating capital flows, and creating a more open market.

Faced with the increasingly severe and complex international situation, China and Vietnam should uphold the spirit of equality, mutual benefit, unity, mutual trust, and win-win cooperation, work together for development, better benefit the people of both countries, and inject more stability into the ever-changing and intertwined world.

All kinds of signs indicate that Fan Mingzheng's trip is to find a solution to the problem. Professor Cheng Hanping, Director of the Vietnam Research Center and Southeast Asian Research Center at Zhejiang University of Technology, believes that the focus may include seeking to promote border trade cooperation between the two countries, dismantling the implementation difficulties of major infrastructure projects that still exist between the two countries, and so on.

Taking infrastructure construction as an example, infrastructure investment is one of the three strategic breakthroughs in Vietnam's economic and social development. According to the transportation infrastructure target approved by the Vietnamese parliament, Vietnam's national highways will have at least 5000 kilometers by 2030 and 3000 kilometers by 2025.

"However, currently, there are still obstacles for Chinese companies to take on infrastructure projects in Vietnam, which requires both sides to strengthen strategic mutual trust and overcome obstacles to achieve win-win cooperation." Cheng Hanping said.

Asian economic stars face challenges

In fact, in terms of economic performance, even when looking at the world, Vietnam is outstanding enough. In 2022, Vietnam's GDP exceeded 400 billion US dollars, a year-on-year increase of 8.02%, which is the highest growth rate in the Asia Pacific region. According to World Bank data, the Vietnamese economy maintained an average growth rate of 6.8% in the thirty years prior to the pandemic.

As a country with abundant resources such as oceans, forests, and minerals, Vietnam has certain inherent advantages in its development. But Vietnam is not just that simple. In Cheng Hanping's view, Vietnam's economic achievements are equally inseparable from its huge demographic dividend and its role as an active advocate and participant in global trade.

Since the 1980s, Vietnam has actively developed an outward oriented economy and participated in more than ten bilateral and multilateral regional trade agreements through reform and opening up. "This allows Vietnam's goods to be easily exported," said Cheng Hanping. At the same time, Vietnam has a huge demographic dividend, with half of the nearly 100 million population aged 16 to 50, giving Vietnam a labor cost advantage in global competition. On this basis, Vietnam's rapid economic growth is traceable.

But along the way, the shortcomings of Vietnam's economy are emerging. Entering 2023, Vietnam's GDP growth has slowed down. In March of this year, the Vietnamese Bureau of Statistics released data showing that Vietnam's GDP increased by 3.32% year-on-year in the first quarter, lower than the 5.92% in the previous quarter. Among them, textile and footwear orders decreased by 70% to 80% year-on-year, and electronic product shipments decreased by 10.9% year-on-year.

Behind the data, phenomena such as power shortages, reduced orders, and factory layoffs in northern Vietnam have also been exposed from time to time.

Both achievements and weaknesses stem from a relatively single outward oriented economy. In the past two years, Vietnam's total exports have accounted for over 90% of its GDP. "Currently, the international environment is poor, and the overall demand in the global market is decreasing, which has led to Vietnam's excessive dependence on overseas markets being impacted. Once the demand for orders declines, Vietnam will be deeply affected." Cheng Hanping believes that this also reflects the weak resilience of Vietnam's economy.

Made in China and Vietnam, Alternative or Complementary?

China and Vietnam are both socialist countries, with mountains and rivers intertwined and deep roots.

As a rising star adjacent to China, whether it is promoting reform and opening up or attracting foreign investment to build factories, Vietnam's development path is seen by many as "crossing the river by touching China".

In the past few years, with the rise of manufacturing, the possibility of Vietnam becoming the "next world factory" has been widely discussed. There is a voice that suggests that China's title as the "world's factory" may give way.

In the view of Cheng Hanping, who has studied the Vietnamese economy for many years, this argument has serious logical flaws, "Vietnamese made cannot replace Chinese made."

The form of the industrial chain in Vietnam is different from that in China. Cheng Hanping said that China has a relatively complete industrial chain and is promoting industrial upgrading. In the development process, low-end industrial chains and supply chains need to be transferred, and Vietnam has taken on this role well with cost advantages and other advantages.

"Currently, some Chinese enterprises, including Zhejiang merchants, have factories located in Vietnam. They first transport semi-finished products from China to Vietnam for assembly, and then sell them globally, in order to avoid some risks in international competition and better utilize cheap labor to save production costs."

Cheng Hanping believed that if we were to define it, the relationship between Made in China and Made in Vietnam should be complementary and complementary.

Currently, Vietnam is China's largest trading partner in ASEAN. According to data from the website of the General Administration of Customs, the bilateral trade volume between China and Vietnam in 2022 was 234.92 billion US dollars, a year-on-year increase of 2.1%.

China's investment in Vietnam is also continuously expanding. In 2022, Chinese companies ranked fourth among the countries investing in Vietnam, with investments mainly concentrated in the processing and manufacturing industry, especially in industries such as electronics, mobile phones, computers, textiles and clothing, and mechanical equipment.

Between China and Vietnam, as Fan Mingzheng said during his visit to China, we hope to be close and friendly, and our neighbors hope to be friendly. There are still more possibilities for both sides on the road ahead.