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Chinese language corporations are fuelling virtually one in three new investments in Vietnam, in an indication of how they’ve relocated operations overseas to keep away from Donald Trump’s commerce struggle with Beijing.
However this shift is prone to improve Vietnam’s vulnerability to tariffs as Trump targets international locations which have racked up huge commerce surpluses with the US.
Vietnam has been one of many largest beneficiaries of commerce tensions between the world’s two largest economies. Its surplus with the US reached a document $123.5bn final yr, the third-largest after China and Mexico.
A part of that has been pushed by the exports of corporations comparable to Apple and Intel, which have moved manufacturing traces from China to Vietnam to unfold provide chain dangers and keep away from punitive tariffs.
However Vietnam can also be more and more getting funding from Chinese language corporations, accounting for 28 per cent of recent initiatives final yr, up from 22 per cent in 2023.
“Chinese language capital is compelled to return to Vietnam, despite the fact that it isn’t low cost any extra,” mentioned Meir Tlebalde, chief government of Sunwah Kirin Consulting Vietnam, which advises overseas buyers.
She mentioned many Chinese language purchasers have been below stress from consumers within the US and Europe to maneuver out of China.
Most Chinese language manufacturing investments in Vietnam have been being made to keep away from US tariffs and safe a distinct “certificates of origin” for items produced by Chinese language corporations, she mentioned.
Nevertheless, Vietnam’s provide chain remains to be extremely reliant on China. “No less than half of the uncooked supplies come from China,” mentioned Tlebalde.
Within the first month of 2025, Chinese language corporations accounted for 30 per cent of initiatives, in response to the latest authorities information. Chinese language investments additionally got here by way of Hong Kong and Singapore, the latter of which was the highest investor in greenback phrases in Vietnam final yr, analysts mentioned.
The surge in Chinese language investments in Vietnam and its dependence on Chinese language uncooked supplies may entice renewed scrutiny from the Trump administration, which has accused Beijing of circumventing tariffs by sending merchandise by way of third international locations.
Vietnam, as with many different international locations, can also be extremely uncovered to Trump’s threats of reciprocal tariffs on US buying and selling companions. He has additionally threatened to levy 25 per cent tariffs on metal imports, which may additionally hit Vietnam, the US’s fifth-biggest provider of the metallic.
Excessive tariffs would have a huge impact on Vietnam’s economic system, deterring funding and placing a damper on one of many quickest progress charges on the earth. The US accounts for practically 30 per cent of Vietnam’s exports.
“There are some considerations that the US may see that [increased Chinese investment] as oblique tariff avoidance by Chinese language corporations, they usually may examine extra items coming from Vietnam,” mentioned Jack Nguyen, chief government of Incorp Vietnam, which advises overseas buyers within the nation.
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Most Chinese language funding in Vietnam is in meeting and low-to-mid-end manufacturing, from automobiles to photo voltaic panels. China’s strict curbs throughout the Covid-19 pandemic additionally pushed some corporations to diversify exterior the nation.
A small proportion of Chinese language items have been additionally relabelled “Made in Vietnam” with none value-added and rerouted to the US, consultants mentioned, a follow that’s unlawful.
Hanoi had already elevated due diligence on Chinese language merchandise and investments, Nguyen mentioned. “They might not enable Vietnam for use as a transshipment nation to the US on the danger of the US coming down arduous on Vietnam.”
Vietnam’s Prime Minister Pham Minh Chinh acknowledged dangers to his nation, telling an viewers in Davos final month that Hanoi was growing “political and financial options” to sort out its commerce imbalance.
He added that Vietnam would buy between 50 and 100 planes from Boeing within the subsequent 10 years in addition to different high-tech US tools — and agreed to golf with Trump “all day lengthy” if wanted.
This month, commerce minister Nguyen Hong Dien mentioned Vietnam was prepared to extend agricultural imports from the US and that it might not impose any measures that may prohibit commerce with the US.
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Vietnam might also must step up stress on the rerouting of Chinese language merchandise. Hung Nguyen, a provide chain knowledgeable on the RMIT College Vietnam, mentioned Hanoi may push Chinese language corporations to put money into higher-value manufacturing and tighten native content material necessities to drive them to arrange a provide chain within the nation.
“I anticipate [Vietnam] will use technical obstacles to reject some Chinese language investments,” he mentioned.
However Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute, mentioned Vietnam must “stroll a tremendous line” between China and the US, its two largest buying and selling companions.
“I’d not count on Vietnam to brazenly push again towards Chinese language funding,” mentioned Giang.
Koen Soenens, common gross sales and advertising and marketing director of business zones developer Deep C, mentioned 80 per cent of investments from Chinese language and Taiwanese corporations in Vietnam have been from those who depended closely on exports to the US and Europe. Chinese language corporations now account for greater than 40 per cent of Deep C’s gross sales, up from simply 15 per cent within the early 2020s.
Extra report of Haohsiang Kong Kong
