Chinese FDI in Vietnam: Growing Economic Ties, Despite Strains

For the past 25 years, Chinese investments in Vietnam and bilateral trade between the two nations has grown steadily despite issues such as the South China Sea and increasing cooperation between Vietnam and countries such as US, India, and Japan. The Chinese mainland has emerged as the eighth largest investor in Vietnam, with the actual FDI much higher if we include their affiliates in Hong Kong and Macau. Over 60 per cent of all Chinese FDI focuses on manufacturing and processing, with a majority of the investment focused on labour-intensive industries.

Trade agreements

Both countries are parties to the ASEAN China FTA, which created the largest free trade area in the world. Apart from ASEAN China FTA, both countries are currently negotiating the Regional Comprehensive Economic Partnership (RCEP), which includes the ASEAN member states, and the six states with which ASEAN has existing free trade agreements, which include Australia, China, India, Japan, South Korea, and New Zealand.

This is an excerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.