How Vietnam gained from China’s experience
It is speculated that Vietnam, followed by countries such as China, India and Mexico, would be the next target of the US government’s sanctions spree. Why has Hanoi grabbed US President Donald Trump’s attention? Vietnam’s remarkable economic growth is one of the reasons.
Vietnam has a weak economic foundation. Though being an important producer of rice, Vietnam once faced problems even feeding its people. In 1986, this Southeast Asian country implemented doi moi, an “open door” market-oriented policy that has helped it grow rapidly.
Vietnam’s economy has been growing at a high rate especially in the past decade, with the GDP clocking a growth of 7.08 percent in 2018, the highest since 2008.
According to the General Statistics Office of Vietnam, in 2018, the agriculture, forestry and fishery sectors grew by 3.76 percent, the industry and construction sector 8.85 percent and the services sector 7.03 percent. The poverty rate in 2018 was 6.8 percent, a drop of 1.1 percentage point from 2017. Vietnam is lifting itself out of poverty to enter the ranks of low-to-middle income countries.
What has contributed to Hanoi’s rapid economic development?
First, the Vietnam government has set a clear goal of development. The Eighth National Congress of the Communist Party of Vietnam (CPV) in 1996 set up the goal of making the nation a modern and industrialized country by 2020. The 12th National Congress of the CPV in 2016 drafted a five-year plan with a GDP growth target of 6.5-7 percent from 2016 to 2020. GDP per capita is expected to be between $3,200 and $3,500 by 2020.
The clearly crafted aim, the united leadership of the CPV and the Vietnamese government, and the top-to-bottom execution guarantee the realization of the goal.
Second, Vietnam has been flexible
in applying China’s reform and opening-up experience, keeping view of its realities. Every time China holds the National Congress of the Communist Party of China, issues important economic policies and introduces important reforms, Vietnam carefully studies the Vietnamese translation.
Vietnam has sent officials on study tours to China several times. By learning from China’s experience, Hanoi has avoided possible mistakes and detours, and its economy has grown rapidly. Hanoi’s socialism-oriented market economy, with policies targeted at giving state-owned enterprises the leading role and encouraging private enterprises, reflects the experience of China’s reform and opening-up.
Furthermore, Vietnam’s foreign policy has won it more friends. In the domain of economic cooperation, Vietnam proactively integrated into the international community. It has signed agreements, such as the Comprehensive and Progressive Agreement for Trans-pacific Partnership and the Euvietnam Free Trade Agreement, which has given a fillip to openness in the economy. Hanoi pays great attention to attracting foreign investment and developing manufacturing and other industries, mirroring the experience of other developing countries.
Hanoi’s strength lies in its preferential policies for foreign capital, low labor costs and cheap industrial raw materials. Currently, companies making integrated circuits and chips such as Samsung and Intel and firms owning labor intensive businesses, like adidas and Uniqlo, have entered Vietnam. Foreign investment brings in capital and advanced technology and also creates wealth and employment opportunities. It also drives the development of foreign trade.
In sum, after years of efforts, the Vietnamese economy has entered a new phase. However, the aftermath could be more daunting. Vietnam’s economy has some structural problems which could aggravate if the country enters a new era. It remains to be seen whether Hanoi would be able to overcome them. The author is a research fellow at China (Kunming) Academy of South and Southeast Asian Studies. opin[email protected] globaltimes.com.cn