Sep 11, 2018 / 12:42

Vietnam seeks ways to grow in face of US - China trade war: PM

The Hanoitimes - Vietnam will rely on internal strength and get things in order so the country can overcome any obstacles and maintain momentum and growth, according to Prime Minister Nguyen Xuan Phuc.

"This trade war between the U.S. and China will surely affect Vietnam," the PM said in an interview with Bloomberg on September 10. "We are seeking new ways to grow," he added. "We want to maintain good relations with both the US and China."
Illustrative photo.
Illustrative photo.
Trade currently amounts to about twice Vietnam's GDP - more than any country in Asia apart from Singapore, for which, the economy is particularly sensitive to disruptions in global supply chains. About a quarter of Vietnam's total trade is with China, which is facing potential tariffs on all of its exports to the US in an escalating trade war with President Donald Trump.

Phuc said it's important for Vietnam to maintain macroeconomic stability, export growth and living standards for the country's 96 million people. He repeatedly said Vietnam was "resilient" in the face of global challenges and would seek more trade agreements beyond the 12 it has already completed.

"We will have to rely on our internal strength and get our house in order so we can overcome any obstacles and maintain momentum and growth," Phuc said.

​The PM added that Vietnam would closely watch the development of international markets to manage the local currency with active and flexible monetary policies in combination with strict fiscal policies.

Vietnam's GDP expanded 7.1% in the first six months of the year, the second-fastest among major Asian economies behind India. Still, the government has said growth may slow in the second half and it's seeking to keep inflation under control, with steps including subsidizing fuel and freezing electricity prices.

Moody's Investors Service upgraded Vietnam's credit score last month, citing its strong growth potential buoyed by healthier banks, stable debt levels and more efficient use of capital. The Vietnamese dong is among the most stable currencies in Asia this year, compared to large declines in others like the Indian rupee and the Indonesian rupiah.

Exports surged to a record US$215 billion last year, with U.S. customers accounting for about US$42 billion of that -- more than double compared with five years ago.

However, Vietnam risks coming under attack for a trade surplus with the U.S. that reached US$39 billion last year, the sixth-largest after Japan, Canada, Germany, Mexico and China. So far, Vietnam has managed to escape Trump's ire.

"I told President Trump I agree with him that we need to balance our trade, but what we shipped to the U.S. is actually benefiting American buyers and the investment inflow from the U.S. to Vietnam is also very positive," Phuc said.