Text / Liu Liang
Recently, the Vietnamese economy has come into focus.
"Export volume surpassed Shenzhen in the first quarter", "New world manufacturing factories are on the rise", "Foreign investors accelerate investment in Vietnam", "Ten years to catch up with China"... These headlines about Vietnam have made countries pay more attention to Vietnam !
Will Vietnam really replace China as the next "world factory"?
In the face of the attacking Southeast Asian "giants", how should we treat them rationally?
Attack on "Giants"
In recent years, Vietnam's economy has indeed been surprisingly good.
We can briefly look at the two sets of data first.
The first set of data, Vietnam's economic growth rate.
As we all know, the new crown epidemic has brought a strong impact on the industrial chain and supply chain, causing the early economic growth of many major economies to encounter a historic "great decline", and negative growth in GDP growth can be found everywhere.
However, in 2020, Vietnam has become one of the few major Asian economies with a positive growth rate like China, with a GDP growth rate of nearly 3%.
That year, China's GDP growth rate was 2.3%, slightly lower than Vietnam's 2.9%.
The second set of data, Vietnam's export growth.
According to data released by the Vietnamese authorities, in the first quarter of this year, Vietnam's total import and export of goods grew by 14.4% year-on-year, with a trade surplus of over 800 million US dollars. Its exports were mainly driven by manufacturing processed products.
From the total data point of view, the total export volume reached 88.58 billion US dollars, a year-on-year increase of 12.9%.
Compared with Shenzhen, China, known as the "China Manufacturing Innovation Center", Vietnam's export value is higher.
In the first quarter, Shenzhen's export value reached about 60.8 billion US dollars, a year-on-year decrease of 2.6%.
The economic growth rate has bucked the trend and is even higher than that of China. The total export volume this year has surpassed that of Shenzhen. Both sets of data seem to imply that Vietnam's economy is gradually approaching China.
real vietnam
Is Vietnam overtaking China?
In fact, the above conclusions cannot be drawn directly from the data comparison at the above single latitude.
First, although Vietnam's GDP growth rate in 2020 will exceed China's, China is still far ahead in terms of aggregate data.
Statistics from the World Bank show that in 2020, China's total GDP will reach 14.7 trillion US dollars, ranking second in the world; Vietnam's total GDP will be more than 270 billion US dollars, ranking 42nd in the world.
In terms of aggregate data, China's GDP is 50 times that of Vietnam.
And from the per capita GDP data, China is more than 10,000 US dollars, nearly 4 times that of Vietnam.
Therefore, it is not rigorous to simply simplify the GDP growth rate as the transcendence of economic quantity.
Second, the export comparison between Shenzhen and Vietnam is actually not much comparable.
Although a direct comparison between Shenzhen and Vietnam's export situation can make the public feel the difference more intuitively, in fact, the conceptual latitude of the comparison between the two is not the same. Shenzhen is a city in China and Vietnam is a country. It is obviously untenable to compare the total GDP base, not to mention the significant gap in population between the two.
Therefore, the evidence that Vietnam has caught up with China's economy, which is the focus of public opinion, is actually somewhat one-sided.
made in Vietnam
Foreign investment is accelerating the investment layout, and the industrial chain is accelerating the transfer to Southeast Asia. Another focus of public opinion is "Made in Vietnam".
According to the latest foreign direct investment (FDI) data released by Vietnam’s Ministry of Planning and Investment, in the first four months of 2022, Vietnam attracted more than US$10.8 billion in foreign direct investment, a year-on-year increase of 88.3%.
International giants such as Samsung, Sony, Adidas, and Nike have also quietly set their sights on the Vietnamese market.
According to foreign media reports, more than 50% of Samsung's mobile phone exports and nearly one-third of its electronic product shipments are manufactured in Vietnam.
Coincidentally, Nike has more than 50% of its footwear products and 30% of its apparel products, which are also completed by Vietnamese factories.
The U.S. sporting goods giant produces almost half of its footwear in Vietnam.
These data seem to confirm that, compared with the old "Made in China", Vietnam is becoming a powerhouse for industrial chain transfer and a new "world factory".
How should we view this phenomenon?
Shi Zhan, director of the Center for World Politics Studies of China Foreign Affairs University, pointed out in a recent interview with a reporter from China News Agency that some years ago, some people began to worry about whether Vietnam would replace China as the next world factory.
But through his research, he found that this is not an industrial transfer, but a "spillover".
He pointed out that the so-called "transfer" is actually the final assembly link.
"After the assembly process, it is the end product. The end product is directly sold to consumers. Many of them are directly exported to the United States and face the impact of tariffs. So they go to Vietnam, and the terms of trade are good."
He further emphasized that this transfer is remarkable because those that are transferred are the end links, the end links are "to C" (to the customer), and the brand is well known; and the intermediate links that remain are "to B" "(For businesses), people are not familiar with it, so the news spread effect causes people to have some kind of cognitive bias.
"The spillover of these supply chain links to Southeast Asia means that the scale of the China-centric supply chain network has become larger. At the same time, the production efficiency and elasticity of the entire East Asian supply chain network will also be stronger." Shi Zhan Say.
Sino-Vietnamese PK
One side is the old "Made in China" and the other side is the rising "rookie". How do you see the Sino-Vietnamese "world factory" dispute?
At present, it is still difficult for Vietnam to shake and replace China's status as "the world's largest manufacturer".
"Vietnam's economy is too small. If the total GDP of Vietnam is placed in the ranking of China's urban GDP, it can only be ranked eighth, between Suzhou and Chengdu. Can Suzhou replace the whole of China?" Shi Zhan said bluntly In order to replace China as the world's factory, Vietnam must have its own complete industrial system, a very important point of which is to have an independent heavy chemical industry.
He emphasized that if a late-developing country wants to build its own heavy chemical industry, there is no chance for it to rely solely on the market process. It must rely on the state to invest a lot of capital and make great efforts to support it.
South Korea, Japan, and China in East Asia all developed heavy chemical industries in this way.
But it is difficult for Vietnam to support the heavy chemical industry in this way.
Tang Yao, associate professor of the Department of Applied Economics, Guanghua School of Management, Peking University, pointed out that because a country's exports often include intermediate goods and services from other countries, one of the best indicators to measure the hard power of a country's manufacturing industry is the manufacturing industry. Value Added.
In this indicator, there is currently a huge gap between Vietnam and China in terms of manufacturing volume.
According to data released by the World Bank, in 2020, the added value created by China's manufacturing industry will account for 28.55% of the world's, while Vietnam's will account for 0.34% of the world's, which is equivalent to China's 1.17%.
Comparing the manufacturing industries of the two countries also needs to take into account the development potential of Vietnam.
Tang Yao pointed out that we can take South Korea, which is in the first echelon of manufacturing, as a reference. South Korea's per capita manufacturing output value is about 2.8 times that of China and 17 times that of Vietnam. Its population is about half of Vietnam's, accounting for the increase in the world's manufacturing industry. 3% of the value.
Assuming that Vietnam's per capita manufacturing output value reaches the level of South Korea, its share of the world's manufacturing industry will reach about 6%.
Based on calculations based on this extreme assumption, it is difficult for Vietnam to replace China as the "world's factory".
face the challenge
As expert analysis said, it is difficult for Vietnam to replace China as the new "world factory", but some challenges have clearly been placed in front of China.
Bai Ming, deputy director of the International Market Research Institute of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, pointed out that the shift of manufacturing to Southeast Asia means that the competitiveness of China's traditional labor-intensive industries is being challenged.
With low labor costs and many free trade partners, Vietnam has a certain late-mover advantage and will have a certain "substitution" effect.
In addition to the above-mentioned outstanding advantages, Bai Ming also believes that compared with other countries in Southeast Asia, the centralized system also makes it easier for Vietnam to focus on overcoming some economic development difficulties.
In addition, from the perspective of the external environment, the US-led strategy of "de-sinicization of the industrial chain" also provides many development opportunities for Vietnamese manufacturing.
In response to the transfer of manufacturing to Vietnam, Bai Ming emphasized that we should beware of the two tendencies of "fear theory" and "contempt theory": we should not be overly concerned because of the development of manufacturing in Vietnam, nor should we be easily caused by the large gap between the two countries." despise" view.
"On the one hand, although Vietnam's labor costs are low, labor productivity is also low, and Vietnam's urban land prices and real estate prices are rising rapidly, and the marginal development cost is high, so it is easy to encounter development bottlenecks. But on the other hand, we also We must be vigilant under the 'de-sinicization of the industrial chain' in the United States. Although Vietnam's industrial chain is not complete, it has many free trade partners. In terms of market access, Vietnam's entry into the European and American markets is also more convenient. To a certain extent, it can make up for the shortcomings of its industrial chain." Bai Ming said.
Tang Yao pointed out that although Vietnam is difficult to replace China, in the long run, ASEAN countries as a whole will inevitably have a dynamic competitive relationship with China in manufacturing. The output value is close to the level of the first-tier countries.
In this regard, Tang Yao put forward specific suggestions:
——In the context of China's rising labor, land and ecological costs, China needs to systematically reduce manufacturing costs by deepening economic reforms, promoting new infrastructure construction including low-carbon transformation, and increasing financial support. enhance the drive for innovation;
——China needs to continue to expand its opening up and further remove the hidden barriers to market access;
——Promote the construction of a unified domestic market, reduce manufacturing costs through market-oriented allocation of land, capital, manpower, data and intellectual property elements, and play the role of a "magic magnet" for the large consumer market;
—— Combine long-term and short-term policies to alleviate the impact of labor shortages on the manufacturing industry;
——Work hard on the "internal skills" of modern service industries such as R&D, information, finance, and commerce that serve the manufacturing industry, enhance the hard power of the manufacturing industry by strengthening the soft power of the service industry, and avoid opposing the development of the service industry and the manufacturing industry rise up and break up the mutually reinforcing relationship between the two.