HA NOI (VNS) - The whopping rise in trade deficit that Viet Nam ran up with China last year has reiterated its alarming dependence on imports of a wide range of products from there.
Updates from the General Statistics Office (GSO) revealed that Viet Nam ran up an estimated trade deficit of US$32.3 billion in 2015, soaring up by as much as 12.5 per cent against the previous year.
The massive rise in imports from China were in a wide range of products such as equipment, metals, automobile components and garment raw materials.
Experts said that the trade deficit with China would hardly drop if Viet Nam did not take more drastic measures to promote the development of the support industry and production of raw materials.
According to Diep Thanh Kiet, deputy president of Viet Nam Leather, Footwear and Handbag Association, the domestic market did not supply adequate raw materials for production.
For example, local supply only met a little more than 4 per cent of demand for imitation leather, Kiet said, and added that many kinds of raw materials had to be completely imported from China as domestic firms were unable to produce them.
"It is very difficult to find domestic producers who can supply materials in such huge quantities at low prices and diverse designs such as China," Kiet was quoted as saying by Tuoi Tre (Youth) newspaper.
He said that if the country's policies of developing support industries remained ineffective, the heavy reliance on China would continue for dozens of years.
The same situation also hit the plastic industry. Tran Viet Anh, deputy director of HCM City Rubber Plastic Manufacturers Association, said that the plastics industry relied on imported raw materials with an import value of more than $1 billion last year.
The reliance on import was due to the weak support industry, he said.
On November 3, the government issued a decree which raised support and incentives to boost the development of the support industry.
Pham Sy Thanh, director of the Chinese Economic Research Programme of the Viet Nam Economic Policy Research Institute was quoted by the newspaper as saying that the widening trade deficit was one of the consequences of forex policies with major currencies becoming weaker than the dollar.
In a move that surprised the global market, China devalued the yuan by nearly 2 per cent on August 11 in an effort to expand exports amid its economic slowdown.
According to Thanh, reducing the trade deficit with China was a possibility, given the formation of the ASEAN Economic Community, the signing of the trade deal with the European Union and the conclusion of the negotiation of the Trans-Pacific Partnership with tariff cuts which were expected to contribute towards reducing imports from China.
Statistics showed that Viet Nam imported nearly $50 billion from China last year while it exported a little more than a modest $17.7 billion, making the trade deficit the highest ever.