New Economic Zones to Boost China-Vietnam Trade

Vietnam and China have signed a memorandum of understanding (MoU) that will create four new economic zones along the Vietnam-China border by 2020.
 
Requiring US$2 million for planning and development and US$200 million for infrastructure construction, the MoU for the project was signed yesterday by Vietnam’s Industry of Trade and China’s Ministry of Commerce with the intention of boosting trade in mountainous areas between the two countries.
 
The cross-border economic zones are expected to accelerate the integration process between China and ASEAN while transforming underdeveloped areas into economic, commercial, and service hubs. By establishing economic zones along the Vietnam-China border, the two nations hope to develop rural infrastructure while simplifying customs procedures and increasing customs cooperation.
 
The four zones will be established at the following international border gates:
 

• Dong Dang (Lang Son)–Pingxiang (Guangxi)
• Mong Cai (Quang Ninh)— Dongxing (Guangxi)
• Lao Cai (Lao Cai) — Hekou (Yunnan)
• Tra Linh (Cao Bang) — Longbang (Guangxi)

Northern Vietnamese provinces have recently strengthened their economic ties with China’s neighboring Guangxi Zhuang Autonomous Region. Vietnam’s Lang Son Province in particular increased trade at an average of 27 percent per year between 2005 and 2010, and is expected to reach US$2.4 billion in trade by the end of 2013.
By 2030, China is set to overtake the United States and become Vietnam’s largest trading partner.
 
Despite scheduling a minimum wage increase at the end of 2013, Vietnam is expected to retain its regional wage competitiveness. As production costs increase in China, Vietnam’s low-cost clothing, textile, and wood manufacturing sectors are expected to grow rapidly through 2030.
 
During Chinese Premier Li Keqiang’s visit to Vietnam last month, both countries agreed to set aside disagreements over islands in the South China Sea and concentrate on economic expansion.
 
Signing 12 wide-ranging business agreements to increase cooperation in trade, infrastructure, energy, and maritime affairs, Vietnam and China appear set to significantly boost their trade in the future. In 2012, trade between Vietnam and China reached US$41 billion, and both countries set a goal of increasing that number to $60 billion by 2015.
 
The creation of additional economic zones between China and Vietnam is expected to further accelerate this process.
 
This article was first published on Asia Briefing.
 
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