BTL Collector Edition

NATIONAL ECONOMICS UNIVERSITY
SCHOOL OF TRADE AND INTERNATIONAL ECONOMICS
GROUP ASSIGNMENT
TOPIC : TRADE PROTECTIONS OF CHINA ON
VIETNAM’S GOODS AND VIETNAM’S RESPOND
Supervisor : Assoc.Prof.Dr. Nguyen Thuong Lang
Tel: 0983478486, Email: langnguyen2200@gmail.com,
langnt@neu.edu.vn
Students : Vu Dinh Long & Lai The Long
Student Email: vudinhlong2001@gmail.com & long.lai990091@gmail.com
Major : International Economics
Class : International Economics 61 B
Type of Education : AEP
HANOI, 1/2021
Bài tập học phần kinh tế quốc tế GVGD: PGS.TS.Nguyễn Thường Lạng
LỜI CAM ĐOAN

Tôi xin cam đoan bài tập này hoàn toàn do tôi thực hiện. Các phần trích dẫn và tài
liệu sử dụng trong bài tập hoàn toàn trung thực, được trích nguồn và đảm bảo độ chính
xác cao nhất trong phạm vi hiểu biết của tôi. Nếu không đúng như đã nêu trên, tôi xin
chịu trách nhiệm về bài tập của mình.
Hà Nội ngày 20 tháng 1 năm 2021
Sinh viên thực hiện
Vu Dinh Long & Lai The Long
LỜI CẢM ƠN
Lời đầu tiên cho em xin được cảm ơn sâu sắc tới các giảng viên trường Đại học
Kinh tế quốc dân nói chung và các giảng viên thuộc Viện Thương Mại và Kinh tế quốc
tế nói riêng đã tận tình giảng dạy, truyền đạt cho chúng em những kiến thức và kinh
nghiệm quý báu.
Đặc biệt em xin gửi lời cảm ơn đến PGS.TS. Nguyễn Thường Lạng, người đã trực
tiếp hướng dẫn em trong suốt quà trình thực hiện bài tập. Trong khoảng thời gian được
làm việc với thầy, em đã không ngừng học tích lũy nhiều kiến thức bổ ích cho mình mà
còn được học tập được tinh thần làm việc nghiêm túc, hiệu quả, đây là những điều rất
cần thiết cho em trong quá trình học tập và công tác sau này.
Cuối cùng xin gửi lời cảm ơn chân thành tới gia đình và bạn bè đã luôn động viên,
đóng góp ý kiến và giúp đỡ trong quá trình học tập, nghiên cứu để hoàn thành bài tập
này.
Hà Nội, ngày 20 tháng 01 năm 2021
Sinh viên thực hiện
Vu Dinh Long & Lai The Long
VU DINH LONG & LAI THE LONG 2

INTRODUCTION
Table of Contents
CHAPTER I. INTERNATIONAL TRADE AND PROTECTIONISM...........................................................4
1.1. ABOUT TRADE : ROLES, FUNCTIONS AND INFLUENCES.....................................................4
1.1.1. Definition of trade and international trade.................................................................................4
1.1.2. Roles and functions of international trade....................................................................................5
1.1.3. Influences of international trade..................................................................................................7
1.2. PROTECTIONIST POLICIES.........................................................................................................10
1.2.1. Definition.....................................................................................................................................10
1.2.2. Roles and functions of Protectionism........................................................................................10
CHAPTER II. CHINA’S INTERNATIONAL TRADE POLICIES..............................................................14
2.1. OVERALL OF CHINA INTERNATIONAL TRADING POLICIES.................................................14
2.1.1. China’s Trade Development Strategy and Trade Policy...............................................................14
2.1.2. Strengths and weakness of China in trading..................................................................................15
2.2. CHINA PROTIONIST POLICIES ON VIETNAM’S EXPORTS......................................................17
2.2.1. General infomations.........................................................................................................................17
2.2.2. China Protectionist policies on Vietnam’s exports.........................................................................18
CHAPTER III. VIETNAM’S RESPONSE TO CHINA’S POLICIES & CONCLUSION...........................22
3.1. VIETNAM’S RESPONSE......................................................................................................................22
3.1.1. Short-term response.........................................................................................................................22
3.1.2. Long- term response.........................................................................................................................22
CONCLUSION...................................................................................................................................................24
LIST OF REFERENCE.....................................................................................................................................25

CHAPTER I. INTERNATIONAL TRADE AND PROTECTIONISM

1.1. ABOUT TRADE : ROLES, FUNCTIONS AND INFLUENCES
1.1.1. Definition of trade and international trade
Trade involves the transfer of goods or services from one person or entity to another,
often in exchange for money. Economists refer to a system or network that allows trade as
a market.
An early form of trade, barter, saw the direct exchange of goods and services for other goods
and services. Barter involves trading things without the use of money. When either bartering
party started to involve precious metals, these gained symbolic as well as practical
importance Modern traders generally negotiate through a medium of exchange, such as money.
As a result, buying can be separated
from selling, or earning. The invention of
money (and later of credit, paper
money and non-physical money) greatly
simplified and promoted trade. Trade
between two traders is called bilateral trade,
while trade involving more than two traders
is called multilateral trade.
In one modern view, trade exists due
to specialization and the division of labor, a
predominant form of economic activity in
which individuals and groups concentrate on a
small aspect of production, but use their
output in trades for other products and Figure 1. Two traders from 16th century in
needs. Trade exists between regions because Germany
different regions may have a comparative
advantage (perceived or real) in the
production of some trade-able commodity—including production of natural resources scarce or
limited elsewhere. For example: different regions' sizes may encourage mass production. In
such circumstances, trade at market prices between locations can benefit both locations.
Retail trade consists of the sale of goods or merchandise from a very fixed
location (such as a department store, boutique or kiosk), online or by mail, in small or
individual lots for direct consumption or use by the purchaser. Wholesale trade is defined as
traffic in goods that are sold as merchandise to retailers, or to industrial, commercial,
institutional, or other professional business users, or to other wholesalers and related
subordinated services.

Historically, openness to free

trade substantially increased in some areas
from 1815 to the outbreak of World War I in
1914. Trade openness increased again during
the 1920s, but collapsed (in particular in
Europe and North America) during the Great
Depression of the 1930s. Trade openness
increased substantially again from the 1950s
onwards (albeit with a slowdown during
the oil crisis of the 1970s). Economists
and economic historians contend that current
levels of trade openness are the highest they
have ever been.
International trade, however , is the
Figure 2. Ancient Silk Road trade routes across
exchange of capital,Euroasia
goods, and services across
international borders or territories because
there is a need or want of goods or services.
In most countries, such trade represents a significant share of gross domestic product
(GDP). While international trade has existed throughout history (for example Uttarapatha, Silk
Road, Amber Road, scramble for Africa, Atlantic slave trade, salt roads), its economic, social,
and political importance has been on the rise in recent centuries.
Carrying out trade at an international level is a complex process when compared to
domestic trade. When trade takes place between two or more nations factors like currency,
government policies, economy, judicial system, laws, and markets influence trade.
To smoothen and justify the process of trade between countries of different economic
standing, some international economic organizations were formed, such as the World Trade
Organization. These organizations work towards the facilitation and growth of international
trade. Statistical services of intergovernmental and supranational organizations and national
statistical agencies publish official statistics on international trade.
1.1.2. Roles and functions of international trade

International trade allows countries to expand their markets and access goods and
services that otherwise may not have been available domestically. As a result of international
trade, the market is more competitive. This ultimately results in more competitive pricing and
brings a cheaper product home to the consumer.

International trade not only results in increased efficiency, it also allows countries to
participate in a global economy, encouraging the opportunity for foreign direct
investment (FDI). In theory, economies can therefore grow more efficiently and can more
easily become competitive economic participants.
For the receiving government, FDI is a means by which foreign currency and expertise
can enter the country. It raises employment levels, and theoretically, leads to a growth in gross
domestic product (GDP). For the investor, FDI offers company expansion and growth, which
means higher revenues.
Moreover, since World Trade Organization (WTO) established on 1st January 1995
under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the
General Agreement on Tariffs and Trade (GATT), which commenced in 1948, world exports
increased significantly. The line graph below illustrated world exports since 1970 to 2003 :

1.1.3. Influences of international trade

International trade influences a whole range of activities including jobs, consumption
and the fight against poverty. It also affects the environment and relations among countries. In
turn, trade is shaped by a host of influences ranging from natural resources to fashion.
1) Impact of Inflation:
If a country’s inflation rate increases relative to the countries with which it trades, its
current account will be expected to decrease, other things being equal. Consumers and
corporations in that country will most likely purchases more goods overseas (due to high local
inflations), while the country’s exports to other countries will decline.
2) Impact of National Income:
If a country’s income level (national income) increases by a higher percentage than

those of other countries, its current account is expected to decrease, other things being equal.
As the real income level (adjusted for inflation) rises, so does consumption of goods. A
percentage of that increase in consumption will most likely reflect an increased demand for
foreign goods.
3) Impact of Government Policies:
A country’s government can have a major effect on its balance of trade due to its
policies on subsidizing exporters, restrictions on imports, or lack of enforcement on piracy.

4) Subsidies for Exporters:
Some governments offer subsidies to their domestic firms, so that those firms can
produce products at a lower cost than their global competitors. Thus, the demand for the
exports produced by those firms is higher as a result of subsidies.
Many firms in China commonly receive free loans or free land from the government.
These firms incur a lower cost of operations and are able to price their products lower as a
result, which enables them to capture a larger share of the global market.
5) Restrictions on Imports:
If a country’s government imposes a tax on imported goods (often referred to as a tariff),

the prices of foreign goods to consumers are effectively increased. Tariffs imposed by the U.S.
government are on average lower than those imposed by other governments. Some industries,
however, are more highly protected by tariffs than others. American apparel products and farm
products have historically received more protection against foreign competition through high
tariffs on related imports.
In addition to tariffs, a government can reduce its country’s imports by enforcing a

quota, or a maximum limit that can be imported. Quotas have been commonly applied to a
variety of goods imported by the United States and other countries.
6) Lack of Restrictions on Piracy:
In some cases, a government can affect international trade flows by its lack of
restrictions on piracy. In China, piracy is very common; individuals (called pirates)
manufacture CDs and DVDs that look almost exactly like the original product produced in the
United States and other countries. They sell the CDs and DVDs on the street at a price that is
lower than the original product. They even sell the CDs and DVDs to retail stores. It has been
estimated that U.S. producers of film, music, and software lose $2 billion in sales per year due
to piracy in China.
As a result of piracy, China’s demand for imports is lower. Piracy is one reason why the
United States has a large balance-of-trade deficit with China. However, even if piracy were
eliminated, the U.S. trade deficit with China would still be large.

7) Impact of Exchange Rates:
Each country’s currency is valued in terms of other currencies through the use of
exchange rates, so that currencies can be exchanged to facilitate international transactions.

1.2. PROTECTIONIST POLICIES
1.2.1. Definition
Protectionism is the practice of following protectionist trade policies. A protectionist
trade policy allows the government of a country to promote domestic producers, and thereby
boost the domestic production of goods and services by imposing tariffs or otherwise limiting
foreign goods and services in the marketplace. Protectionist policies also allow the government
to protect developing domestic industries from established foreign competitors.
1.2.2. Roles and functions of Protectionism

ROLES: An economy usually adopts protectionist policies to encourage domestic
investment in a specific industry. For instance, tariffs on the foreign import of shoes would
encourage domestic producers to invest more resources in shoe production.
In addition, nascent domestic shoe producers would not be at risk from established
foreign shoe producers. Although domestic producers are better off, domestic consumers are
worse off as a result of protectionist policies, as they may have to pay higher prices for
somewhat inferior goods or services. Protectionist policies, therefore, tend to be very popular
with businesses and very unpopular with consumers.

FUNCTIONS :
Protectionist policies come in different forms, including:
1. Tariffs
The taxes or duties imposed on imports are known as tariffs. Tariffs increase the price of
imported goods in the domestic market, which, consequently, reduces the demand for them.
Consider the following example, which analyzes the UK market for US-made shoes.
Due to the imposition of tariffs, the price for the product increases from GBP100 (P1) to
GBP120 500 (P2). The demand for US-made shoes in the UK market decreases (from Q2 to
Q4).
2. Quotas
Quotas are restrictions on the volume of imports for a particular good or service over a
period of time. Quotas are known as a “non-tariff trade barrier.” A constraint on the supply
causes an increase in the prices of imported goods, reducing the demand in the domestic
market.

3. Subsidies
Subsidies are negative taxes or tax credits that are given to domestic producers by the
government. They create a discrepancy between the price faced by consumers and the price
faced by producers.
4. Standardization
The government of a country may require all foreign products to adhere to certain
guidelines. For instance, the UK Government may demand that all imported shoes include a
certain proportion of leather. Standardization measures tend to reduce foreign products in the
market.
1.2.3. Influences of Protectionism

Advantages of Protectionism
More growth opportunities: Protectionism provides local industries with growth

opportunities until they can compete against more experienced firms in the international market
Lower imports: Protectionist policies help reduce import levels and allow the country to
increase its trade balance.
More jobs: Higher employment rates result when domestic firms boost their workforce
Higher GDP: Protectionist policies tend to boost the economy’s GDP due to a rise in
domestic production
Disadvantages of Protectionism
Stagnation of technological advancements: As domestic producers don’t need to

worry about foreign competition, they have no incentive to innovate or spend resources on
research and development (R&D) of new products.

Limited choices for consumers: Consumers have access to fewer goods in the market
as a result of limitations on foreign goods.
Increase in prices (due to lack of competition): Consumers will need to pay more
without seeing any significant improvement in the product.
Economic isolation: It often leads to political and cultural isolation, which, in turn,
leads to even more economic isolation.
Figure 3. "Declaration of independance","a pro tariff cartoon. Library of Congress, Washington, D.C

CHAPTER II. CHINA’S INTERNATIONAL TRADE POLICIES

2.1. OVERALL OF CHINA INTERNATIONAL TRADING POLICIES
2.1.1. China’s Trade Development Strategy and Trade Policy
Overview and Prospect
China has become both the largest trading power and inward FDI receipt country
in 2014. The impressive economic and trade performance are attributed to sound
development strategy and on-going institutional reforms during the past thirty-five
years. In particular, China’s joining the WTO in 2001 and fully engaging in regional and
bilateral trade agreements in recent years provide a striking momentum for its rule-
based, market-oriented
trade and investment
liberalization. In
November 2013, the new
Chinese leadership’s focus
on deepening economic
reform in China led to a
milestone Decision
reached at the Third
Plenum of the 18th Central
Committee of the Chinese
Communist Party (CCP),
which depicted the vision Figure 4. Shenzen, China's special economic zone
of comprehensive and far-
reaching economic reform
in the near future. The expected reforms are also considered as a strategic response to
address the emerging trading rules and disciplines, focusing on regulatory coherence,
which are intensively negotiated in some mega-regional trade pacts, such as the Trans
Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).
The paper attempts to offer a comprehensive review and assessment of China’s

trade development strategy and trade policy reforms since China initiated its domestic
economic reform and open-door policy, and also to analyze the prospect of future
reforms, including some challenges that China would need to address in the context of a
changing global business environment.
The following paper is organized as follows. Part I explores the historical

development of China's trade development strategy during 1978-2014 in order to

demonstrate how China's trade development strategy evolves from import substitution to
export promotion, then to trade liberalization, and further to new trade competitiveness
agenda. Part II will describe China current trade policy objective, institutional
framework, and approaches to achieve the goals. Part III will analyze and evaluate some
selected key trade policy measures, including tariffs, non-tariff barriers (NTBs), trade
facilitation, export restrictions, services, and other measures affecting trade. In Part IV,
the institutional decision-making process of trade policy in China is elaborated to
illustrate how bureaucracies in the central government, local governments, business
associations (including state-owned enterprises and foreign enterprises), and other
stakeholders have been playing and imposing the impacts in the procedure. Part V
analyzes how China will address the new challenges of transition of trade development
model and formidable trade reforms in the future.
2.1.2. Strengths and weakness of China in trading

No conflict frays the country's edges. This stability has allowed for rapid
industrialization, foreign investment and the rise of an urban Chinese middle class.
Hard-won political unity created the conditions in China for the reforms of the Deng
Xiaoping era and the country's huge economic success. Those gains, in turn, make China
confident and strengthen its hand in talks with the Trump administration that will ultimately
come. The advances are also the biggest thing China has to lose. The stronger China's
position, the more it has the scope -- and necessity -- to offer concessions to stave off a
conflict.
Strengths of China
1. Manufacturing monster-China is considered as the factory of the world. As of 2015
manufacturing industrial sectors contribute to 40% of china’s GDP.
2. Defence Power-China is the third largest defence power in the world.
Power Index rating: 0.0945,Total military personnel: 3,712,500
Total aircraft strength: 2,955
Fighter aircraft: 1,271

Combat tanks: 6,457
Total naval assets: 714

(one aircraft carrier)
Defense budget: $161.7

billion
3. Economic power-China
is currently the second largest
GDP in the world and is poised to
overtake US in 2030 as the most
powerful economy of the world.
Figure 5. China's army strength
4. Growing regional
influence-China’s BRI around the
Eurasia and Africa region has increased its influence in the region and its investment in various
countries are making more countries pro-China.
Weakness
1. China’s cheap labour is depleting -China boasts to have cheap labour but in the
current scenario it is not so.The workforce is ageing and their wage demands have increased a
lot. In 2006 avg chinese wage was around 21000 yuan which rose to around 60000 yuan in
2015.
2. Lack of innovation -China lacks in innovation.China when tried to make an impact

in R&D with the help of Huawei in order to become an artificial intelligence power US
interfered and China were again on back foot.
Trump in past 2 years is focussing more on China and preventing it to become a

superpower and therby implementing policies that are against Chinese interests.
3. Taiwan-Its one of the geo-political reasons. Taiwan is considered as the Achille’s

heel of China. China is more and more isolating Taiwan so that in future they can capture it and
implement its One China Policy.If any other power tries to create relations with China,it
becomes too uncomfortable to China. When Trump passed Asia Reassurance Initiative Act
under which US establishes to increase US influence in Indo-pacific region and improve its
relations with Taiwan China immediately responded and criticised it. Taiwan location is of
huge geo-political importance and if super power such as US will improve relation with them
and increase their presence their China can be in trouble.

2.2. CHINA PROTIONIST POLICIES ON VIETNAM’S EXPORTS

2.2.1. General infomations
During the process of globalization and internationalization of the economy, integrating
and participating in international economic organizations have become an irreversible trend for
each country in the process of economic development, and neither of Vietnam. By joining the
international trade organization (WTO) - the largest and most important global trade
organization will bring a member country many new and great opportunities for expanding
export-import markets, receive goods, services, technology and management, are treated fairly
on the world market, improve
the conditions necessary for
economic development and
improve the quality of life of
the people domestic. Each
country joining the WTO has
its own trade policy but based
on the principles and
framework of the
organization. In recent years,
with its high and stable
economic growth, China has
overcame the three main
economic pillars that are
Figure 6. Vietnam and China leaders
slowly recovering, namely the
US, Japan and Western
Europe in terms of economic growth.
China's role in the international arena is growing rapidly, especially in the field of trade.
This success is partly due to the Chinese government's planning and execution of policies quite
closely with the situation of the country and the world. With its current trade policy, China is
gradually becoming the source of goods for the whole world which has made major economies
concerned and has become the subject of current trade negotiations.
China and Vietnam are two related countries with a long-standing, traditional
relationship. This relationship is being strengthened which bring social-economic benefits to
both countries. With the non-stopped cooperate between two countries, especially in the field
of trade cooperation. China now becomes a partner with Vietnam's top ranking investment
projects in large scale. For Vietnam, China stands among countries exporting goods to Vietnam
and ranked third among the imported goods (after the US and Japan). In the year 2000,

Vietnam had a rolling surplus in the trade balance with China is 111 million USD, however,
this trend has changed since 2001 when the trade balance was always in deficit from 211
million USD in 2001 to 663 million years 2002, more than 9 billion USD in 2007 and about
32.5 billion USD in 2015. This leads to many different, even opposite of impacts on Vietnam-
China trade exchange. The point is once the trade balance between the two countries is
continuous deficit, whether Vietnam must adjust the deficit to ensure economic growth ?
Meanwhile, Vietnam also have to improve the competitiveness of exported goods import and
substitution without compromising to macroeconomic stabilization such as foreign debt, price
fluctuations and implementation of international economic integration commitments.
2.2.2. China Protectionist policies on Vietnam’s exports

Impacts of China’s protectionist policies on Vietnam
 The trade deficit remains between two countries are getting bigger
Along with the turnover of two-way trade, as well as the gap growth rate between
import and export of Vietnam -China in a unfavourable way for Vietnam, Trade Balance seems
to benefit China and create disadvantage for Vietnam.
Since China joined the WTO in 2001, Vietnam continuously getting trade deficit from
China with an increasing trend. Specifically, Vietnam's trade decifit from China in 2002 was $
0.64 billion (3 times more than about $0.19 billion USD in 2001), in 2005 to nearly 2.7 billion
USD (14 times higher), in 2010 to 12.7 billion USD (more than 66 times), in 2014 to 28.9
billion USD (more than 152 times) and reached a record level 32.4 billion USD in 2015, more
than 12.1% compared to 2014, and more than 170 times that of 2001. The worrying thing is,
trade deficit from China accounts for mostly proportion in the total trade deficit of Vietnam all
over the world.
As we can see, during research, the proportion of trade deficit of Vietnam with China in
Vietnam's total trade deficit Male has increased dramatically from 18% in 2001 (0.19 USD
billion compared to 1.1 billion USD), to 64% in 2007 (9.06 billion USD compared to 14.1
billion USD), 86% in 2009 (11.04 billion USD compared to 12.9 billion USD), more than
100% in 2010 (12.71 billion USD compared to 12.6 billion USD USD) and 136% in 2011
(13.47 billion USD compared with 9.9 billion USD). In 2012 and 2013 and 2014,even the trade
balance of Vietnam has a surplus (although at a low level), the trade balance of Vietnam with
China still deficit in odrer is 16.4 billion USD, 23.70 billion USD and 28.9 billion USD.
Especially, In 2015, Vietnam’s trade deficit from China increased about 9.6 times compared to

general trade deficit. The current situation of Vietnam's deficit with China and with the rest of
the world as above shows, Vietnam are having to use a trade surplus with other countries to
offset the shortage of trade decifit with China, in other words,Vietnam is exporting for China.
However, unfortunately, this also tends to decrease, due to Vietnam trade decifit from China is
still growing fast while exports to other markets were narrowed because many reasons.
However, these are just the main figures being published by the authorities, not mention
the value of smuggled goods from Chinato Vietnam, which is very popular in the Vietnamese
market. This is one of the main reasons that make the data of the Chinese statistical agency
about measuring the value of the goods that China exported to Vietnam and the data from
Vietnam statistics agency have nearly 20 billion USD in difference only in 2014 alone and
16.62 billion USD in 2015. That proves that Vietnam is relied more on the supply source (both
goods consumption and production) from the Chinese market.
 Features in proportion of Vietnam-China export
In export, with many advantages Vietnam has focused on exporting to China 4 main
commodity groups, with about 100 types of goods divided iton 4 main groups is:
- Fuel: oil, coal, metal ores, oilseeds, medicinal herbs(medicinal plants),…
- Agricultural products: food (rice, dry cassava), vegetables and fruits (especially
tropical fruits such as: banana, mango, rambutan, dragon fruit ...), tea, cashew nuts;
- Fishery group: fresh aquatic products, aquatic products frozen, some specialties such
as: snake, turtle,…
- Consumer goods group: handicrafts technology, footwear, high quality furniture,

detergent, cake candy,…
However, in terms of
technology content that Vietnam
exported, though improving, the
proportion of technology content
in the exported goods of Vietnam
to China is still slowly to be
improved still inferior to most
domestic countries area.
According to the research by the

Research Institute Central Economic Management (RICEM), Vietnamese exported goods only
higher than Indonesia in high technology percentage, the rest are less than others countries in
ASEAN and far behind Korea and Japan. Thus, it can be said, the products exported has
medium technology content are not being improved although those reflects the real level of
industrialization is a real problem for Vietnam.
In the opposite direction, Vietnamese goods that imported from China focus on these
group of processing and manufacturing products, of which 9 groups reached turnover of more
than 1 billion USD like machinery and equipment, accessary; steels; electronics furnitures and
cell phones accessories; chemistry; plastic products; cars; textile materials and leather shoes.
A two-way export and import structure hold specific characteristics of a trading

relationship between a developed and underdeveloped country. In that condition, Vietnam still
has a trade deficit and heavily rely on importing from China is inevitable and the situation may
still remains for a few years later.
 Vietnam’s trade dependance on China getting higher and higher
In particular, it can be said that Vietnam is getting more and more dependent on
1
substantial supplies of goods from China. Specifically, in recent years, China accounted for
6
1 1 1
to of the export turnover and to of the import turnover and reach over 100% in the
7 4 3
general trade deficit of Vietnam every year.
Moreover, many Vietnam's exports mostly rely on China’s market to survive and nearly
all industries have to rely on imported raw Chinese materials and equipment to produce exports
and many export products of Vietnam (such as textiles, footwear, ...) must rely on materials
from China to produce and export. Maybe not exaggerating when many people said that
Vietnam is no different than "a worker for China” through importing raw materials and
equipment from China, then outsourcing and exported them to gain benefits thanks to cheap, or
much more, Vietnam's economic is the "extended arm" for many economic branches in China .
At the same time, Vietnam is a cheap resources, passive and always having difficulties, and
have to export agricultural products and minerals production and raw materials for the "world
factory" China.
 Border trading between China and Vietnam
Smuggling is quite common and very difficult to control, especially Vietnamese

enterprises, often passively due to the policy mechanism between China and Vietnam still have

many disagreement, especially that the Chinese often changes their trade mechanisms and
policies.
The ease of the Chinese market in the importion of raw agricultural products has caused
Vietnamese farmers produced low quality products, using a lot of toxic chemicals, resulting in
when Chinese businesses don't buy any products with such a quality are not possible sold to the
Chinese market.
- In order to develop exports, especially increase the proportion processing industry and
services, improving capacity
competition of exported
goods. The current, China is
the number 1 import partner
rubber, cashew nut, third in
seafood which import
country exports over 56% of
the value of fresh fruit and
vegetables for export
Vietnam. Promoting exports
to the market China is a
"public" issue of the world
and will continue to grow
rapidly in the coming years.
The problem here is if such Figure 7. Chinese traders buying Vietnamese agriculture products
as the structure of goods
exported from Vietnam to
China has not had any strong moves exports of raw goods to commodities with a high content
of added value, the improvement in trading will be very difficult to implement.

CHAPTER III. VIETNAM’S RESPONSE TO CHINA’S POLICIES &

CONCLUSION
3.1. VIETNAM’S RESPONSE
Increase the percentage of equipment imported from countries with modern computer art
sources like America, EU, Japan, ... Especially, do not import equipment, computers,
technology outdated without consider its value. New conversion formula, improve
productivity, reduce product prices, at the same time, to create conditions development of
alternative assistive technology imported raw materials from the Chinese market.
- Improve the exchange rate between the VND and NDT flexibly and set up the system
Bank at the border gate favorable conditions for import-export activities between the two water
but not give bad variable of the background Vietnam economy
3.1.1. Short-term response

To quickly improve trade between Vietnam South - China, we need it in the short term
Quick implementation of the following solutions:
- Review all imported group rows password between Vietnam - China on the database
taxes are already committed between the two countries, Vietnam the previous male quickly
adjusted some types of goods that Vietnam imports China with a lower tax rate Commitment,
with this solution can deliver results that trade improves future results.
- Need more strict management of sales exchanging goods at Viet Trung border gate.
- While we don't have the number standard specifications for some goods China enters
our country, before we impose it using the correct technical standards of some countries in
ASEAN such as Thailand, Malaysia, Indonesia and Singapore, ... with fast time China's regime
number is not safe quality imported into our country.
3.1.2. Long- term response

Continuing promote export of goods to China on the basis of exploiting Vietnam's
profits In particular, to encourage the main export deep and valuable ranks and mode items
increase high. Attention should be paid to exploit the benefits from the Chinese market,
limiting the danger China profits right from the planning economic and trade policy.
Completing import management policy in the direction of not letting trade deficit from
China increase excessively:
- Strengthen import controls through prevent entry smuggling goods from ASEAN
countries and China to protect domestically produced and consumer goods.

- Complete and develop a system of standards for imported technologies to limit the
import of outdated and old technologies.
- More simplified import licensing procedures, including licenses managed by

specialized agencies, further expanding the subjects allowing import and export of goods and
services, especially in the area. private economic sector and private business.
- The taxes should encourage the import of raw materials and fuels serving for export,
essential consumer goods, restricting the import of luxury consumer goods, considering
reducing non-promotional products. export promotion
- Establish and make good use of technical barriers, non-tariff measures in accordance
with WTO rules in management.
Import
- Strictly inspect the quality of imported goods to ensure standards of production and
circulation on the domestic market
- In the strategy of importing from China, it is necessary to avoid importing goods for
improper production, adversely affecting the domestic manufacturing industries; to reduce and
then proceed to prohibit the import of old, outdated machinery and equipment, resulting in low
efficiency and causing environmental pollution.
- Accelerate economic restructuring and development of supporting industries: In the

context of increasingly deep and comprehensive international economic integration and the
strong development of the modern science and technology revolution Our country's economic
structure will have qualitative changes, link to the regional economic structure, increase
competitiveness and economic growth capacity as well as meet the requirements of the division
of labor. and international and regional cooperation. Moving from the model of modular
processing and assembly to an integrated model of production and strong development of
supporting industries in agricultural product processing, textile industry, cars, motorcycles,
electronics, ... has special significance towards reducing trade deficit in the long term.
Conducting market diversification, including promoting and strengthening trade

relations with the US, EU, Japan, Korea and ASEAN.
Improving the investment environment to take advantage of the opportunity once the
Chinese economy declines and tension with the United States, Japan and South Korea, FDI
inflows will move out of China to find safe investment and more favorable as is happening in

the past few years. At the same time, must take measures to selectively attract investment from
China in line with Vietnam's economic development orientation
Accelerate the process of international economic integration comprehensive and

profound.
At the same time with export boosting, Vietnam also needs to pay attention to exploit
and develop.
CONCLUSION
China was and continues to be Vietnam's most important trade partner. Bilateral trade
turnover is non-stop increase year by year, especially after China enter WTO. Through
studying the current state of affairs Trade relations between the two countries from 2000 to
present, yes can see the trade deficit of Vietnam with China going on at an alarming rate and
Vietnam is under increasing dependence focus on the Chinese market. That was and are
impacting not small, especially in the aspects Negative edge to the Vietnamese economy. Want
to solve this problem from the root, only One way is to adjust the export management
mechanism Import (import-export) with China is still very loose, get rid of heavy dependence
on Chinese market, commodity structure renewal import and export is outdated and
unfavorable for Vietnam, development of supporting and lifting industries competitive capacity
of Vietnamese goods. Job China shifts to a growth model relying on imports to stimulate
domestic demand is also one New factors help Vietnam improve relations Bilateral trade if
businesses Vietnam knows to seize this opportunity to promote export to your country
strengths items that China is in great demand.To reduce trade deficit and reduce dependence
China, Vietnam must definitely have a change new comprehensively and basically in terms of
economic structure, from there, production model conversion, implementation industrialization,
modernization and upgrade structure Current import-export. Vietnam needs to step by step find
a way to be able to participate in the global value chain in segment higher current can be
reduced trade deficit with China in particular and the world in general, thus catching up with
other developed countries in the region and the world.

LIST OF REFERENCE
1. Hoekman, B., Winters, L. A. "Trade and employment: Stylized facts and research
findings" In: Ocampo, J. A., Sarbuland, K., Jomo, K. S. (eds). Policy Matters:
Economic and Social Policies to Sustain Equitable Development. New York: Zed
Books, 2007.
2. Davidson, C., Matusz, S. J. International Trade with Equilibrium Unemployment.
Princeton, NJ: Princeton University Press, 2009.
3. Dutt, P., Mitra, D., Ranjan, P. "International trade and unemployment: Theory and
cross-national evidence" Journal of International Economics 78:1 (2009): 32–44.
4. Kletzer, L. G. "Trade-related job loss and wage insurance: A synthetic
review" Review of International Economics 12:5 (2004): 724–748.
5. Kee, H. L., Hoon, H. T. "Trade, capital accumulation and structural unemployment:
An empirical study of the Singapore economy" Journal of Development
Economics 77:1 (2005): 125–152.
6. Cirera, X., Willenbockel, D., Lakshman, R. W. "Evidence on the impact of tariff
reductions on employment in developing countries: A systematic review" Journal of
Economic Surveys (2013).
7. Menezes-Filho, N. A., Muendler, M. A. Labor Reallocation in Response to Trade
Reform NBER Working Paper No.17372, 2011.
8. Wacziarg, R., Wallack, J. S. "Trade liberalization and intersectoral labor
movements" Journal of International Economics 64:2 (2004): 411–439.
9. Verhoogen, E. A. "Trade, quality upgrading, and wage inequality in the Mexican
manufacturing sector" The Quarterly Journal of Economics 123:2 (2008): 489–530.
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12. International Economics, Dominick Salvatore

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NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF TRADE AND INTERNATIONAL ECONOMICS

Tel: 0983478486, Email: langnguyen2200@gmail.com,

Students : Vu Dinh Long & Lai The Long

Student Email: vudinhlong2001@gmail.com & long.lai990091@gmail.com

Major : International Economics

Class : International Economics 61 B

Type of Education : AEP

LỜI CAM ĐOAN

Hà Nội ngày 20 tháng 1 năm 2021

Sinh viên thực hiện

Vu Dinh Long & Lai The Long

Hà Nội, ngày 20 tháng 01 năm 2021

Sinh viên thực hiện

Vu Dinh Long & Lai The Long

VU DINH LONG & LAI THE LONG 2

VU DINH LONG & LAI THE LONG 3

CHAPTER I. INTERNATIONAL TRADE AND PROTECTIONISM

VU DINH LONG & LAI THE LONG 4

Historically, openness to free

1.1.2. Roles and functions of international trade

VU DINH LONG & LAI THE LONG 5

VU DINH LONG & LAI THE LONG 6

1.1.3. Influences of international trade

2) Impact of National Income:

If a country’s income level (national income) increases by a higher percentage than

3) Impact of Government Policies:

VU DINH LONG & LAI THE LONG 7

4) Subsidies for Exporters:

If a country’s government imposes a tax on imported goods (often referred to as a tariff),

In addition to tariffs, a government can reduce its country’s imports by enforcing a

6) Lack of Restrictions on Piracy:

VU DINH LONG & LAI THE LONG 8

7) Impact of Exchange Rates:

VU DINH LONG & LAI THE LONG 9

1.2. PROTECTIONIST POLICIES

1.2.2. Roles and functions of Protectionism

VU DINH LONG & LAI THE LONG 10

Protectionist policies come in different forms, including:

VU DINH LONG & LAI THE LONG 11

1.2.3. Influences of Protectionism

More growth opportunities: Protectionism provides local industries with growth

Stagnation of technological advancements: As domestic producers don’t need to

VU DINH LONG & LAI THE LONG 12

VU DINH LONG & LAI THE LONG 13

CHAPTER II. CHINA’S INTERNATIONAL TRADE POLICIES

The paper attempts to offer a comprehensive review and assessment of China’s

The following paper is organized as follows. Part I explores the historical

VU DINH LONG & LAI THE LONG 14

2.1.2. Strengths and weakness of China in trading

2. Defence Power-China is the third largest defence power in the world.

Power Index rating: 0.0945,Total military personnel: 3,712,500

Total aircraft strength: 2,955

Fighter aircraft: 1,271

VU DINH LONG & LAI THE LONG 15

Combat tanks: 6,457

Total naval assets: 714

Defense budget: $161.7

2. Lack of innovation -China lacks in innovation.China when tried to make an impact

Trump in past 2 years is focussing more on China and preventing it to become a

3. Taiwan-Its one of the geo-political reasons. Taiwan is considered as the Achille’s

VU DINH LONG & LAI THE LONG 16

2.2. CHINA PROTIONIST POLICIES ON VIETNAM’S EXPORTS

VU DINH LONG & LAI THE LONG 17