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Chinese language firms are fuelling virtually one in three new investments in Vietnam, in an indication of how they’ve relocated operations overseas to keep away from Donald Trump’s commerce struggle with Beijing.
However this shift is more likely to enhance Vietnam’s vulnerability to tariffs as Trump targets international locations which have racked up large commerce surpluses with the US.
Vietnam has been one of many greatest beneficiaries of commerce tensions between the world’s two largest economies. Its surplus with the US reached a report $123.5bn final yr, the third-largest after China and Mexico.
A part of that has been pushed by the exports of firms equivalent to Apple and Intel, which have moved manufacturing traces from China to Vietnam to unfold provide chain dangers and keep away from punitive tariffs.
However Vietnam can be more and more getting funding from Chinese language firms, accounting for 28 per cent of recent initiatives final yr, up from 22 per cent in 2023.
“Chinese language capital is pressured to return to Vietnam, though it isn’t low-cost any extra,” mentioned Meir Tlebalde, chief government of Sunwah Kirin Consulting Vietnam, which advises overseas traders.
She mentioned many Chinese language purchasers have been beneath stress from patrons within the US and Europe to maneuver out of China.
Most Chinese language manufacturing investments in Vietnam have been being made to keep away from US tariffs and safe a special “certificates of origin” for items produced by Chinese language firms, she mentioned.
Nonetheless, Vietnam’s provide chain continues to be extremely reliant on China. “At the least half of the uncooked supplies come from China,” mentioned Tlebalde.
Within the first month of 2025, Chinese language firms accounted for 30 per cent of initiatives, based on the latest authorities information. Chinese language investments additionally got here by way of Hong Kong and Singapore, the latter of which was the highest investor in greenback phrases in Vietnam final yr, analysts mentioned.
The surge in Chinese language investments in Vietnam and its dependence on Chinese language uncooked supplies might appeal to renewed scrutiny from the Trump administration, which has accused Beijing of circumventing tariffs by sending merchandise via third international locations.
Vietnam, as with many different international locations, can be extremely uncovered to Trump’s threats of reciprocal tariffs on US buying and selling companions. He has additionally threatened to levy 25 per cent tariffs on metal imports, which might additionally hit Vietnam, the US’s fifth-biggest provider of the steel.
Excessive tariffs would have a big effect on Vietnam’s economic system, deterring funding and placing a damper on one of many quickest progress charges on the planet. The US accounts for practically 30 per cent of Vietnam’s exports.
“There are some issues that the US might see that [increased Chinese investment] as oblique tariff avoidance by Chinese language firms, they usually might examine extra items coming from Vietnam,” mentioned Jack Nguyen, chief government of Incorp Vietnam, which advises overseas traders within the nation.
Most Chinese language funding in Vietnam is in meeting and low-to-mid-end manufacturing, from vehicles to photo voltaic panels. China’s strict curbs throughout the Covid-19 pandemic additionally pushed some firms to diversify exterior the nation.
A small share of Chinese language items have been additionally relabelled “Made in Vietnam” with none value-added and rerouted to the US, consultants mentioned, a follow that’s unlawful.
Hanoi had already elevated due diligence on Chinese language merchandise and investments, Nguyen mentioned. “They’d not enable Vietnam for use as a transshipment nation to the US on the threat of the US coming down onerous on Vietnam.”
Vietnam’s Prime Minister Pham Minh Chinh acknowledged dangers to his nation, telling an viewers in Davos final month that Hanoi was creating “political and financial options” to deal with its commerce imbalance.
He added that Vietnam would buy between 50 and 100 planes from Boeing within the subsequent 10 years in addition to different high-tech US tools — and agreed to golf with Trump “all day lengthy” if wanted.
This month, commerce minister Nguyen Hong Dien mentioned Vietnam was keen to extend agricultural imports from the US and that it might not impose any measures that might limit commerce with the US.
Vietnam might also must step up stress on the rerouting of Chinese language merchandise. Hung Nguyen, a provide chain professional on the RMIT College Vietnam, mentioned Hanoi might push Chinese language firms to spend money on higher-value manufacturing and tighten native content material necessities to power them to arrange a provide chain within the nation.
“I anticipate [Vietnam] will use technical boundaries to reject some Chinese language investments,” he mentioned.
However Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute, mentioned Vietnam must “stroll a advantageous line” between China and the US, its two largest buying and selling companions.
“I’d not anticipate Vietnam to brazenly push again in opposition to Chinese language funding,” mentioned Giang.
Extra reporting by Haohsiang Ko in Hong Kong
