HomeBlogOpportunities for Vietnam after the rupture in US-China relations
Opportunities for Vietnam after the rupture in US-China relations
The first two quarters of 2023 witnessed global economic instability. Moreover, the two leading world powers (the US and China) are extremely tense politically, with their relationship seemingly difficult to mend.
"The Taiwan Strait" is becoming a sensitive hotspot in the region, the main reason for the increasing tension in US-China relations. The Chinese military went on high alert after a US warship passed through the Taiwan Strait on April 16, 2023, following the end of China's military exercises in the area. A few days earlier, China conducted a large-scale military exercise to express extreme displeasure over Taiwanese leader Tai Anh Van meeting with US House Speaker Kevin McCarthy in California, USA. This exercise was conducted on a large scale and with high frequency to exert pressure on Taiwanese officials.
China's massive military exercises in the Taiwan Strait, source: Compiled
At the 28th Nikkei Asia Future Forum in Tokyo, Japan (May 25, 2023), Singapore's Deputy Prime Minister Lawrence Wong stated: "The political situation is becoming increasingly dangerous amidst the prolonged tension between the two sides related to the Taiwan Strait." Asian leaders are very concerned and apprehensive when discussing the "tense as a taut string" situation between these two superpowers. Asian countries are at risk of approaching the brink as the relationship between these two giants cannot be overcome or resolved.
The rift between the US and China has escalated concerns for many companies worldwide, with business owners striving to change and diversify their supply chains to avoid being drawn into the geopolitical competition between the two superpowers. This change is difficult to implement, and the economies of other countries cannot avoid being somewhat affected when the world's top two powers are in severe conflict.
US-China relations cannot be reconciled, source: Compiled
When the US-China relationship is unstable, Europe also takes action to cope with this situation. The US and Europe are gradually shifting their logistics and supply chain operations. They are seeking other potential markets to relocate and invest capital. Turning unrest into an opportunity, this is a great opportunity for Vietnam to "absorb" the abundant FDI capital inflows.
Vietnam is a developing country that converges many valuable factors attracting FDI capital. Security and stable political conditions are the top concerns for "FDI giants" to decide to establish a foundation for long-term investment activities in Vietnam. Additionally, our country has a favorable geographical location, numerous seaports, key regions, convenient for international trade and serves as a hub for connecting and penetrating surrounding economies to the west of the Indochinese Peninsula. Especially, with a population of over 90 million people, Vietnam has a significant competitive advantage in terms of abundant young labor force, skilled workforce meeting basic requirements, and competitive labor costs. Furthermore, institutional structures, legal transparency gradually being perfected are closely linked to integration, not only creating favorable conditions for investors to operate with peace of mind in the long term but also facilitating enterprises to participate in global supply chains and value chains smoothly. The government always creates conditions and implements preferential tax policies for FDI enterprises coming to invest in Vietnam. Thanks to that, Vietnam is always a bright spot, a potential destination for countries wishing to invest and establish business foundations in your country.
The Vietnam market – a fertile land for foreign investors, source: Compiled
The Trade Data Services (TDS) company stated that American and European companies have been enhancing commercial cooperation with Vietnam in recent years. Vietnam's exports to the US have increased from 10% to 16% during the 2018-2021 period, and they continue to rise at present. This is a positive and encouraging sign for a developing country like Vietnam, helping our economy to grow steadily, create more jobs, and increase income for the people.
What needs to be done now is for Vietnam to enhance its supply chain, meet the challenging standards set by these countries. Investing in infrastructure, updating advanced technologies, improving the skills of workers to create the foundation, build solid confidence for foreign businesses to invest in our country. Author: InterLOG synthesis and editing
