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China Finding Vietnam a Demanding Business Partner

China Finding Vietnam a Demanding Business Partner

China is finding Vietnam to be a tough partner as Chinese firms try to do more business with the long-time political rival along its southern border.

Vietnam’s legislature, faced with public protests, has put off until May 2019 a bill that would let Chinese and other foreign investors use special economic zones. The government in Hanoi also warns against taking out preferential loans from China for infrastructure development. It has cautioned as well against Chinese development aid.

Still, the Vietnamese are allowing a surge of private business with China as it benefits their country, experts say. In one sign of that trend, Chinese companies are setting up factories in Vietnam to dodge the Sino-U.S. trade dispute, said Maxfield Brown, senior associate with the business consultancy Dezan Shira & Associates in Ho Chi Minh City.

In a separate development, companies along the border from October can settle deals in Chinese yuan per popular demand as trade increases, the Viet Nam News reported in August.

“My general take is that economic relations between the two countries will get stronger in the next five years partly because of America’s more America-first attitude to Asia Pacific, but also there’s just a lot of economic benefits,” said Adam McCarty, chief economist with Mekong Economics in Hanoi.