Seize the opportunity from the latest unwinding of the zero-Covid Policy of China

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Many major export items to China are ready for the bounce back of China market. Photo: ST

China is Vietnam's largest import market, with an estimated turnover of 119.3 billion USD in 2022 - according to the latest data from the General Statistics Office. Most of Vietnam's exports to and imports from China are manufactured goods or other intermediate goods related to electronics and textile production, accounting for two-thirds of the total bilateral trade. Therefore, China's loosening "Zero Covid" policy has raised hopes that many Vietnamese industries will benefit.

As statistics, eight groups of industries will benefit from the relaxation policy in domestic epidemic prevention measures from the beginning of December and is expected to fully reopen the economy in the second quarter of this year, 2023. At the top is the aviation industry, where China has allowed Vietnamese airlines to operate regular routes - with a frequency of 15 flights/week instead of 2 flights/week as in the past. As a result, Airlines, Vietnam Airlines, Bamboo, and Vietjet quickly re-deployed routes to China.

Seafood takes the runner-up position due to the two largest catfish importers, China and Hong Kong, accounting for nearly 30%, reaching 638 million USD in 10 months of 2022, up 58% over the same period last year. The next groups of goods are also those with large exports to China, such as cement, rubber, steel, and rice. VNDirect believes that the opening of China will be one of the biggest driving forces supporting the growth of the export output of enterprises operating in these industries in 2023.

Speaking more about this issue, Mr Nguyen Dinh Tung, General Director of Vina T&T Group, said that Vietnamese agricultural products, including vegetables and fruits, especially durian, are potentially developed with the official contract of Official Export Protocol to China. Currently, Vietnam has four commodities that have a protocol with China: durian, banana, sweet potato, and passion fruit (pilot). In 2023, it is expected that eight more items (dragon fruit, watermelon, and mango) will be negotiated from unofficial to official export according to the protocol to China.

For the textile and garment industry, China is Vietnam's main yarn export market (accounting for 48% of Vietnam's total yarn export value). Therefore, the opening of China will be a factor stimulating the demand for the textile industry in Vietnam. Moreover, by 2023, the decline in inflation in some major import markets will help promote the recovery of the textile and garment industry. Similarly, the retail industry also benefits when China reopens.

In addition, the tourism industry is also expected to get more incentives. According to an analysis by experts of VinaCapital Group, foreign tourism contributed about 10% of Vietnam's GDP before Covid-19, and the number of foreign tourists is on track to reach 25% of the pre-epidemic level in 2022. Furthermore, the number of foreign tourists to Vietnam is estimated to reach over 50% of the pre-Covid-19 level by 2023 based on the assumption that the number of Chinese tourists will return to normal in the second half of next year.

Experts say that when China's economy reopens, the driving force for Vietnam's economic growth will be massive, impacting production and business capacity and improving the performance of Vietnam's enterprises. On the other hand, the highest inflation in the US and European countries may have passed with a gradual decrease, revealing many positive signs from the international trade situation.

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However, according to Dr Tran Minh Tuan, Vice President of Smart Invest Securities (AAS), opening up China's economy will not happen quickly. However, it requires preparation, so businesses must take advantage of opportunities and make thorough preparations from personnel and resources to partners. Nevertheless, Dr Tuan predicts that, at least until the second quarter of 2023, China will be able to open up to integrate with the world economy fully.