As global supply chains faced increasing risks and disruptions, Vietnam has emerged as a promising destination for U.S. investors seeking to reduce their reliance on China.
Experts look at Vietnam as a favorable position to attract “friend-shoring” from the United States, providing opportunities for both nations to benefit economically. Despite this burgeoning economic relationship, analysts suggest that Vietnam is unlikely to politically realign with Washington against Beijing. Instead, Hanoi aims to strike a balance between fostering ties with the U.S. and maintaining essential relationships with its regional neighbor, China.
U.S. Treasury Secretary Janet Yellen had recently praised Vietnam as a “key partner” in the effort to diversify supply chains away from China.
“Vietnam welcomes the U.S. ‘friend-shoring,’ which is beneficial to both countries and contributes to Vietnam’s growth,” Le Dang Doanh, an economist in Hanoi who served as an adviser to the late Prime Minister Vo Van Kiet, told VOA Vietnamese in a phone interview.
While we have been seeing a shift in the Foreign direct investment (FDI) from China to Vietnam, particularly since the escalation of trade tensions between the U.S. and China, Vietnam does not have any intention of drawing U.S. businesses away from China entirely. It recognizing the established investments and manufacturing capacities in its neighboring giant and is looking to attract U.S. companies to relocate only certain production operations to facilitate exports to the United States.
The nation boasts advantages such as cost-effective, young, and productive labor, making it an appealing destination. Vietnam’s geographical position as a neighbor of China and between Northeast and South Asia, the nation has a competitive edge in regional competition for U.S. investments.
Currently, the U.S. is Vietnam’s second-largest trading partner after China. The bilateral trade between them reached almost $139 billion in 2022. The country is a significant export market for Vietnamese textiles, footwear, and electronics. Now, the interest from the U.S. investors’ in Vietnam’s green energy and semiconductor manufacturing sectors reflects the nation’s potential to join the global supply chain.
Vietnam has already bagged significant investments from leading semiconductor companies like Amkor and Intel, which is bolstering its reputation as an attractive destination for high-tech industries.
While Vietnam remains open and welcoming to U.S. businesses, there are concerns about potential retaliation from China limiting their comprehensive partnership with the US.
As per experts Vietnam recognizing the importance of both economic relations and regional stability will tread carefully in navigating the intensifying competition between China and the U.S.
As Vietnam continues to strengthen its economic ties with the U.S., its pivotal role in facilitating trade and commerce in the dynamic South China Sea region is increasingly evident. The country’s strategic location, coupled with its participation in the global supply chain, makes it an essential player in shaping the future of international trade.