Vietnam Economy: Hanoi could see benefit from China-US trade tension

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02:42

Vietnam continues to be one of the world's economic success stories, with growth again set to be around seven percent this year. It has also become a darling of foreign investors, especially for labor-intensive industries. And there are signs that Vietnam could be one of the countries to benefit most from the China-US trade tension. CGTN's Rian Maelzer from Hanoi has more.

Remnants of what people in Vietnam call "The American War". These days it's another conflict involving America that's the big worry – the US-China trade war.

RIAN MAELZER HANOI "Vietnam is the most trade-dependent economy in ASEAN, with exports equivalent to more than 100 percent of its GDP. And the US, followed by China, are its two biggest export markets."

This Chinese-owned company makes socks for major brands, much of it for the US market. Garments and textiles, electrical and electronics, and footwear are Vietnam's main exports to the US. And the US tariffs against Chinese imports are driving many companies to speed up their expansion plans here.

DR. ADAM MCCARTY CHIEF ECONOMIST, MEKONG SECURITIES "As long as Donald Trump recognizes that Vietnam is a separate country to China, Vietnam is winning from the trade wars. The longer-term impacts, medium and longer term, have been really positive. I mean a lot more FDI is flowing in faster than usual and I think connected to this trade war issue."

But there are risks. Vietnam industry provides a lot of components for products to be assembled in China.

DINH THI QUYNH VAN, CEO, PWC VIETNAM "Vietnam is a production hub for a lot of companies, including for Chinese. So if there's a slowdown in the trade, certainly Vietnam is affected. You can see 90 percent of Vietnam's trade is outside of ASEAN."

DR. LE DANG DOANH FORMER GOVERNMENT ECONOMIC ADVISOR "Now to get a segment or a part of a market somewhere is more difficult and Vietnamese companies must be very smart, improve their competitiveness, reduce the cost."

Analysts say Vietnam's government will also need to continue its efforts to cut red tape, improve education and infrastructure, and combat corruption if it's to be sure of seeing more positives than negatives from the trade war. Rian Maelzer, CGTN, HANOI.