Nurturing the special traditional brotherly friendship between Vietnam and China
Vietnam and China, as friendly neighbors, share a longstanding traditional relationship. In 2008, the establishment of a comprehensive strategic cooperative partnership marked a significant milestone aimed at expanding, fostering, and deepening the relations between Vietnam and China. This partnership serves the interests of both nations, contributing to peace, stability, and development in the region. Over the years, economic, trade, and investment cooperation between Vietnam and China has grown increasingly robust.
Recent times have witnessed regular exchanges and collaboration between high-level leadership delegations from both countries, elevating the comprehensive cooperation between Vietnam and China to new heights. Political trust has been reinforced, catalyzing enhanced cooperation in economy, trade, and investment. Notably, agriculture and rural development consistently garner close attention and direction from the leaders of both Parties, States, and Governments.
China has maintained its position as Vietnam’s largest trading partner for 20 years, with Vietnam reciprocally holding the title of China’s primary trading partner in ASEAN and ranking as China’s fourth-largest trading partner globally (following the United States, Japan, and Korea).
As per the General Department of Vietnam Customs, the bilateral trade turnover between Vietnam and China is projected to reach USD 175.6 billion in 2022. This comprises Vietnamese exports totaling USD 57.7 billion and imports amounting to USD 117.87 billion. The colossal potential of the Chinese market is underscored by its GDP scale nearing USD 20 trillion, securing its position as the world’s second-largest economy, trailing only the United States. Boasting a population 14 times larger than Vietnam’s and consistently high GDP growth, Chinese consumers are interested in embracing Vietnam’s distinctive agricultural products. Furthermore, China’s rich cultural traditions, akin consumption habits to Vietnamese people, and a history of economic and trade relations spanning millennia further strengthen the symbiotic ties. Bilateral cooperation agreements and participation in multilateral accords, such as the ASEAN-China Free Trade Agreement (ACFTA), the Regional Comprehensive Partnership Agreement (RCEP), and potential involvement in the Comprehensive and Trans-Pacific Partnership Agreement (CTPP), underscore the economic and trade relationship between Vietnam and China, aligning with Vietnam’s strategic foreign economic policy goals.
China’s demand for high-quality Vietnamese agricultural products
During the China-ASEAN Expo (CAEXPO) and the 20th China-ASEAN Business and Investment Summit (CABIS) held in Nanning City, Guangxi Province, China, in September 2023, discussions between Prime Minister Pham Minh Chinh and Prime Minister Li Qiang, affirmed China’s commitment to open its market to Vietnamese goods further. This emphasis particularly extends to high-quality agricultural and aquatic products. The commitment includes expanding market access, enhancing trade efficiency through border gate infrastructure upgrades, aligning policies, establishing smart border gates, and promoting transactions in local currencies. Prime Minister Li Qiang directed relevant Chinese ministries and branches to actively engage in discussions with Vietnam, fostering specific areas of cooperation and collaboratively constructing stable supply and production chains.
This commitment was reaffirmed at the 12th Meeting of the Vietnam-China Joint Economic and Trade Committee, convened in November 2023 in Hanoi. Chinese Minister of Commerce Wang Wentao underscored the substantial demand in the Chinese market for high-quality Vietnamese agricultural products, expressing a warm welcome to further collaboration. Looking ahead, the Chinese Ministry of Commerce will persist in coordinating efforts to facilitate opening the Chinese market for Vietnamese agricultural products.
With a population exceeding 1.4 billion people and a burgeoning middle class, China stands as a significant market for a myriad of high-quality AFF products. Despite this, the current market share of Vietnamese agricultural products remains relatively modest, accounting for less than 5% of China’s total import value within this product category. This presents an opportunity for Vietnamese businesses to expand their market share for high-quality AFF products in China.
The post-pandemic economic recovery in China and support for market opening have propelled impressive growth in Vietnam’s AFF product exports to China in 2023. The export trajectory is expected to maintain its robust momentum. A testament to this growth is evident in the results for the first 11 months of the year, with export turnover reaching USD 11.1 billion – an 18% increase over the same period and accounts for the highest export rate of 23.2%. China currently holds a substantial share in Vietnam’s total fruit and vegetable export value, constituting nearly 54%, including 90% of lychee output, 80% of dragon fruit output, and over 90% of cassava output and processed cassava products.
The positive outcomes can be attributed to China’s strategic shift away from the Zero Covid policy, progressively easing and eventually abolishing stringent epidemic control measures. This move has unleashed pent-up consumer demand and expedited and facilitated the customs clearance process for import and export activities. Moreover, China’s continued approval of official exports of new Vietnamese fruits to China has positively affected trade dynamics in recent times.
The fruit protocols signed with China last year have provided substantial advantages to Vietnam’s fruit and vegetable export activities from the outset of 2023 to the present. Presently, 14 varieties of Vietnamese agricultural products enjoy official export status to the Chinese market. These include dragon fruit, longan, rambutan, mango, jackfruit, watermelon, banana, mangosteen, lychee, black jelly, lemon vines, durian, sweet potatoes, and bird’s nest. Furthermore, China has extended export licenses to cover 12 fruit and vegetable products, milk, 805 seafood processing facilities, 40 live crab and lobster packaging facilities, and 05 packaging facilities for black tiger shrimp and whiteleg shrimp, encompassing 128 species/product types and 48 aquatic species.
The opening of the market for fruit and vegetable products, with a notable emphasis on durian, has propelled a remarkable surge in Vietnam’s fruit and vegetable exports to China in 2023. For the first ten months of 2023, Vietnam’s fruit and vegetable export turnover reached USD 3.2 billion, more than doubling compared to the corresponding period in 2022. Particularly noteworthy is the surge in durian exports, a fruit highly prized for its economic value and popularity among Chinese consumers. In the first half of the year, durian exports saw a staggering increase, reaching USD 876 million – a remarkable leap from the USD 44.2 million recorded in the same period last year, as reported by the General Department of Vietnam Customs.
The export of AFF products to China is yielding impressive results, marking a highly positive development in light of the considerable challenges faced by Vietnam’s overall trade in 2023. This achievement carries heightened significance, particularly given that agricultural products represent a traditional commodity group deeply intertwined with the livelihoods of millions of farming households in Vietnam.
Elevating Vietnam’s agricultural product quality to meet China’s high standards
Vietnam, boasting significant potential in agriculture, particularly in specialties, stands as a promising source of agricultural products for Chinese consumers. The country’s advantageous geographical location lends itself to efficient trade and commerce, conferring a competitive edge in logistics compared to other nations. The swift transportation of fresh agricultural products, including vegetables, fruits, and seafood, from Vietnam to China ensures they reach consumers promptly, maintaining their natural quality and freshness.
While the Chinese market presents abundant opportunities, the competition is intense. Vietnamese brands must demonstrate to Chinese consumers the exceptional quality and reliability of Vietnamese agricultural products in trade. Consequently, Vietnam has implemented various measures to enhance product quality, align with import requirements, and sustainably expand its export market share in China. Key strategies include:
First, regularly updating information about market demand and Chinese regulations on quality standards, food safety, and disease safety. Collaborative efforts by the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development, in conjunction with Chinese partners and localities, have involved organizing conferences and seminars to disseminate policy changes in the Chinese market, offering substantial support to businesses. Additionally, the dissemination of handbooks guides businesses in the export of agricultural products.
Second, implementing strict quality management practices, tracing product origins, and ensuring compliance with Chinese regulations. Recent initiatives by the Ministry of Agriculture and Rural Development have decentralized the management of issuing codes for growing areas and establishments. Localities are now empowered to proactively carry this responsibility, from document reception and verification to issuing growing area codes. Vietnamese specialized agencies have provided active guidance and professional training on China’s import regulations, reinforcing adherence to the new requirements. Simultaneously, it enhances guidance, supervision, and inspection of code issuance, management, and utilization at local levels. Coordination with ministries, branches, and localities in inspecting, examining, and addressing violations. Plant quarantine units at border gates intensify inspecting and controlling goods and information related to growing areas and packaging facilities. Swift detection and rigorous handling, including the refusal to issue plant quarantine certificates for non-compliant shipments, demonstrate the commitment to upholding regulations.
Third, to ensure the uniformity and high quality of exported AFF products, emphasis is placed on achieving standardization across key dimensions, including quality, packaging, labeling, food safety and hygiene, traceability, logo, and national brand. With the visit of the General Secretary and President of China, Xi Jinping, the Ministry of Agriculture and Rural Development coordinated with the General Administration of Customs of China to complete and sign the Protocol on plant quarantine requirement for watermelons exported from Vietnam to China; a Memorandum of Understanding for the establishment of foot and mouth disease-free zones using vaccines. In addition, the two sides are coordinating closely to complete procedures and soon sign a Protocol on exporting frozen durian, fresh coconut, medicinal herbs, and other Vietnam’s fruits to China.
Fourth, Vietnam is committed to standardizing border trade operations and regularly coordinates with the Chinese side to address traffic congestion. At the 7th China-ASEAN Agricultural Cooperation Forum in September 2023 in Nanning City, Deputy Minister Phung Duc Tien and leaders of the People’s Government of Guangxi Zhuang Autonomous Region, China, signed a Memorandum of Understanding on agricultural cooperation. The aim is to foster cooperative relationships in agriculture and rural development, promoting trade and investment in the agricultural sector. This Memorandum outlines specific cooperation areas, such as reinforcing collaboration in agriculture and rural development, expediting customs clearance for agricultural and aquatic goods, promoting trade and investment in agriculture and fisheries, and establishing mechanisms to support businesses and the market. This serves as a model for the Ministry’s efforts to extend future AFF trade relations with other Chinese localities.
Finally, a pivotal step towards fostering stronger ties involves the establishment of the Association of AFF Export Enterprises of Vietnam and China. During a May 2023 business trip by the Ministry of Agriculture and Rural Development, Deputy Minister Tran Thanh Nam garnered consensus from the leaders of Guangxi and Yunnan provinces. The proposal for forming two Agricultural Business Associations, Vietnam-Guangxi and Vietnam-Yunnan, was well-received. This initiative aims to connect businesses on both sides, forming an integrated agricultural supply chain. In doing so, the authorities of both countries will facilitate conditions and promptly address any challenges that may arise.
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