CHINA Hanoi, the new ‘engine’ of growth in Asia that unseats Beijing

According to the World Bank, the Vietnamese GDP will reach +7.2% this year. Chinese growth slows to 2.8% rise, lowest since 1990. Most ASEAN countries outperform China. However, only Vietnam has the potential to replace China as the “factory of the world”.

Beijing () – World Bank estimates, published yesterday, indicate that Vietnam’s Gross Domestic Product could increase by up to 7.2% by the end of the year. In this way, the country would become the new “engine” of growth in the Asia-Pacific region, displacing China.

Vietnam’s success is largely due to its effective Covid-19 containment policy and stable population growth. Another important factor is its growing role in the global supply chain, mainly due to a still very competitive labor market.

The restrictive measures and closures imposed by the “Zero Covid” policy promoted by Xi Jinping, the real estate crisis and the pressures against the high-tech giants have encouraged the slowdown in the Chinese economy. The World Bank forecasts 2.8% growth in China by 2022 (4.5% next year), the lowest figure since 1990, when it reached 3.9%.

For the first time in 32 years, China’s GDP will grow below the average for developing countries in East and Southeast Asia. In addition to Vietnam, the Philippines (6.5%), Malaysia (6.4%), Indonesia (5.1%), Cambodia (4.8%) and Thailand (3.1%) promise to do better than China.

On the other hand, an analysis by FDI Markets shows that Beijing is losing ground in terms of foreign direct investment, going from a share of 49.1% in 2003 to less than 10% between January and July 2022. ASEAN countries (Association of Southeast Asian Countries) are overtaking China in this area.

Hanoi aspires to replace Beijing as the new “factory of the world”, a position that the Chinese have held for 30 years. Many foreign companies operating in China are determined to move part of their operations and production to Vietnamese territory, where they find lower costs and fewer regulatory restrictions. According to Chinese media, Apple is in talks to first produce the Apple Watch and MacBook in Vietnam; Samsung is keen to produce microchip components in the country, and US semiconductor designer Synopsys is working to expand its operations.