China threatens war with Vietnam

How Vietnam benefits from the trade conflictThe laughing third?

The first choice falls on Vietnam, if only because of its geographical proximity: wages are low, the infrastructure is developing quickly, the country has numerous free trade agreements with other nations.

As a result, there has been a veritable flood of new settlements in Vietnam's industrial areas, but does that mean anything good for the Southeast Asian country in the long term? Le Hong Hiep of the Institute for Southeast Asian Studies in Singapore doubts this:

"Vietnam cannot build a new port or a new industrial park overnight. It is also problematic when it comes to the workforce: not enough workers and technicians can be trained that quickly."

So the pace of development is far too fast for the country, and investors could turn their backs on it in disappointment. Some companies are already reporting bottlenecks in the ports - they are still too small to cope with the growing number of container ships.

Vietnam is also threatened with US tariffs due to an export surplus

The traffic is growing too fast for the narrower streets; Traffic jams, construction sites and traffic chaos cost a lot of time. The companies from southern China's huge industrial regions with their high-speed trains and multi-lane roads are used to this differently. But that is not all.

"If the companies settle successfully, Vietnam's exports to the US will increase. And that becomes a risk for Vietnam, because the US sees Vietnam as one of the main sources of the trade surplus with the US. President Trump and his administration have already warned Vietnam that that they could raise taxes on Vietnamese products. "

Something that the country's government is dying to avoid. It is therefore willing to do something to the US: For example, it emphasizes that it does not manipulate its currency. And, this is also very important to the USA:

"Vietnam tries to prevent Chinese companies from exporting their products through Vietnam in order to avoid punitive tariffs. And there have been cases where the government has taken action against this illegal activity."

Vietnam is competing for high-tech industry

The government of the Southeast Asian country knows how important the influx of foreign companies is. Foreign investments increased by 86 percent in the first quarter of this year. Vietnam's economy grew by 7.1 percent last year.

The country is happy to allow labor-intensive industries such as clothing or shoe production to move on to other Southeast Asian countries such as Malaysia or Indonesia. The industrial settlement there is growing strongly - especially on the island of Batam - because it is located near the international port of Singapore.

Vietnam, on the other hand, advertises especially for high-tech companies - and Samsung, Intel and LG have already followed the call. Politically, Vietnam moves on a field between its former war opponent, the USA, and its intimidating large neighbor China

"Vietnam is very pragmatic in its dealings with both of them. And I think Vietnam sees China as a very important partner, but the two countries are in conflict over the South China Sea."

Land could restrict relationship with China

In the dispute over the South China Sea, China is flexing its muscles more and more, something that expert Le believes could ultimately lead Vietnam to restrict its economic ties with China.

It is all the more important to orientate yourself towards the West, towards partners such as the USA, Japan, India or the EU. He knows which side he would choose in this current conflict:

"It seems to me that China is the loser, the US will prevail."