Vietnam replacing China as the new 'engine' of growth in Asia
According to the World Bank, Vietnam’s GDP will grow 7.2 per cent this year, compared to 2.8 per cent for China, the lowest since 1990. While most ASEAN countries are also doing better, only Vietnam has the potential to replace China as the “factory of the world”.
Beijing (AsiaNews) – With GDP estimated to grow by 7.2 per cent this year, Vietnam is overtaking China and becoming the new engine of growth in the Asia-Pacific region, this according to the latest World Bank economic outlook report published yesterday.
Vietnam's success is due in large part to its effective COVID-19 containment policy, stable population growth, and its increasing role in the global supply chain, especially given its competitive labour force.
China’s repeated COVID-19 lockdowns by order of Chinese President Xi Jinping, the crisis of its real estate sector, and the crackdown on hi-tech giants have slowed down its economy.
The World Bank expects China to grow by 2.8 per cent this year (4.5 per cent next year), the lowest figure since 1990, when it was 3.9 per cent.
For the first time in 32 years, China's GDP growth will be below the average of developing countries in East and Southeast Asia.
In addition to Vietnam, the Philippines (6.5 per cent), Malaysia (6.4 per cent), Indonesia (5.1 per cent), Cambodia (4.8 per cent) and Thailand (3.1 per cent) will do better than China.
An analysis by fDi Markets also shows that China is losing ground in terms of foreign direct investment, from 49.1 per cent in 2003 to less than 10 per cent between January and July 2022, clearly overtaken by members of the Association of Southeast Asian Nations (ASEAN).
Vietnam is hoping to replace China as the new "factory of the world", a position the latter held for 30 years. The more so, as many foreign companies present in China are moving part of their activities and production to Vietnam, where they find lower costs and fewer regulatory restrictions.
According to Chinese media, Apple is in talks to manufacture the Apple Watch and MacBook in Vietnam for the first time, while Samsung is ready to make components for microchips in the country. For its part, US semiconductor designer Synopsys plans to expand its operations in the Southeast Asian country.