Xinhua, Washington :
US experts have said the recent upheavals in Vietnam will damage its reputation of good business environment and have a negative impact on its economic growth.
Protests broke out last week in some Vietnamese cities and escalated into looting and violence targeting Chinese enterprises and nationals, following Vietnam’s intensive disruptions of China Oilfield Services Limited’s normal drilling in waters of China’s Xisha Islands in the South China Sea earlier this month.
The violence has left at least two Chinese dead and more than 100 others injured. Firms from countries like Singapore, Japan and the Republic of Korea in Vietnam were also affected.
“The affected factories are also suppliers to Walmart, Target or other British and European retail outlets. Even though it (the violence) is mainly anti-Chinese, it affects the global supply chains that Vietnam is participating in. In that sense, it could damage the business environment reputation of Vietnam,” said Theodore Moran, a senior fellow with the Washington-based Peterson Institute for International Economics.
The recent upheavals were not going to “destroy” the already diversified Vietnamese economy, but would “have a negative impact on the growth,” Moran said in a recent interview with Xinhua.
Since opening its door to foreign investors, Vietnam has offered preferential land and tariff policies to attract foreign investment. After entering the World Trade Organization in 2007, foreign investment to Vietnam hit a peak of 71.7 billion U.S. dollars in 2008, but then slid following the global financial crisis.
In 2013, Vietnam attracted 21.6 billion dollars in foreign direct investment, up 54.5 percent year-on-year thanks to the favorable external factors including China’s industry upgrade, which has created many opportunities for its neighbor since 2011, according to official figures.
“If you have a strong anchor like China growing at 8, 9 or even 7 percent, it generates consequences for other countries (in the region) so they all grow faster than they might have,” said Yukon Huang, a senior associate at Carnegie Endowment for International Peace, a foreign policy think tank based in Washington.
Huang said Vietnam, which has massive demand for capital equipments, benefits enormously from importing lower-cost capital goods from China.
“My advice for Vietnam is that think about how you benefit from China’s rise rather than worrying about the insulation,” Huang said.
“A more prosperous China is good to the region, good for the Vietnamese economy,” Moran said. “If the geopolitical dimension could be managed smoothly, the economic dimension could be win-win for the region, because the rising amounts of trade with China are in both directions.”
The Chinese government has strongly condemned the violent activities in Vietnam and expressed deep discontent with the Vietnamese side for not taking effective measures to protect Chinese companies and workers.
