Chinese Investment Accelerates Growth in Vietnam

By Liu Gang



Chinese Investment Accelerates Growth in Vietnam

By Liu Gang

Workers at the Chinese-invested textile production line

multidimensional and multilevel investment by Chinese firms in Vietnam have led to huge improvements in economic cooperation between the two countries in recent years.

As neighbors enjoying good relations，Chinese investment has led to a policy alignment along both China’s Belt and Road initiative and Vietnam’s Two Corridors and One Economic Circle strategy. With investment in crucial projects， the local labor force has benefited through increased employment.

Projects with Chinese Investment

The construction of the Hai Duong Power Plant （1，200-MW）-a Chinese funded project built by a Chinese firm-recently broke ground in Vietnam’s Northern Hai Duong Province.this project represents the largest amount of investment by a single Chinese firm operating in Vietnam， amounting to US$1.9 billion. the project has been jointly managed by the China Power Engineering Consulting Corporation（CPECC）， a subsidiary of China Engineering Corporation， and Jaks Resources Berhad of Malaysia.

As Vietnam modernizes， energy demands are growing. According to Vietnamese government statistics， Vietnamese demand for electricity is set to grow at an annual rate of 10-12 percent over the course of the next few years.

Wu Chunli， the general manager of CPECC， said that the Hai Duong Power Plant will be equipped with two 600-MW sub-critical units and four special boilers， enabling it to be among the highest-capacity generating stations in Vietnam. It will ease power shortages in the province as well as surrounding areas，doing much to improve the pace and quality of Vietnam’s development.

Tan Sri Datuk Hussin Bin Haji Ismail， the Chairman of the Board of Directors at Jaks Resources Berhad， spoke highly of working so closely with a Chinese firm.

“CPECC is quite experienced in construction in the power industry，” Tan Srisaid. “It has conducted the survey， design and Engineering Procurement Construction of hundreds of power engineering projects in dozens of countries.”

The Hai Duong plant is representative of Chinese direct investment in Vietnam. Vietnam’s Ministry of Planning and Investment has indicated that by the end of 2015， total Chinese direct investment in Vietnam amounted to US$10 billion in a total of 1，284 projects. China was Vietnam’s ninth largest source of foreign investment. Seventy percent of Chinese investment in Vietnam has been related to manufacturing.

Bui Thanh Quyen， Secretary of the Hai Duong Provincial Party Committee and Chairman of the Provincial People’s Council，has expressed confidence in Chinese investment.

“I believe the success of this project will benefit the local population，” Bui said.

Enterprises’Social Responsibility

In addition to Hai Duong， large Chinese projects in other Vietnamese provinces have led to hiring of large numbers of local workers， particularly in rural areas where demand for employment is highest. Chinese firms operating in Vietnam tend to attach great importance to their social responsibilities. they view large projects as an opportunity to benefit the local population not only through the construction of much needed infrastructure， but also as a means to boost local employment.

Qi Zhili， the executive deputy general manager of the Build-Operate-Transfer（BOT） company working on the Hai Duong plant said that although the project has only recently begun， they have already finished flood prevention and drainage works along the northern line of the plant. they have also completed work on upgrading the 2.3 km road that links the two townships closest to the construction site.

Wang Jianping， Chairman of the Board of the China Energy Corporation Limited， spoke at the project’s opening ceremony. He indicated that his corporation will work not only on the construction of the project， but also on measures to protect the local environment and maximize social benefits.

Nguyen， a citizen of Vietnam’s northern Hoa Binh Province， is working on the first phase on construction of the Yongxin Coal Power Plant in Bing Thuan， a province in south of Vietnam.

“the Chinese company I am working for has confidence in me，” Ruan said. “they have entrusted me with vehicle schedule， canteen management and office supply procurement. They employ a large number of Vietnamese workers.”

Nguyen’s project accounted for the first Chinese project in Vietnam that implemented a BOT model， representing a new strategy in Chinese enterprise operations in the country.

Hu Suokin，the Economic and Commercial Counselor of the Chinese Embassy in Vietnam， said that Chinese enterprises in Vietnam have provided local citizens with more than 200，000 job opportunities. Exports and taxes paid by Chinese firms operating there have done much to promote local economic development.

Top-Level Design & Policy Support

Chinese firms have studied the Vietnamese market to help it improve its industries. Vietnam’s textile and garment industry， already a large international player，could improve further with a boost in local production. Vietnam’s export of dry goods in 2015 was worth US$27.5 billion， ranking fithh in the world. However， most production facilities are incomplete， and more than 80 percent of raw materials and accessories required in production are imported. In export trade，having local control of resources required for production is crucial. Large-scale Chinese textile and garment firms have begun investing heavily in Vietnam， bringing such expertise to a market with massive potential.

The China Texhong Textiles Group has invested nearly US$900 million in Vietnam’s provinces of Dong Nai and Quang Ninh，mostly in the supporting facilities of textile manufacturing. An industry chain of spinning， weaving， dyeing， finishing and tailoring has been established， cutting costs of production by controlling the entire production process.

Qingdao Sailun Tyre Company， another large Chinese firm， has invested US$302 million in the Faudon Industrial Park in Vietnam’s Tay Ninh Province. Using local materials， the project has produced specialty tires that were previously imported into Vietnam， filling a void in Vietnam’s local tire market.

Hoi An， a Vietnamese coastal city， is an important node in the ancient Maritime Silk Road， the seaborne-commerce aspect of China’s Belt and Road initiative. Hoàng，curator of the city’s porcelain museum， said that a large number of vases， bowls and dishes on display at the museum were made in Jindezhen， a renowned porcelain-producing city in China. this serves as evidence that close trade ties between China and Vietnam have persisted for centuries. the ancient Maritime Silk Road made Hoi An a prosperous international commercial port， just as China’s Belt and Road initiative， in conjunction with Vietnam’s Two Corridors and One Economic Circle strategy， is opening up a new chapter in modern day cooperation.

The Hai Duong Power Plant and the Yongxin Coal Power Plant are sensible and feasible projects in line with Vietnam’s development strategy. the Vietnamese government is looking forward to each project’s completion， and to see the benefits brought to the local population.

Vũ Huy Hoàng， a former minister at Vietnam’s Ministry of Industry and Trade，has expressed confidence that the plants will be operational as scheduled， and that the local population will benefit.

Hu Suokin， meanwhile， is at the forefront of cooperation between the Vietnamese and Chinese governments， ensuring development projects and investments are in line with Vietnam’s development strategy. As Chinese investment in Vietnam intensifies， Hu’s role in facilitating economic cooperation between the two countries looks vital.