Chinese president Xi Jinping warned there would be “no winners” in a trade war and that protectionism “leads nowhere”, as he began a three-nation trip to south-east Asia starting in Vietnam on Monday.
Xi’s tour, which began in Hanoi, also includes rare visits to Malaysia and Cambodia and will seek to strengthen ties with China’s closest neighbours amid a trade war that has sent shockwaves through global markets.
Writing in an article published in Vietnam’s Nhan Dan newspaper on Monday, Xi urged Vietnam to “resolutely safeguard the multilateral trading system, stable global industrial and supply chains, and open and cooperative international environment”, Beijing’s Xinhua news agency said.
He added that a “trade war and tariff war will produce no winner, and protectionism will lead nowhere”.
It is expected Xi’s visit will seek to emphasise that China is a reliable partner, contrasting itself with Washington, which imposed – then suspended – punishing tariffs across south-east Asia, an export-reliant region.
Officials in Vietnam, a manufacturing powerhouse, were shocked when Vietnam was hit with a tariff of 46%, even after various efforts to appease the Trump administration. The tariff, which has been paused, threatens to devastate the country’s ambitious economic growth plan.
During Xi’s visit, Vietnam and China will sign about 40 agreements across multiple sectors, Vietnam’s deputy prime minister, Bui Thanh Son, said on Saturday. It is expected this will include cooperation to develop Vietnam’s railway network.
Vietnam’s leader, To Lam, wrote in an article published in state media on Monday that Hanoi wanted to boost cooperation in defence, security and infrastructure, especially on rail links.
Vietnam, and many other south-east Asian countries, are trying to maintain a delicate balancing act between the US and China. The US is Vietnam’s main export market, with US exports accounting for 30% of Vietnam’s GDP. However, China is Vietnam’s top import source, which it relies on for raw materials and other supplies that will be used to produce exports destined for the US.
Vietnam has traditionally sought to avoid taking sides between the US and China and will want to avoid antagonising either party, especially as it tries to persuade Washington to lower its 46% tariff.
Vietnam is vulnerable to Washington’s tariffs because its trade surplus with the US has grown rapidly over recent years to more than $123bn (£94bn), fuelled in part by companies relocating production to Vietnam to avoid tariffs imposed on China by the last Trump administration.
Hanoi is preparing to crack down on Chinese goods being shipped from its territory to the US, in an effort to placate the Trump administration, according to a Reuters report, and to tighten controls on sensitive exports to China. It has also made other concessions, including offering to remove all tariffs on US imports and promising to buy more US goods.
Cambodia and Malaysia, which face tariffs of 49% and 24% respectively, are also seeking to negotiate with Trump, while China has previously vowed to “fight until the end” if the US continued to escalate the trade war.
Source: theguardian.com
