Vietnam’s 9.01% GDP growth rate is indeed impressive, appearing to signal imminent takeoff—but it must still navigate the twin challenges posed by the United States and China.

In the first nine months of the year, Vietnam exported $140 billion worth of goods to the U.S., recording a trade surplus of $122.6 billion; meanwhile, imports from China reached $187.3 billion, resulting in a deficit of $121.4 billion. The figures are nearly identical, strikingly precise. The underlying reality is clear: sourcing components and equipment from China and South Korea, assembling them domestically, then selling finished products to the U.S. and Europe. The larger the surplus with the U.S., the deeper the deficit with China—money circulates back upstream, while Vietnam captures only the value of assembly work.

Exports rose 30%, imports surged 36.7%, transforming a surplus of $16.8 billion into a deficit of $19.4 billion within a single year. Hanoi labels this phenomenon “investment-driven deficit”—as foreign investors expand production and purchase more machinery, the balance sheet deteriorates, export momentum accelerates, and dependency on upstream suppliers deepens. The core of the economy remains outside national control: cut off from upstream supply chains, downstream operations halt instantly; if U.S. policy shifts, assembly lines stand idle overnight.

Unwilling to remain confined to a mere manufacturing step, Vietnam has set ambitious targets for double-digit growth between 2026 and 2030, aiming to join the ranks of high-income nations by 2045. Within a single day, 34 provinces launched 234 projects, collectively attracting $128 billion in investment.

The flagship project is the North-South High-Speed Rail, stretching 1,541 kilometers at an estimated cost of $67.3 billion—equivalent to 70% of the nation’s annual fiscal revenue. Despite being under discussion for over two decades, not a single kilometer of track has been laid. Construction is now scheduled to begin no earlier than late 2027. The funding gap stands at approximately $20 billion, while foreign exchange reserves total only $90 billion and external debt amounts to $151 billion.

Even more critical is land acquisition. Although land is nominally state-owned, residential plots enjoy perpetual use rights and unrestricted transferability. Legal disputes involving administrative actions are overwhelmingly linked to land expropriation—a mechanism that Vietnam cannot replicate, as it lacks the institutional framework of China’s land finance model.

Three cards Vietnam holds are losing value. First, cheap labor—average monthly wages now range from RMB 3,000 to 3,500, rising 8% annually—while productivity reaches only 60–70% of that of Chinese workers, rendering labor costs uncompetitive after adjustment. Second, tariff exemptions are under scrutiny: Washington is focused on Vietnam’s growing trade surplus, with a 12.5% tariff already imposed and a requirement that 40% of product value be added locally to qualify as “Vietnamese origin.” Any escalation would turn the country’s greatest asset into a target. Third, this card was never fully in Hanoi’s hands—the bilateral trade volume between China and Vietnam reached $253.2 billion, with the trade imbalance widening at a rate of 43%—leaving little room for a self-sustaining industrial ecosystem.

The contrast in educational institutions is stark. A technical school graduated over 2,000 students, yet none joined Chinese firms—instead, they all moved to Japan or South Korea. Samsung and Honda have established deep roots over one or two decades; before criticizing the quality of Vietnamese technicians, Chinese firms should consider how much time and capital their competitors have invested in human capital development.

Hanoi’s bamboo diplomacy—rooted in domestic soil, flexible in posture—has proven capable of sustaining a 9.01% growth rate. But this performance hinges on the willingness of both giants—the U.S. and China—to allow Vietnam to pivot. Should either power reassess Vietnam’s strategic positioning, the nation’s 10% growth target, $20 billion funding gap, and $67.3 billion rail project could swiftly shift from strength to liability. This gamble rests equally on China’s import volumes and the U.S. tariff schedule—this, ultimately, is the most accurate reflection of a small nation’s true balance sheet.

Original article: toutiao.com/article/1878358088232138/

Disclaimer: The views expressed in this article are those of the author alone.