VietNamNet Bridge - The soft landing of the Chinese economy would be better for Vietnam than a hard landing, experts say.


China says the economy will "absolutely not experience a hard landing" though China's National People's Congress has lowered the economic growth target for 2016 to 6.5-7 percent.

According to Nguyen Tri Hieu, a renowned economist, a hard landing occurs when the economy plunges rapidly and the GDP decreases in two consecutive quarters. There is no clear concept about ‘soft landing’, but it is understood as a decline in small degree.

China is a powerful economy with the GDP value ranking second in the world, with a large population, and big forex reserves ($3.2 trillion). Thus, the economy is quite capable to resist negative happenings in the world.

Therefore, Hieu said, the Chinese government has every reason to state that it will not make a hard landing amid the doubts by international scholars.

Nguyen Huy Quy, former Head of the Institute for Chinese Studies, also thinks that China may avoid a hard landing thanks to its powerful resources. It is highly possible that China would still maintain n average-high GDP growth rate and would not see shocks in inflation.

Quy noted that some international analysts don’t have deep knowledge about Chinese economy’s nature, and some have made such comments because they ‘had a motive for the comment’.

The soft landing of the Chinese economy would be better for Vietnam, which bears influences from China.

Commenting about China’s move on lowering the targeted GDP growth rate, Hieu said the 6.5 percent growth rate plan for 2016-2020 was ‘more reasonable’ than the initially projected 7 percent growth rate.

The high growth rate would be good for the economy, but China will have to pay heavy price for it, from the environment, labor to public debt and bank bad debt.

The soft landing of the Chinese economy would be better for Vietnam, which bears influences from China. However, experts said even if China does not make hard landing, the decline of the second biggest economy in the world would still raise concern. If China economy has a runny nose, Vietnam economy would sneeze.

The Vietnam-China trade value in 2015 reached $60 billion. If China economic growth slows down, it will reduce imports from Vietnam, while its exports to Vietnam will also decrease, which means that Vietnam will have to import products from other countries which are more expensive than Chinese goods.

Hieu said in order to reduce the risks from the Chinese economy, Vietnam will have to ease reliance on China by looking to other markets for their products. Vietnam will also have to improve its inner strength.

Dat Viet