China: the new competitive pressures

 - the top concern of the Chinese government is now moving towards economic growth model to a more sustainable balance.

 

The problem restructuring of the economy the government is clearly an essential step in the present context.

Necessity to restructure

After a period of rapid economic growth in this country are facing significant challenges to the development of both economy and society. These challenges include: Firstly, with an excess of cheap labor is exhausted after the thoroughly exploited. Second, the depletion of natural resources and infrastructure. Third, the problem of inequality at an alarming rate, the Gini coefficient of inequality in the 61/100 is said to be dangerous threshold beyond 50 points. Fourth, these challenges, in turn, is derived from the growth model is too dependent on exports. To continue to develop and grow, the Chinese recognized that it was time to reform its economy in order to overcome these challenges in order to achieve sustainable growth in the future.

Signs of slowing growth and rising social unrest as the evidence shows, the slowdown of the economy is the world's third largest. That is the consequence rooted resistance or challenges mentioned above. The growth rate of China's GDP in 2012 was only 7.8%, the lowest in 13 years. And this year's first quarter GDP grew by only 7.7%. According to a recent survey by HSBC manufacturing activity in May China's first shrunk in the last 7 months.

The echoes of the world and VN

As the 3rd largest economy in the world, while China made successful restructuring will bring a positive impact on the global economy. It's a great pillars ensure world economic growth becomes more sustainable.

And in terms of environmental perspective, if China implemented strategic restructuring towards utilize local resources as well as improving the scientific and technological issues compete for resources with other countries in the world the future will be much reduced. However, the way the Chinese have long held that the conversion technology they want to do quickly in a "burn phase", not by spending money to buy the rights. So, this will be the risk of instability in the global trade. The problem hackers to steal your technology partner countries in recent years is testament to this.


 VN is a country to go to China from 1 to 2 decades. While China's enforcement policies strong devaluation in 1994 up to 40%, the VN does not conduct similar steps. While both countries have anchored the dollar coin. As a result, VN economy suffered a huge competitive pressure from China on the world market as well as in trade with China.

There are signs that foreign investors are moving into VN in order to exploit cost advantages over China.And so far, the transition model based on the growth in China has to accept RMB appreciation. Along with the reforms mentioned above could VN impact will be as follows:

On the positive side, by increasing the minimum wage policy and the appreciation of the yuan, Chinese goods become more expensive on the world market, thereby VN goods are more competitive. There are signs that foreign investors are moving into VN in order to exploit this advantage over China. On the negative side, because VN is the largest net importer from China, the appreciation of the yuan will make up the cost of imports, meaning the trade deficit increased.

However, in the longer term this can also be seen as positive because of the expensive imports will create pressure to domestic production rather than imports. Thus, VN can hope to build industry support, the biggest failure after more than two decades of reform. This failure stems primarily from the natural policy of keeping the exchange rate stable instead of dumping as China implemented. This makes foreign investors, including domestic, found cheaper imports instead of domestic production. But that's long term future, but in the short-term pressure on the trade deficit with China will increase.

One other negative impacts should also be noted. When China conducted technological innovation, technological progress higher up they will waste the old technology obsolete out. The signs in recent years that old technology waste wave of China to the VN. VN, therefore, has been considered to contain waste recovery technology in China for cheap. Environmental issues from the technological backwardness has been caused in China, with the risk of causing problems in VN.

State President Truong Tan Sang will visit state to China from 19 to 21/6, at the invitation of the President Xi Jinping. This is a state visit to China's first President Truong Tan Sang in his capacity as president of the country, and the state visit of China's first VN leaders after Chinese new leadership . The visit of President Truong Tan Sang is very important sense, to enhance political trust and friendly cooperation between the two parties, two countries, the major direction of the relationship partner comprehensive strategic partnership between the two countries in-depth, substantive development in the field, for the development of the two countries, for peace, stability and development in the region. The two sides are expected to sign a number of agreements and cooperation documents.