A monograph not a paper this week. From The Board of Governors of the Federal Reserve comes a recent ‘FEDS Notes’ by Chris A. Avalos, Trang Hoang, and Eva Van Leemput which looks at how much ‘China’ is in the Vietnam export boom of recent years.
Since 2016 changes have been extraordinary. A look at the chart on the right reveals an important component of Vietnam’s progress.
In addition to what was expected i.e. numbers for Chinese FDI and Chinese firms located in Vietnam have grown, the researchers note that others formerly based in China have also been making new homes in Vietnam. Korean firms stand out in particular in this regard.
Contrary to what many presume, although the ‘China’ component of Vietnam’s exports to the U.S. has risen since the first Trump tariffs they are by no means the largest propeller of Vietnam’s export surge.
The paper doesn’t call it out explicitly but a non-partisan can see what’s obvious here. Squeezing Chinese manufacturers at home has merely sent them abroad but they remain as industrious as ever, just on somebody else’s turf.
Or, as the report concludes, the work “..highlight[s] the growing complexity of trade policy in a world characterized by deeply integrated supply chains and multinational firms that can reallocate production across countries in response to changing trade barriers.” Indeed.
It’s a short piece but you can read it in full via this link Vietnam’s Export Boom to the U.S.: The Role of Chinese Firms.
Happy Sunday.