Vietnam’s China deficit nearly matches its US surplus

A US$121.5bn deficit with China sits opposite a US$122.6bn surplus with the United States.

The read. Vietnam’s nine-month trade data place its two largest bilateral imbalances almost exactly opposite one another. Imports from China reached US$187.34 billion, producing a bilateral deficit of US$121.48 billion. Exports to the United States reached US$140 billion, producing a surplus of US$122.62 billion. The two balances differ by only US$1.14 billion.

The overall picture is less balanced. Vietnam’s imports rose 36.7% during January–September, compared with 24.5% growth in exports, leaving a US$19.42 billion goods-trade deficit. September produced a US$1.27 billion surplus, but it was not enough to reverse the nine-month result.

The bilateral figures do not establish that the same goods move from China through Vietnam to the United States. They do show a production base drawing heavily on Chinese inputs while depending on American demand on a comparable scale.

What to watch. Rules of origin and transshipment terms will determine how exposed that model is to US trade enforcement. Manufacturers should be able to document supplier origin, production stages and the value added in Vietnam.

The second signal is whether import growth continues to outpace exports. A widening overall deficit would show that the country’s demand for foreign inputs is rising faster than its export earnings, even if the US surplus continues to grow.