Will Vietnam become the new Asian star?
Recently, the updated version of the East Asia and Pacific Economic Report released by the World Bank predicts that Vietnam's gross domestic product (GDP) will grow by 6.8% in 2018, higher than the 6.5% predicted by the World Bank in April. In the general downturn of the world economy, such a high growth rate has made the world start to pay attention to this Southeast Asian country.
Will Vietnam become the new Asian star? In my opinion, although Vietnam has problems of this kind, its potential is more worthy of attention than its historical burden.
Vietnam is a densely populated country. With its special shape and natural conditions, most of the population is concentrated in the Red River Plain in the north (near the capital Hanoi) and the Mekong River in the south (represented by Ho Chi Minh City).
Vietnam has a population of nearly 100 million, with a median age of 30 years. In other words, Vietnam has a working population of more than 60 million.
Examining the industrial history of various countries, we find that when a traditional agricultural country moves toward an industrial country, it must absorb rural populations into the cities. Vietnam’s working population is larger than that of South Korea, with a literacy rate of over 97%, and one third of them have a high school degree or above. They are concentrated in the two major economic regions of the north and the south, and Ho Chi Minh City alone has 12 million people. As long as there is industry, these people will burst into huge productivity.
Vietnam adopts economic policies that are highly similar to those of China. Their national policy is "reform and opening up", which is only one word difference from China's "reform and opening up", and the content is almost identical. On the path of reform, basically stepping on the footsteps of China. China is engaged in special economic zones, and Vietnam also has special economic zones; China is developing an export-oriented economy and attracting foreign investment, and Vietnam insists on doing so.
As early as 1987, Vietnam promulgated the "Foreign Investment Law" to attract foreign investors. There were "Four Little Dragons" and "Four Little Tigers" in Asia in the 1990s. China's economy was also very dazzling, and Vietnam's advantages were not reflected. Vietnam joined the WTO in 2007 and signed a large number of bilateral free trade agreements.
So far, foreign investment accounts for a quarter of the total social investment in Vietnam. South Korea, Japan and Singapore are the main sources of investment, while Samsung is the largest foreign company in Vietnam. Half of the world's Samsung mobile phones are "Made in Vietnam." The benefits of economic opening and the encouragement of China's achievements have inspired the Vietnamese government's confidence in opening up the economy.
Vietnam’s infrastructure is still very backward, with hundreds of billions of dollars in construction shortfalls, but Vietnam’s investment in this area is second only to China in Asia. The improvement of infrastructure will make Vietnam form a strong competition with China in the future.
The Vietnamese economy also has a problem: inflation. Over the past few years, Vietnam has maintained double-digit inflation and prices have risen rapidly. The main reason for inflation is that through export trade, Vietnam reserves a large amount of US dollar foreign exchange, and foreign reserves bring imported inflation. Compared with hyperinflation in developing countries, Vietnam's inflation originates from economic development and is easier to manage. Last year, the Vietnamese stock market experienced a sharp rise, and housing prices also tended to bubble, which reflects the vitality of the Vietnamese economy.
In the process of economic development, the Vietnamese government has played a leading role. Due to fiscal stimulus and public works, the government is burdened with large amounts of debt, which forces them to sell shares in state-owned enterprises. In recent years, the Vietnamese government has promoted the sale of shares of a large number of state-owned enterprises in order to overcome their difficulties.
Vietnam has been reforming and opening up for 30 years, and has always "learned from China". Vietnam has encountered the difficulties encountered in China's reforms, and it has mostly used China's experience to solve them. So far, the effect is pretty good. The starting point of this country is lower than that of China, and there are many experiences to learn from. As long as we focus on development, there is still a long way to go in the future. A booming Vietnam will also bring more opportunities to China.