Analysis | How can Vietnam avoid becoming China’s dirty industrial backyard?
- The Asian giant is now the fifth biggest investor in Vietnam, but critics argue the benefits are unbalanced and Hanoi must tread carefully to avoid exploitation
- Vietnam runs the risk of becoming China’s ‘technology landfill’ if it does not select investment projects wisely
Vietnam has become awash with Chinese investment in the last decade as businesses from its northern neighbour spread their wings abroad in a push for new markets.
Capital inflows from mainland China, Hong Kong and Macau stood at US$700 million in 2011, but by last year had topped US$2.4 billion.
Proponents say the money has been invaluable in providing jobs and pulling up industrial, labour and regulatory standards. But critics argue Chinese projects exploit cheap labour and minerals, while polluting the environment and landing the locals in debt.
Either way, China looks there to stay. The Asian giant is now the fifth biggest investor in Vietnam behind Japan, South Korea and Singapore, and the sectors attracting cash are increasingly varied.
However, experts say Vietnam will need further regulatory reforms, better education and a push to move up the value chain to make future investments pay off and limit the environmental impact of low-cost manufacturing.