Trade between China and Vietnam brisk<\/p>\n
Where is the vibrant border trade between China and Vietnam
\nheading? Liu Zhi sheds some light on the issue.<\/p>\n
The two southern Chinese provinces of Yunnan and Guangxi
\nborder six provinces of Vietnam. The length of this entire Sino-
\nVietnamese land border is 2,373 km. On both sides of this
\nfrontier are communities who have the same ethnic origin,
\nlanguage and customs. Their historically close relations go back
\na long way, and contacts between these trans-border communities
\nhave never really stopped despite war or hostile bilateral
\nrelations between the two countries.<\/p>\n
The present governments of both China and Vietnam started
\npromoting this trans-border trade by signing their first
\nagreement in 1953 and since then economic exchanges have been
\nsteadily promoted until military hostilities between both
\ncountries in 1979 made cross-border communications difficult.
\nFrom that year, frontier markets were closed and the once
\nprosperous trading posts became desolate. However, owing to the
\nclose informal relationship between trans-border communities, a
\nform of secret trade went on.<\/p>\n
At first it took the form of relatives living on either side
\nexchanging their goods at appointed spots. Gradually as the
\nhostility lessened, these secret informal points became regular
\nmarkets for exchanging goods. They were called \"Sod Markets\" or
\n\"Dew Markets\" for the trade was usually underway on the sod
\nbefore sunrise. As the security situation on the frontiers became
\nnormalized, China opened more than 30 trading posts along the
\nfrontier and cross-border traffic became increasingly free.<\/p>\n
This frontier trade has developed rapidly since the mid-1980s.
\nAccording to Chinese statistics, the annual total volume of Sino-
\nVietnamese frontier trade during 1988-1990 was 450 million yuan,
\n800 million yuan and 2,370 million yuan respectively. Clearly, it
\nwas a situation where trade was doubling every year. Over the
\nnext three years, 1991-1993, the growth was less dramatic and the
\nannual average volume was about 2,800 million yuan (about US $300
\nmillion).<\/p>\n
The early years of the 1990s marked the beginning of official
\nefforts to re-open old transport lines. For instance, Guangxi's
\nSino-Vietnamese Friendship Pass Railway Bridge, and Yunnan's
\nSino-Vietnamese Friendship Bridge were opened in 1991 and 1992
\nrespectively. However, the railway link between Yunnan and
\nVietnam has been more difficult to resume.<\/p>\n
The main exports of China along this border are hardware,
\ndiesel engines, cement, steel, bicycles, sewing-machines,
\ntextiles, daily necessities and medicine, while those from
\nVietnam are agricultural products, coal, cotton, yarn, rubber,
\ngrain, herbs and fruit. The methods of payment are varied.
\nChinese currency has been habitually accepted as the currency for
\nsettling accounts although barter is also practiced. Nowadays,
\nthe yuan, U.S. dollar and dong are freely exchanged along the
\nborder. Trading is usually by the \"cash on delivery\" method but a
\nmore sophisticated trading environment is emerging with the
\nintroduction of different kinds of credit.<\/p>\n
The participants in this growing market are also getting more
\nvaried. No longer is trading only done by border inhabitants on
\nan individual basis; trade has drawn to this border the state-
\nowned companies, the collectives and the private enterprises of
\nboth countries. These firms are no longer just those belonging to
\ncounties along the border but also companies from the inner
\nprovinces on both sides. However, the bulk of the trade is done
\nby private enterprises, accounting for up to 70 to 80 per cent of
\nthe total trading volume. Frontier tourism and economic-
\ntechnological cooperation have also come into being.<\/p>\n
The development of Sino-Vietnamese frontier trade has brought
\nalong the development of industry and the construction of trading
\ntowns on both sides of the border. Frontier areas, as they become
\nmore prosperous from these bustling economic activities, also
\nbecome socio-economically more stabilized.<\/p>\n
The factors that have contributed to the growing border trade
\nhave been the geographical proximity of market places; similar
\npolitical-cultural background on either side; and the
\ncomplementary commodities and industrial needs of China and
\nVietnam. Since the normalization of relations between both
\ncountries in November 1991, there have also been a series of
\nagreements to promote economic cooperation which have provided
\nthe legal basis for the frontier trade and there is room for more
\ngrowth.<\/p>\n
However, there are also factors which have or will hamper the
\ngrowth of this trans-border commerce. First, although the Sino-
\nVietnamese relationship has been normalized, age-old suspicions
\nplus unresolved territorial disputes on land and at sea still
\nexist. As a result, Sino-Vietnamese relations have had its ups
\nand downs. Recent examples would include the incident in 1992
\nwhen Vietnam protested after China granted a U.S. oil company
\nprospecting rights in the South China Sea.<\/p>\n
At the same time, Vietnam also closed some frontier trading
\nposts and banned the import of 17 kinds of Chinese goods. Vietnam
\nhas also complained that the smuggling along the border causes it
\nto lose vast sums of revenue from taxes. At the same time,
\nimports from China have also put tremendous pressure on Vietnam's
\nown light industries.<\/p>\n
The second factor that might restrict the growth of border
\ntrade is the availability of other sources of goods to the
\nVietnamese. As Vietnam has opened up its economy, the Asian NIEs
\nand some Western countries have been actively seeking to make
\ninroads into the Vietnamese market.<\/p>\n
The third restricting factor is the lack of physical and
\nbureaucratic infrastructure along the border to handle trade
\nproperly. This is in terms of communication facilities as well as
\nbanking and other institutional conditions to settle trading
\naccounts properly.<\/p>\n
Unless all the challenges and competition are addressed, Sino-
\nVietnamese frontier trade may not go very far beyond its present
\nlevel.<\/p>\n
Liu Zhi is an Associate Research Fellow with the Institute of
\nSoutheast Asia Studies in Yunnan, China.<\/p>",
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