Commentary: Made in Vietnam or a backdoor for Chinese exports?

To be sure, China undoubtedly plays a much larger role in some areas. One important study finds that indirect Chinese imports via third countries are higher in strategic sectors. Last year, America imposed heavy import duties on Vietnamese solar panels for containing excessive Chinese content. That assessment is probably right, given China dominates global solar panel supply chains. And if we focus only on the increase in Vietnam’s exports to America since 2018, rather than the total, the estimated share that reflects indirect Chinese content rises to about 40 per cent.

Chinese manufacturing investment is also pouring into Vietnam. In 2023, announced investments reached almost US$12 billion. In 2024 though, this dropped back to US$3.6 billion. Meanwhile, investment from others has risen to about US$10 billion a year – with South Korea, Taiwan and Japan collectively investing about US$7 billion annually in recent years. The investment picture thus seems similar to the trade one, suggesting future Vietnamese exports will reflect heavy involvement from Chinese firms but with even more coming from other partners, especially advanced Asia.

What can we conclude? China has clearly played a big role in Vietnam’s booming exports to the United States. But China is not the main story. Vietnam itself, and other supply chain partners, are playing the more important role. Moreover, with the right policies, Vietnam can over time leverage this and increasing investment inflows to move up the value chain, gradually reducing its reliance on foreign inputs, including from China.

Vietnam is, in other words, playing a helpful role in the diversification of US supply chains away from China. The question is whether the Trump administration can see value in this, or whether it is only interested in reshoring manufacturing to America.