China exports more to Vietnam than Japan for first time as supply chains shift
The rerouting of trade risks raises costs for businesses and consumers but has benefited Vietnam, which has seen a surge of investment as companies look to diversify supply chains from China
VIETNAM overtook Japan as China’s third-largest export destination for the first time, as US tariffs force companies to find new suppliers to avoid levies while continuing to rely on Chinese manufacturers for components.
China’s exports to Vietnam in 2024 rose almost 18 per cent to a record US$162 billion, according to data released by China’s customs administration on Monday (Jan 13). That surpassed the US$152 billion in shipments to Japan, previously the third-largest market for Chinese exporters.
The jump was driven mostly by a surge in exports of parts to the South-east Asian nation, where they are assembled and then exported to the US and elsewhere. Electronics components including screen modules and computer memory made up eight of the ten fastest-growing exports, according to Chinese data through November 2024.
The rerouting of trade risks raises costs for businesses and consumers but has benefited Vietnam, which has seen a surge of investment as companies look to diversify supply chains from China. Leading electronics makers such as Samsung Electronics, Luxshare Precision Industry and Hon Hai Precision Industry have invested billions of US dollars in Vietnam in recent years to assemble products such as AirPods and MacBooks.
The artificial intelligence (AI) boom and US export restrictions targeting AI chips have similarly boosted investment in Vietnam while keeping China in the game.
Hon Hai started making Nvidia’s AI graphics cards at its subsidiary in Vietnam last year, with key parts including integrated circuits and printed circuit boards sourced from China, according to data from NBD, a private customs data provider.
Most of the finished products were shipped to American customers, driving up Vietnam’s trade surplus with the US to a record in the year through November. This may put the country in the crosshairs of President-elect Donald Trump, who has spoken of the need to balance trade with Vietnam and in 2019 called it a trade “abuser.”
The US has already pushed back against this trend, with the Biden administration imposing tariffs on solar panels made in Vietnam and three other South-east Asian nations late last year. Most of the panels were made by Chinese companies that had invested in those countries, partly to circumvent US tariffs.
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