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UPDATED: June-30-2008 NO. 27 JUL. 3, 2008
An Economic Alarm
As both are emerging Asian economies, China will not look on the Vietnamese economic crisis unconcerned
By LAN XINZHEN

IWEP has conducted specific research on the economic crisis in Viet Nam. According to its report, it is necessary for the international community to offer aid to Viet Nam. It suggests that China, Japan and South Korea and the Association of Southeast Asian Nations should consult to offer short-term loans to Viet Nam.

According to the IWEP report, Viet Nam needs loans of $30 billion-50 billion in market estimation. "To East Asian nations, to offer such sums of money to aid Viet Nam is like putting out a potential fire with a ladle of water, conducive to both maintaining prosperity and promoting unity of Asia," he continued.

In his opinion, there may be various means to offer aid, such as direct U.S. dollar loans, by employing foreign exchange reserves, or issuing bonds.

The IWEP report holds that China should play a more active role in offering aid to Viet Nam. The report proposes that China should provide more governmental aid to Viet Nam in fields like rural development, poverty reduction and urban development. Technological and financial aid may also be offered toward infrastructure construction.

Moreover, the report deems that China should encourage more companies to invest in Viet Nam, establishing joint ventures and employing more local people. China should also further open its market to Viet Nam, encouraging more Vietnamese companies to export to China while encouraging Viet Nam to absorb more Chinese capital.

Guo Tianyong, professor at the Central University of Finance and Economics, says that in both creating a good external environment for China and maintaining stability in the regional economic system, it is necessary to take measures to avoid an expansion of financial market panic in the region and a series of adverse impacts.

Since Viet Nam owns abundant mineral and coal resources, Guo suggests China sign long-term purchasing contracts with Viet Nam and increase imports from it. This is normal bilateral trade which can offer capital aid to Viet Nam at a critical moment in its financial market, and is conducive to the long-term and stable cooperation between the two countries.

 

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