Chinese companies are fuelling almost one in three new investments in Vietnam, in a sign of how they have relocated operations abroad to avoid Donald Trump’s trade war with Beijing.
But this shift is likely to increase Vietnam’s vulnerability to tariffs as Trump targets countries that have racked up big trade surpluses with the US.
Vietnam has been one of the biggest beneficiaries of trade tensions between the world’s two largest economies. Its surplus with the US reached a record $123.5bn last year, the third-largest after China and Mexico.
Part of that has been driven by the exports of companies such as Apple and Intel, which have moved production lines from China to Vietnam to spread supply chain risks and avoid punitive tariffs.
But Vietnam is also increasingly getting investment from Chinese companies, accounting for 28 per cent of new projects last year, up from 22 per cent in 2023.
“Chinese capital is forced to come to Vietnam, even though it is not cheap any more,” said Meir Tlebalde, chief executive of Sunwah Kirin Consulting Vietnam, which advises foreign investors.
She said many Chinese clients were under pressure from buyers in the US and Europe to move out of China.
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Most Chinese manufacturing investments in Vietnam were being made to avoid US tariffs and secure a different “certificate of origin” for goods produced by Chinese companies, she said.
However, Vietnam’s supply chain is still highly reliant on China. “At least half of the raw materials come from China,” said Tlebalde.
In the first month of 2025, Chinese companies accounted for 30 per cent of projects, according to the most recent government data. Chinese investments also came via Hong Kong and Singapore, the latter of which was the top investor in dollar terms in Vietnam last year, analysts said.
The surge in Chinese investments in Vietnam and its dependence on Chinese raw materials could attract renewed scrutiny from the Trump administration, which has accused Beijing of circumventing tariffs by sending products through third countries.
Vietnam, as with many other countries, is also highly exposed to Trump’s threats of reciprocal tariffs on US trading partners. He has also threatened to levy 25 per cent tariffs on steel imports, which could also hit Vietnam, the US’s fifth-biggest supplier of the metal.
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High tariffs would have a big impact on Vietnam’s economy, deterring investment and putting a damper on one of the fastest growth rates in the world. The US accounts for nearly 30 per cent of Vietnam’s exports.
“There are some concerns that the US could see that [increased Chinese investment] as indirect tariff avoidance by Chinese companies, and they could investigate more goods coming from Vietnam,” said Jack Nguyen, chief executive of Incorp Vietnam, which advises foreign investors in the country.
Most Chinese investment in Vietnam is in assembly and low-to-mid-end manufacturing, from cars to solar panels. China’s strict curbs during the Covid-19 pandemic also pushed some companies to diversify outside the country.
A small percentage of Chinese goods were also relabelled “Made in Vietnam” without any value-added and rerouted to the US, experts said, a practice that is illegal.
Hanoi had already increased due diligence on Chinese products and investments, Nguyen said. “They would not allow Vietnam to be used as a transshipment country to the US at the risk of the US coming down hard on Vietnam.”
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Vietnam’s Prime Minister Pham Minh Chinh acknowledged risks to his country, telling an audience in Davos last month that Hanoi was developing “political and economic solutions” to tackle its trade imbalance.
He added that Vietnam would purchase between 50 and 100 planes from Boeing in the next 10 years as well as other high-tech US equipment — and agreed to golf with Trump “all day long” if needed.
This month, trade minister Nguyen Hong Dien said Vietnam was willing to increase agricultural imports from the US and that it would not impose any measures that would restrict trade with the US.
Vietnam may also have to step up pressure on the rerouting of Chinese products. Hung Nguyen, a supply chain expert at the RMIT University Vietnam, said Hanoi could push Chinese companies to invest in higher-value manufacturing and tighten local content requirements to force them to set up a supply chain in the country.
“I anticipate [Vietnam] will use technical barriers to reject some Chinese investments,” he said.
But Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute, said Vietnam would have to “walk a fine line” between China and the US, its two largest trading partners.
“I would not expect Vietnam to openly push back against Chinese investment,” said Giang.
Additional reporting by Haohsiang Ko in Hong Kong
