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The economy of Vietnam has been an absolute rocket ship over the past few years. By 2035, CNBC believes that globally they’ll have the most rapid rise in wealth. Long gone are the days of turmoil and war. In this episode, we’ll take a look at Vietnam’s fascinating economic rise.
Show notes: https://docs.google.com/document/d/1mIGWaStrz0dZ1mUcchD_jfAwXXvC3TEpXlTxtQcB7R0/edit?usp=sharing
ColdFusion Podcast:
https://www.youtube.com/@ThroughTheWeb
Created by: Dagogo Altraide
Producers: Tawsif Akkas, Dagogo Altraide
The Rise of Vietnam: Is It the Next China?
In recent years, Vietnam has emerged as one of Southeast Asia’s most dynamic and fast-growing economies. Once considered a low-income agricultural society, the country has transformed itself into a formidable player in global manufacturing and exports. As the world watches China navigate rising labour costs, geopolitical tensions, and shifting global alliances, Vietnam is increasingly viewed as a potential successor in the regional economic hierarchy.
But can Vietnam truly become “the next China”? To answer this, we must examine the factors driving its growth, the challenges it faces, and how its trajectory compares to the one carved out by China over the past four decades.
Economic Transformation and Growth Trajectory
Vietnam’s economic evolution has been nothing short of extraordinary. Since the initiation of its Đổi Mới reforms in 1986—liberalising trade, encouraging foreign investment, and moving towards a market-oriented economy—Vietnam has experienced consistent GDP growth, often exceeding 6–7% annually.
In 2023, Vietnam’s GDP reached over USD 430 billion, placing it among the top 40 economies globally. Foreign direct investment (FDI) continues to pour in, especially from countries seeking to diversify away from China. Major multinationals like Samsung, Apple, Intel, and Nike have already established large-scale operations in Vietnam, capitalising on its young, educated workforce and competitive wages.
A Key Manufacturing Hub in Global Supply Chains
Vietnam has successfully positioned itself as a key player in global supply chains. It now ranks among the world’s top exporters of electronics, textiles, footwear, and furniture. According to the World Bank, Vietnam is one of the few developing nations that have managed to increase both export volume and product complexity in recent years.
Its strategic location bordering China, strong infrastructure investments, and numerous trade agreements—including the EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP)—have only enhanced its appeal as an alternative manufacturing hub.
Why Vietnam Is Being Called “The Next China”
1. Low Labour Costs and Demographic Advantage
With average wages significantly lower than those in China’s industrial provinces, Vietnam offers a more cost-effective base for labour-intensive manufacturing. The country also enjoys a demographic dividend, with a median age of 32 and a growing urban workforce. Literacy and education rates are high, and the government continues to invest heavily in vocational training and STEM education.
2. Political Stability and Pro-Business Policies
The Vietnamese government has consistently demonstrated a commitment to economic development and foreign investor protection. Policies are pragmatic and focused on long-term growth, including efforts to reduce bureaucracy, reform state-owned enterprises, and digitalise public services.
3. Diversification Strategy of Global Firms
As trade tensions between the US and China intensify, many companies are implementing “China +1” strategies to diversify their manufacturing footprint. Vietnam has been a major beneficiary, attracting investment from Japan, South Korea, the US, and Europe. The COVID-19 pandemic further exposed the risks of over-dependence on China, accelerating this shift.
Key Challenges That Vietnam Must Address
Despite its remarkable progress, Vietnam faces several significant challenges before it can truly rival China in economic scale and global influence:
1. Infrastructure Limitations
While improvements have been made, Vietnam’s transport, logistics, and energy infrastructure still lag behind China’s highly developed systems. Ports, roads, and power grids require further investment to support large-scale industrialisation.
2. Regulatory and Legal Bottlenecks
Bureaucracy, inconsistent regulatory enforcement, and opaque legal processes can frustrate foreign investors. Land ownership issues and corruption remain ongoing concerns.
3. Limited Technological Capability
Vietnam’s economy remains heavily reliant on assembly and low-value manufacturing. Moving up the value chain—towards R&D, innovation, and indigenous technology development—will be crucial if Vietnam is to emulate China’s rise.
4. Smaller Domestic Market
Vietnam’s population of approximately 100 million is significantly smaller than China’s 1.4 billion, limiting the scale of its domestic consumption. It will take decades before Vietnam can replicate the scale of China’s internal market.
Vietnam vs China: A Comparative Snapshot
| Metric | Vietnam | China |
|---|---|---|
| Population | ~100 million | ~1.4 billion |
| GDP (2023) | ~$430 billion | ~$18 trillion |
| Main Industries | Electronics, Textiles | Electronics, Machinery, Auto |
| Avg Monthly Wages (2023) | ~$300–400 | ~$750–1,000 |
| Trade Agreements | CPTPP, EVFTA, RCEP | RCEP, SCO, bilateral deals |
| Foreign Investment Focus | Labour-intensive & tech | High-tech, finance, infra |
The Road Ahead: Complement or Competitor?
Rather than replacing China outright, Vietnam is more likely to complement China’s role in global trade. China remains indispensable in high-tech manufacturing, capital markets, and global logistics. However, Vietnam is rapidly capturing market share in key export categories and becoming a critical link in the regional value chain.
The long-term picture may see Vietnam emulate China’s earlier developmental stages—using its manufacturing base to lift income levels, develop infrastructure, and foster home-grown innovation. Whether it will replicate China’s scale and geopolitical reach remains uncertain.
Conclusion: A Rising Star With Cautionary Notes
Vietnam’s rise is a compelling story of smart policymaking, resilience, and global integration. It stands as one of the most promising emerging markets of the 21st century. However, declaring it the “next China” oversimplifies the complexities of global economics and overlooks China’s unique scale, historical trajectory, and technological dominance.
Still, Vietnam’s emergence offers valuable lessons—and opportunities—for investors, policymakers, and corporations alike. In a multipolar global economy, Vietnam may not replace China, but it will certainly be an indispensable part of what comes next.
