The Impact of US - China Trade War on Vietnam

2022 Fiscal Year Research-status Report

• Project/Area Number: 22K01456
• Research Institution: National Graduate Institute for Policy Studies
• Principal Investigator: WIE Dainn 政策研究大学院大学, 政策研究科, 准教授 (50600649)
• Project Period (FY): 2022-04-01 – 2025-03-31
• Keywords: trade war / trade diversion / export / FDI / productivity

Outline of Annual Research Achievements

In FY2022, we performed an extensive literature review and conducted a comprehensive data analysis. We learned the literature on trade diversion and firms’ entry into the export market. Then, we investigated the evidence of trade diversion in Vietnam, driven by the US-China trade war, which allowed Vietnamese firms to gain relatively favorable access to the US market. Using the US import data, we showed that the trade war significantly increased the import of targeted products from Vietnam. We further explored firms’ responses using microdata and demonstrated that those affected by the US-China trade war are more likely to be an exporter and receive FDI (Foreign Direct Investment). Using tariff wedges as an instrumental variable, we also found that firms that became an exporter experienced a considerable increase in productivity.

Current Status of Research Progress

2: Research has progressed on the whole more than it was originally planned.

Reason

The project is progressing smoothly as we had prepared the project for a long time before we launched it. We acquired data immediately after its release, and applied the methodology that we developed carefully. All team members are well-equipped, thanks to the funding and devoted to the project.

Strategy for Future Research Activity

In FY2023, we plan to present our findings through international conferences and workshops. Incorporating feedback, we aim to prepare our first draft for circulation in the academic community.

Causes of Carryover

We spent almoat all the funding for our research. So there is nothing to be carried out to the next fiscal year.