Chinese devaluation could affect investment in Vietnam

With the recent fluctuations of the exchange rate between Renminbi and US dollar, many people are afraid that Chinese investments into Vietnam will be negatively affected.

Xiang Yang Zhong Liang Company is a Chinese mining machinery manufacturer that is about to develop their branch in Vietnam. As scheduled, this project will be started in northern Vietnam later this year. The company’s leaders said the 3% devaluation of the Renminbi against US dollar may make them reconsider which currency they choose to invest in this project.

According to expert Pham Hong Chuong, who has spent years researching China’s economy, the changes in Renminbi’s value are already projected in advance and China may stick to a devaluation of 3 to 4%.

It will take more time to assess exactly how the devaluation of Renminbi will affect Chinese investments in other countries, including Vietnam. Although the initial impacts are largely insignificant, expert believe that Vietnam still needs to prepare more flexible policies to deal with unexpected situations.