Processing Trade Booms Along China—Vietnam Border

Wang Zhe

Fruits from Vietnam， milk powder from New Zealand， yoghurt fermentation technology from France and diligent Chinese workers； all combined together in a single plant of the Guangxi Viet Huong Vien Datry Joint Stock Company. This Sino-Vietnamese dairy manufacturer， located in the Youyiguan Industrial Park in the city of Chongzuo， Guangxi Zhuang Autonomous Region， on the Sino-Vietnamese border， produces various Southeast Asian flavored yoghurt which are transported by cold-chain logistics to supermarkets across China.

In recent years， resources from across China and ASEAN member countries have poured into Chongzuo to make this border city an important area for manufacturing and processing trade. In 2017， the total foreign trade value of Chongzuo reached 141 billion yuan （US$22.3 billion）， up 15.8 percent from 2016. The border processing industry completed the output value of 5.368 billion yuan （US$0.85 billion） in 2017， an increase of 66.3 percent compared with 2016.

Advantages Attracting Investment

These days， workers are busy with their jobs at a snack food processing plant of Yankershop Food Co.， Ltd.， the first listed food processing company in Pingxiang， a county-level city under the jurisdiction of Chongzuo. Attracted by the abundant resources from both Pingxiang and ASEAN member countries， Yankershop Food decided to invest in Pingxiang. In only six months， Yankershop Food went from signing an investment agreement with the local government in May 2017 to beginning production in December of the same year.

“We will take full advantage of Pingxiangs geographical advantage and the quality fruits coming from Southeast Asian countries such as Vietnam， Malaysia， Thailand and Myanmar，” said Chairman of Yankershop Food Zhang Xuewu. “We are also going to strive to provide Chinese consumers with high-quality snack food from ASEAN.”

Chongzuo is the most convenient land gateway to ASEAN member states from China. The city has four national first-tier ports， namely Youyiguan， Pingxiang， Shuikou and Aidian. In addition， it has three second-tier ports， as well as 14 trading areas for border residents. In recent years， as the Belt and Road construction has deepened， approval was granted for Shuikou Port to be upgraded to an international port. Youyiguan Port was approved to provide visas on arrival， thus becoming the most fully-functional international port in Guangxi. The Youyiguan Highway Port got the green light to expand to include the Sino-Vietnamese passenger and cargo channels of Puzhai and Nongyao. In addition， the dedicated freight channel between Chinas Youyiguan and a Vietnamese international port has been opened to traffic.

In 2017， cargo trains began running on different routes， including the Qingdao （Shandong Province）-Pingxiang-Vietnam line， the Zhengzhou （Henan Province）-Pingxiang-Vietnam line and the Incheon （South Korea）-Jiaozhou （Shandong Province）-Pingxiang line. Goods are currently being transported between China and Vietnam via Pingxiang， while the dedicated freight channel linking Youyiguan with the Vietnamese port， jointly constructed by Pingxiang and Cao Loc， Vietnam， has officially opened to traffic， thereby realizing the separation of passenger and cargo transport via the land route across the China-Vietnam border. Together this transportation infrastructure continues to contribute to the booming processing trade industry in Chongzuo.

Industrial Parks Contribution to Processing Trade

Pingxiang Port has long been Chinas largest port for fruit trade with ASEAN. Some 400 grams out of every 500 grams of fruit entering China from ASEAN come via Pingxiang. Aidian Port is the largest Chinese herbal medicine border trade market， linking Guangxi with ASEAN. Shuikou Port has become a major port involved in the trade of nuts. Enterprises at all of these ports are in urgent need of platforms to integrate various resources. In response， Chongzuo is exploring the “port + industrial parks + processing plants” development model.

Longzhou County， under the jurisdiction of Chongzuo， has become the largest base for the importing， processing and trading of nuts in China. The total cultivated area of the Australian nut has reached 2，600 hectares， while the combined growing area of fruit has exceeded 1，000 hectares， managed by a range of stakeholders including Chinese companies， border residents working with Vietnamese companies and border residents who have signed land rental agreements in Vietnam.

In Fusui County in Chongzuo， nuts are sold after being packaged at the China-Thailand Chongzuo Comprehensive Industrial Development Zone， while Jinguan （China） Foods Co.， Ltd. produces preserved fruit and nut candy at the Guangxi China-ASEAN Youth Industrial Park.

The Guangxi Ningming （Aidian） Yuntian Traditional Chinese Medicine Market based in Aidian Port serves as a specialized supplier of Chinese medicinal herbs for the area. It has established plantations of Chinese medicinal herbs with a combined area of 2，668 hectares， ready to provide resources for a planned border processing base for Chinese herbal medicine.

At the cross-border economic cooperation zone in Pingxiang， a total of eight processing projects involving the importing of nuts， grains， oil， fruits and yoghurt have begun operation， thereby increasing the production capacity of the area.

The six trade hubs for mahogany furniture， mechanical hardware and electrical products， textile and garments， fruits and vegetables， herbs and minerals have become brand names for Chongzuo. As a typical representative of the development of trade processing sector， the local mahogany industry which mainly imported semi-finished products at the beginning， has gradually formed a complete industrial chain including the importing of mahogany logs， the processing of semi-finished products， mahogany deep processing， mahogany product exhibitions and mahogany culture-themed tourism projects， all of which provide jobs for tens of thousands of local residents.

Increased Financial Integration

On Aug. 30， 2017， an escort vehicle loaded with Vietnamese currency passed through the Youyiguan Port to Pingxiang. Through this transfer， the Bank of China （Guangxi Branch） and the Bank for Investment and Development of Vietnam （Lang Son Branch） finished an onsite handover of 3.5 billion Vietnamese Dong （US$154，389.1） in cash.

In 2017， the Guangxi Rural Credit Cooperatives and Vietnam Joint Stock Commercial Bank for Industry and Trade （VietinBank） signed a cooperation agreement on border trade settlement business in Pingxiang. Companies and individual businessmen conducting Sino-Vietnam border trade now only need open settlement accounts at the Pingxiang Rural Commercial Bank and the VietinBank （Lang Son Branch） respectively， thus realizing “point-to-point” settlement service in a secure， efficient and convenient manner.

The financial trading platform of China-ASEAN （Chongzuo） Regional Financial Service Center began trial operations in April 2017， with the average monthly amount of transaction currently exceeding 200 million yuan （US$31.6 million）， thereby alleviating the funding problems of trade processing companies.

Thanks to the favorable policies， Chongzuo is striving to boost its international trade， and the financial reforms along the border have in turn made rapid progress. With the changes in various forms of transactions between the Renminbi and the currencies of ASEAN member countries， more convenient and efficient capital channels will be provided to businessmen who come to the city for investment so as to reduce transaction costs and facilitate economic and trade exchanges between China and ASEAN member countries.