Vietnam’s Golden Opportunity: Riding the Wave of Chinese Investment Amid Trump’s New Curbs

On February 21, 2025, U.S. President Donald Trump signed a memorandum titled “America First Investment Policy,” signaling a sharp escalation in efforts to restrict Chinese investments in strategic American sectors like technology, infrastructure, healthcare, agriculture, and energy.

This move, aimed at safeguarding U.S. national security, is poised to redirect Chinese capital away from the United States—and Vietnam stands ready to catch the wave. With its strategic location, competitive labor costs, and established role as a manufacturing hub, Vietnam could see a significant influx of investment from Chinese firms looking to diversify their operations. However, this opportunity comes with its own set of challenges that Hanoi must navigate carefully.

A Shifting Global Landscape

Trump’s memorandum leverages the Committee on Foreign Investment in the United States (CFIUS) to block Chinese-affiliated investments in key industries, building on a trend of tightening restrictions that began during his first term and continued under the Biden administration. The policy reflects growing concerns in Washington about China’s access to American technology and resources, accusing Beijing of exploiting U.S. capital to bolster its military and intelligence capabilities. For Chinese companies, this translates to a shrinking welcome mat in the world’s largest economy—an unwelcome development amid their own domestic pressures, including economic slowdown and stricter regulations at home.

This isn’t the first time U.S. policy has pushed Chinese firms to look elsewhere. Since the U.S.-China trade war kicked off in 2017, Vietnam has emerged as a prime beneficiary of supply chain diversification. Multinational corporations and Chinese manufacturers alike have flocked to Vietnam, drawn by its proximity to China, affordable workforce, and access to global markets through 17 free trade agreements. Foreign direct investment (FDI) in Vietnam soared to $248.3 billion from 2017 to 2023, with Chinese investment nearly doubling in 2023 alone to $3.9 billion (excluding Hong Kong). Trump’s latest curbs could supercharge this trend, as Chinese firms seek new bases to maintain their global reach.

Why Vietnam?

Vietnam’s appeal is multifaceted. Geographically, it’s a stone’s throw from China, minimizing logistical costs for firms reliant on Chinese supply chains. Its labor force, while not as cheap as it once was, remains competitive compared to China’s rising wages. The country’s infrastructure—ports, roads, and industrial parks—has improved dramatically, making it a viable hub for electronics, solar panels, and electric vehicle components. Add to that Vietnam’s trade agreements, like the Regional Comprehensive Economic Partnership (RCEP), and it’s clear why companies see it as a launchpad to bypass U.S. tariffs.

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Take the solar panel industry as an example. Chinese firms have already ramped up production in Vietnam, with exports to the U.S. hitting $4.2 billion in 2023—26% of America’s total solar panel imports that year. Trump’s new restrictions could accelerate this shift, pushing more Chinese manufacturers to set up shop in Vietnam to sidestep barriers to the U.S. market. Electronics giants like Luxshare and Goertek, suppliers to Apple, have also doubled down on Vietnam, with investments of $504 million and $280 million, respectively, signaling a broader “China-plus-one” strategy that could gain momentum.

The Upside for Vietnam

For Vietnam, this wave of investment promises economic growth and industrial upgrading. In 2024, the country’s economy expanded by 7.09%, outpacing most of its neighbors, driven by strong exports and foreign investment. Chinese capital could further bolster key sectors like semiconductors and high-tech manufacturing, areas where Vietnam aims to climb the value chain. Jobs would follow, boosting local employment and consumer spending. Moreover, as Chinese firms bring technology and expertise, Vietnam could position itself as a more sophisticated player in global supply chains, reducing its reliance on low-value assembly work.

The timing couldn’t be better. With the U.S. and China vying for influence in Southeast Asia, Vietnam’s “bamboo diplomacy”—balancing relations with major powers—positions it to capitalize on both sides. The U.S. has upgraded ties with Vietnam to a Comprehensive Strategic Partnership, eyeing it as a friend-shoring partner, while China’s Xi Jinping has pushed for a “shared future” with Hanoi. Caught in the middle, Vietnam can leverage this rivalry to attract investment from both, though China’s proximity and economic heft make it the more immediate opportunity.

The Catch

Yet, this golden opportunity isn’t without risks. A flood of Chinese investment could deepen Vietnam’s entanglement with China’s supply chains, raising concerns in Washington. The U.S. has already flagged Chinese firms using Vietnam as a conduit to dodge tariffs—solar panels being a prime example. In April 2024, U.S. authorities launched anti-dumping investigations into Vietnamese solar exports, and Trump’s return could broaden such scrutiny to other goods. Vietnam’s $104 billion trade surplus with the U.S. in 2023 already puts it on the radar; any perception that it’s a backdoor for Chinese goods could strain U.S.-Vietnam ties and invite punitive tariffs.

Employees use sewing machines at the Pan-Pacific Company Viet Pacific Clothing (VPC) factory in Vo Cuong, Bac Ninh province, Vietnam. Pan Pacific manufactures and exports feather-down products, apparel, bedding goods, and needlework products.
Photo by SeongJoon Cho | Bloomberg | Getty Images

Domestically, Vietnam must tread carefully too. Anti-Chinese sentiment runs deep, fueled by historical tensions and disputes in the South China Sea. Past investments have sparked protests—like the 2018 backlash against special economic zones perceived to favor China. Hanoi will need to balance economic gains with public sentiment, ensuring Chinese projects don’t overwhelm local industries or exploit resources excessively.

Seizing the Moment

To maximize this opportunity, Vietnam should adopt a selective approach. Prioritizing high-value investments—think semiconductors over labor-intensive factories—could align with its long-term goals while minimizing U.S. backlash. Strengthening rules of origin and cracking down on transshipment would signal to Washington that Vietnam isn’t a mere passthrough. Investing in energy infrastructure to avoid blackouts, like those that plagued northern industrial parks in 2023, would also reassure investors of reliability.

Trump’s curbs on Chinese investment in the U.S. mark a pivotal shift, one that could funnel billions into Vietnam’s economy. If Hanoi plays its cards right, it could ride this wave to new heights, cementing its status as a global manufacturing powerhouse. But success hinges on agility—balancing economic ambition with geopolitical realities in a world where the U.S. and China are tugging ever harder in opposite directions.

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Source: Vietnam Insider