Reshaping Global Supply Chain: The US-China Trade War, China’s Zero Covid Policy, and Vietnam’s Trade Boom

Abstract

The escalating tensions between the United States and China, together with the stringent Zero Covid policy enforced by the Chinese government, have been actively reshaping global supply chains in the past several years. Our project is positioned to examine these two effects on Vietnam's trade engagement. To facilitate our investigation, we compiled export and import data of Vietnam's top 20 trading partners, spanning monthly and yearly intervals. We then explore potential correlations between the US-China trade war, China's lockdown policy, and the trade surge witnessed in Vietnam. Our empirical findings indicate: [a] Both the US-China trade war and China's Zero Covid policy enhance Vietnam's trade with the rest of the world if the two effects are tested separately; [b] If tested simultaneously, the US-China trade war remains statistically significant whereas China's Zero Covid policy does not, which suggests that the former has a more persistent, larger effect than the latter. Scholars and policymakers will discern the relevance of our project in terms of its capacity to elucidate the forces reshaping global supply chains and the dynamics affecting export-led economies, such as China and Vietnam, throughout their enduring evolution.