As China's economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising US tariffs, its 2018 growth was dragged to the lowest in nearly three decades.
Signs of weakness in China - which has generated nearly a third of global growth in recent years - are fuelling anxiety about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.
But there is an unexpected potential beneficiary of the slowdown.
A red-hot economy, business-friendly policies and a Communist party led by free traders: that’s the elevator pitch Vietnamese Prime Minister Nguyen Xuan Phuc is delivering to global investors amid the US-China trade war.
“We are ready to grab the opportunity,” Mr Phuc said in an interview with Bloomberg TV’s Haslinda Amin, a few days before departing this week to the World Economic Forum in Davos, Switzerland.
Vietnam is quietly positioning itself as a safe haven for manufacturers wary of getting caught in the crossfire of the tariff war between the US and China. With a raft of free trade agreements, relatively cheap labour and close proximity to China, Mr Phuc has a good story to tell global executives he’ll meet in Davos.
“We are trying to increase exports in both quantity and quality of our products, especially in which we have advantages, such as seafood, commodities, footwear and electronics,” Mr Phuc said. “We aim to become an export economy that can grow fast and provide more jobs with higher income for our people.”
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Nonetheless, the South East Asian nation is yet to see a flood of companies moving in from China, he said. And the economy has some serious challenges to overcome: inadequate infrastructure and lack of skilled workers make it difficult to attract manufacturing beyond assembly-line work such as garment stitching.
Global economic conditions are also worsening. The US-China trade war and more subdued world growth is weighing on export demand, a threat to an economy like Vietnam where trade accounts for about twice the nation’s gross domestic product - more than any country in Asia apart from Singapore. About a quarter of Vietnam’s total trade is with China.
Vietnam’s economy seems to be sheltered for now. Growth quickened to 7.1 per cent in 2018, among the fastest in the world. Mr Phuc said he is confident growth will reach the higher end of the government’s forecast range of 6.6 per cent to 6.8 per cent this year. He also vowed to keep the Vietnamese dong stable in 2019.
“We see growth momentum in different areas and have good foundations to achieve our goals,” Mr Phuc said.
Vietnam, which has completed about 16 free trade agreements, began tethering itself to global trade after introducing market-oriented “doi moi” reforms in the 1980s. Exports surged to a record $244 billion last year, with US customers accounting for about $48bn of that - more than double compared with five years ago.
Several large manufacturers already operate in Vietnam, the biggest of which is Samsung Electronics, which accounted for about a fifth of the country’s exports last year.
Mr Phuc, concerned about anti-trade sentiments from the Trump administration, is vowing the country will step up imports from the US, from Boeing aircraft to products from oil companies.
“The challenges this year will include global trade tensions, climate change and insufficient infrastructure,” he said.
As a developing economy, he added, “we have to keep growing to bring more jobs to our people and eliminate poverty. We have to grow at more than 6 per cent annually to boost per capita income and to escape the middle income trap”.
Still, Mr Phuc has a good story to sell to global investors. Vietnam was ranked No 1 among seven emerging Asian countries as manufacturing destinations by Natixis, which looked at demographics, wages and electricity costs, rankings in doing business and logistics, and manufacturing as a share of total foreign direct investment.
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“The government has been doing a lot to help foreign investors to grow businesses long- term in Vietnam,” Mr Phuc said.
Meanwhile, the outlook is much less rosy in China.
"Growth will remain under pressure," said Louis Kuijs of Oxford Economics in a report. "Key risks are the ongoing trade tension with the US and that credit growth does not recover."
Exports held up through most of 2018 despite US President Donald Trump's tariff hikes on Chinese imports in a fight over Beijing's technology ambitions. But they contracted in December as the penalties began to depress US demand.
Economic growth in 2018 was the lowest since 1990's 3.9 percent in the aftermath of the violent crackdown on pro-democracy protests centred on Beijing's Tiananmen Square.
Growth in investment, retail spending and factory activity all declined, the National Bureau of Statistics reported.
The impact of US tariffs was limited, but China faces pressure from growing global support for import controls, volatile financial markets and declining investment spending, said the bureau commissioner, Ning Jizhe.
"Downward pressure on the economy is increasing," said Mr Ning at a news conference. Still, he added later, "the Chinese economy's resilience and ability to resist shocks and the long-term trend of stability will not change".
The slowdown is adding to pressure on President Xi Jinping's government to settle its costly dispute with Washington.
The two sides have imposed tariff hikes of up to 25 per cent on tens of billions of dollars of each other's goods in the fight over US complaints Beijing steals or pressures companies to hand over technology. Washington is pressing China to roll back plans for state-led industry development that its trading partners say violate its market-opening obligations.
That dispute has rattled Chinese consumers that Beijing is counting on to drive growth. Some are cutting spending, which might worsen the downturn.
In a possible sign of progress, Beijing announced Friday its top trade envoy, Vice Premier Liu He, will visit Washington for talks January 30 to 31. Business groups and economists said a decision by Mr Liu and his American counterpart, Robert Lighthizer, to get directly involved would suggest earlier talks by lower-level officials made progress.
Mr Trump said on Saturday that trade relations with China were "going very well" and "a deal could very well happen”.
Forecasters expect Chinese growth to bottom out this year as Beijing's stimulus efforts gain traction, according to the Associated Press. However, they have pushed back the time frame for that due to weakening exports.
Government-led spending on public works construction "is shaping up to be the engine for 2019," Iris Pang of ING said in a report. "However, non-infrastructure business activities will be dismal this year. And debt will grow."
A meeting of leaders of the ruling Communist Party in December promised tax cuts, better access to bank lending for entrepreneurs and other steps to help the private sector that generates China's new jobs and wealth.
Chinese leaders warned earlier any recovery would be "L-shaped". That means companies and investors shouldn't expect growth to rebound to the previous decade's double-digit levels.
Meanwhile, Mr Trump cancelled the US delegation’s trip to the global economic summit in Davos, citing the government shutdown, which is now the longest on record.
