[0:00]This is Vietnam, one of the fastest growing economies in the world. Fifty years ago, the last Americans were evacuated from Saigon, leaving behind a war ravaged and impoverished country.
[0:14]Today, Saigon is Ho Chi Minh City, is a metropolis of over 9 million people, skyscrapers, global brands, endless construction.
[0:24]In just a few decades, Vietnam has eliminated extreme poverty, become one of the top exporters to the United States, and turned itself into a manufacturing hub for companies like Apple and Samsung.
[0:38]It all began in the 1980s with the Joy Moy reforms, opening the economy to trade and private enterprise with cheap labor and political stability.
[0:48]Since then, Vietnam has attracted over $230 billion in foreign investment and become an electronics assembly powerhouse.
[0:57]Chinese, Japanese, South Korean and Western firms all building factories. Over the past decade, its economy has grown faster than that of any Asian country but China.
[1:08]In 2025, the economy grew over 8%. Trade crossed $900 billion. On paper, everything looks perfect, but something doesn't add up.
[1:19]Because while the economy is growing fast, its electricity use is slowing down. For years, power demand in Vietnam grew even faster than GDP.
[1:30]But in 2025, GDP grew over 8%, while electricity output rose just 4.9%, less than half the pace.
[1:40]And in an industrial economy, that shouldn't happen. Vietnam looks like a manufacturing powerhouse, but it doesn't behave like one.
[1:49]In a normal industrial economy, more factories means more energy. More production means more power. Growth and electricity moved together, but in Vietnam, they're starting to move apart, which suggests something unusual.
[2:04]That this growth might not be as deep as it looks. So what's actually happening inside the economy? Where is this growth really coming from?
[2:12]And more importantly, how strong is it really? To understand what's happening, you first need to understand how Vietnam's growth model works.
[2:22]At its core, the system is surprisingly simple. Foreign companies bring the capital. They build factories. They import components from across Asia.
[2:30]Screens, chips, circuit boards, machinery. Those parts arrive in Vietnam where they're assembled by a large and relatively cheap workforce.
[2:42]The finished products are then exported to the rest of the world, especially to the United States and Europe. Vietnam doesn't design most of these products,
[2:50]and it doesn't manufacture many of the complex components either. Instead, it specializes in the final stage of the supply chain, assembly.
[2:59]And this model has worked extremely well. Global companies get lower costs. Vietnam gets jobs, investment and export growth.
[3:10]It's one of the reasons multinational firms have poured more than $200 billion into the country over the past two decades.
[3:18]And as tensions between China and the West increase, Vietnam became even more attractive. For many companies, it became the perfect backup plan.
[3:29]An alternative manufacturing base just outside China. This strategy is often called China Plus One, and Vietnam became its biggest beneficiary.
[3:39]Factories moved in, exports exploded, the economy surged, but this model also creates a hidden weakness.
[3:47]Because when most of your growth comes from assembling products designed and supplied elsewhere, the value created inside the country is actually quite small.
[3:55]Which means the economy can grow very quickly without deeply transforming the domestic economy. And that's where the real story begins.
[4:05]Vietnam's boom is not happening evenly across the economy. Instead, it is split into two very different worlds.
[4:13]On one side, there are the foreign companies: Samsung, Apple supplier, large multinational manufacturers.
[4:24]These firms dominate Vietnam's export sector. Today, foreign-invested companies generate roughly three quarters of the country's total exports.
[4:31]They run the largest factories. They control the global supply chains, and they capture most of the gains from the export boom.
[4:39]But on the other side, there are domestic Vietnamese companies, and their story looks very different. While exports from foreign firms surged,
[4:46]exports from domestic companies actually declined in 2025. In other words, the country's exports are booming,
[4:56]but many local businesses are not. This creates what economists sometimes call a two-track economy.
[5:04]One track is fast, global, and foreign-owned. The other is slower, domestic, and struggling to keep up.
[5:11]And that makes Vietnam's growth far more fragile than it appears. This leads to another misconception about Vietnam's rise.
[5:19]Many people see Vietnam as a replacement for China. As companies tried to reduce their dependence on Chinese manufacturing, they began shifting production to other countries.
[5:32]And Vietnam quickly became the biggest winner. But the reality is more complicated. Because Vietnam may be producing the final products,
[5:38]yet it still depends heavily on China for the parts. Most of the components used in Vietnamese factories,
[5:46]chips, displays, machinery, industrial materials, are imported from abroad, and the vast majority of those imports come from China.
[5:54]In fact, Vietnam's trade deficit with China has exploded in recent years. In 2025 alone, the country imported around $186 billion worth of goods from China,
[6:05]creating a deficit of more than $115 billion, which reveals the real structure of the system.
[6:14]China produces the high-value components. Those parts are shipped across the border into Vietnam.
[6:21]Vietnam assembles the final product, and the finished goods are exported to the United States and Europe.
[6:28]In other words, Vietnam is not replacing China in the global supply chain. It is extending it. And that means Vietnam's growth still depends heavily on the same country it is supposedly replacing.
[6:40]While foreign companies dominate exports, a handful of giant conglomerates dominate everything else. Groups like VinGroup, Masan, and Hoa Phat.
[6:49]These companies are not just large businesses, they shape entire industries: real estate, steel, retail, infrastructure, and technology.
[6:58]Take VinGroup. It started as a real estate developer, but today its empire stretches across shopping malls, hospitals, universities, electric vehicles, and massive infrastructure projects.
[7:10]In many ways, these conglomerates function almost like mini economies of their own, and their influence is especially visible in Vietnam's stock market.
[7:19]In 2025, the country's main stock index surged more than 40%, but most of those gains came from just a handful of companies.
[7:29]Many of them tied to VinGroup. At one point, stocks connected to the VinGroup ecosystem accounted for the majority of the market's rise,
[7:37]which creates a strange illusion. From the outside, the stock market appears to be booming,
[7:44]but underneath, much of that growth is concentrated in a very small number of firms. And the risks don't stop there.
[7:52]Because these conglomerates are now entering the most expensive phase of their expansion.
[7:58]Building steel complexes, launching electric vehicle companies, even proposing massive infrastructure projects worth tens of billions of dollars.
[8:08]To finance this growth, many of them rely heavily on borrowing, which means that if one of these companies runs into trouble,
[8:16]the shock could quickly spread through banks, markets, and the wider economy like China Evergrande crisis.
[8:24]And that's what makes this concentration so dangerous. Because when too much of an economy depends on just a few companies,
[8:32]their success becomes everyone's success. But their failure can become everyone's problem.
[8:38]Over the last decade, Vietnam has been driven by bank-dependent economic development. That means Vietnam's banks have been lending aggressively.
[8:47]By the end of 2025, total credit in the economy had grown by nearly 19% in a single year.
[8:54]That pushed Vietnam's credit-to-GDP ratio to around 146%. For a lower-middle-income country,
[9:02]that is an unusually high number. But the real issue isn't just the size of the debt,
[9:08]it's where that money's going. A large share of the loans flowing through Vietnam's banking system are tied to real estate developers and the large conglomerates.
[9:21]Many of the same companies are driving the country's rapid expansion. For years, cheap credit helped fuel a construction boom.
[9:27]Even massive prestige projects, like Dong Son Bronze Drum Stadium, a proposed 135,000-seat sports complex, named after the prehistoric bronze casters.
[9:39]The project is being developed by VinGroup, the country's most powerful conglomerate. But rapid credit growth always carries a risk.
[9:47]Because when borrowing expands faster than the real economy, financial vulnerabilities start to build. And there are already signs of strain.
[9:57]Non-performing loans in Vietnam's banking system have been rising in recent years. Much of that pressure is linked to property developers struggling with high debt and delayed projects,
[10:08]which creates a dangerous feedback loop. Banks lend heavily to developers. Developers rely on rising property values,
[10:17]and property serves as collateral for many of those loans, which means Vietnam's growth is not just dependent on exports and foreign investment,
[10:28]but is also deeply tied to the stability of its financial system. But the most immediate threat to Vietnam's growth is much simpler: electricity.
[10:38]Over the past decade, the country's industrial boom has pushed electricity demand. Manufacturing zones in the north, where many of the electronics factories operate,
[10:51]are especially energy intensive. The World Bank estimated that the 2023 power crisis caused losses of $1.4 billion, equal to 0.3% of Vietnam's GDP.
[11:03]Semiconductor production, which demands intensive electricity usage, was especially vulnerable. In the past,
[11:10]manufacturers have been asked to adjust schedules to conserve power in their region. But building new power plants and transmission lines takes years.
[11:21]And in Vietnam, many of those projects have been delayed. Some are stuck in regulatory disputes, others are waiting for financing.
[11:28]More than 100 renewable energy projects remain stalled, unable to connect to the national grid.
[11:35]At the same time, the state electricity company still controls power prices. Those price caps make it difficult for private investors to earn a return,
[11:45]which slows the construction of new power plants even further. The result is a system that is increasingly stretched.
[11:51]For a country whose economic rise depends heavily on manufacturing, reliable power is not a luxury, it is the foundation of the entire model.
[12:00]Without it, the factories slow, exports stall, and the growth story that has defined Vietnam for decades begins to look far more fragile.
[12:10]Vietnam's leadership is well aware of these risks, and over the past few years, the government has begun trying to address them.
[12:18]At the center of this effort is the country's new leader, General Secretary To Lam. After years as Vietnam's powerful Minister of Public Security,
[12:28]To Lam rose to the top of the Communist Party and is now leading an ambitious push to reshape the country's economic model.
[12:34]His goal is simple: to move Vietnam beyond low-value manufacturing and turn it into a more advanced economy.
[12:42]One that designs technology, builds stronger domestic companies, and produces more of its own industrial components.
[12:50]In theory, this could help Vietnam move up the global value chain. But reforming an economic system this large is never easy.
[12:58]Vietnam's rapid growth was built on cheap labor, foreign investment, and a tightly controlled political system.
[13:06]Changing that model requires difficult trade-offs. Too much regulation can scare away foreign investors.
[13:12]Too little reform can leave domestic firms permanently behind. And all of this is happening while Vietnam
[13:19]navigates a delicate geopolitical balancing act: deeply tied to Chinese supply chains,
[13:26]yet heavily dependent on American and European markets for exports. Vietnam now stands at exactly this crossroads.
[13:34]Its export model has lifted millions out of poverty and turned the country into one of Asia's fastest-growing economies.
[13:42]But the same model also creates deep structural dependencies. From the outside, Vietnam's rise looks unstoppable.
[13:50]A country once devastated by war has transformed itself into a major player in global manufacturing.
[13:56]Factories stretch across the countryside, exports reach every corner of the world,
[14:01]and growth continues to surprise economists. But underneath this success, the system remains fragile.
[14:07]Much of the economy is driven by foreign companies. Domestic firms struggle to keep pace. Debt is rising. Energy infrastructure is under strain.
[14:15]And the country remains deeply embedded in global supply chains it does not fully control. For now, the model still works.
[14:24]Investment continues to flow. Factories continue to expand, and Vietnam remains one of the fastest-growing economies in the world.
[14:33]But the next phase of development will be far more difficult than the last. Because the challenge ahead is not simply to grow, it is to transform.
[14:42]And whether Vietnam can make that transition may determine the future of its economic miracle.
