Vietnam reported a wider trade gap with China in the first two months of this year, data from the Ministry of Industry and Trade show.

The country’s imports from China were worth US$4.48 billion in January and $3 billion a month later, whereas it only shipped $2.31 billion worth of exports to the northern neighbor collectively in these two months.

The trade deficit is thus $5.17 billion, widening from the $2.37 billion recorded in the same period last year.

Vietnam mostly exports raw materials to China and buys back complete products. For instance, it sells rubber latex to China and imports Chinese-made tires.

The Electricity of Vietnam, the country’s power utility, also has to import several billions of kWh of electricity from China to ensure supply for 13 provinces in the north, according to the Vietnam News Agency.

In 2013, EVN imported 3.2 billion kWh from China, and 2.29 billion one year later. This year the company expects to buy 1.8 billion kWh.

Vietnamese businesses also have to import most of their raw materials, equipment, and machinery from China, because “there is an abundant and cheap supply” there, the Vietnam News Agency quoted Bui Huy Son, head of the Vietnam Trade Promotion, as saying.

Vietnam hopes to diversify its export markets thanks to several trade pacts, such as the Trans-Pacific Partnership with the U.S. and some other member nations as well as the Free Trade Agreement with the EU, the country is slated to enter.

“After these trade pacts are signed, Vietnamese businesses will have more chances to expand their markets and increase shipments,” Tran Thanh Hai, deputy head of the export-import department under the Ministry of Industry and Trade told Tuoi Tre (Youth) newspaper in an interview published Friday.

Vietnam is projected to post $165 billion in total exports this year, a 10 percent year-on-year increase, Hai said.

“This is not an easy target but if we can make use of the trade pacts, we will achieve it,” he said.

“Local and foreign businesses in Vietnam will have to import more equipment and machinery to expand production following the signing of the trade agreements, so exports will soar during this initial stage,” he explained.

However, Hai noted, Vietnam is expected to suffer a trade deficit this year, after having enjoyed a trade surplus for three years running since 2012.

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