Thai-Chinese economic relations enter new phase

Over the past 10 years, trade between Thailand and China has grown approximately seven-fold and last year it reached a record level of US$70 billion, outstripping China’s trade with the rest of Asean. China is now Thailand’s second-largest trading partner, while Thailand ranks as 15th among China’s foreign trade partners. 

This has not come about by accident but from a strong commitment on both sides to strengthening bilateral ties. 

One of the first major initiatives was in 1985 when our two countries signed an Agreement for the Promotion and Protection of Investment. This gave Thailand a head start over other Asean countries as it supported strong growth in two-way investment and closer integration in supply chains such as in manufacturing and agriculture.

China is now the second-biggest foreign investor in Thailand after Japan, while Thai companies have invested in thousands of projects in China over the past decade. This two-way investment has led to major structural changes in our bilateral trade, with computer components, electronics and chemicals now major export items from both countries.

Bilateral trade was also strengthened by the Early Harvest programme for agricultural products, signed in 2004. This led to a dramatic increase in trade of fruit and vegetables and, once again, gave Thailand a head start over its Asean neighbours.

Over the years there have been many joint meetings and high-level visits to both countries by leading dignitaries, including members of Thailand’s royal family, particularly HRH Princess Maha Chakri Sirindhorn. There have also been numerous private sector exchanges such as fact-finding visits, trade shows and business matchmaking events.

Given that wages are rising in both countries, Thailand and China now face the challenge of finding lower-cost labour, while preserving strong industrial bases. One way to achieve this is to specialise further in production. 

Thailand can provide high quality and sophisticated manufacturing facilities for certain products and lines and support other Asean countries to develop their manufacturing hubs through financial services, investment, logistics and distribution. This would be a good way of taking the bilateral relationship to the next level – China is seeking to strengthen its role as a partner for Asean and Thailand can take a lead on this.

This year marks the 10th anniversary of the China-Asean strategic partnership and Thailand was the first stop on a tour of four Asean nations by Chinese Foreign Minister Wang Yi. He pointed out that the Thai-Chinese relationship is special: “a treasure that ought to be nurtured by both countries”. 

On a recent visit to Thailand, the chairman of the World Eminent Chinese Business Association (WECBA) also stressed China’s special relationship with Thailand, saying Thailand continues to be a priority destination for Chinese firms. 

It is indeed heartening to see the continued strength in the relationship between Thailand and China and I am sure it will help Thailand achieve its goal of being the hub of Asean.

 

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