The flow of goods and people between China and Thailand continues to increase, and this has so many benefits and drawbacks. China has so much impact on the economy of Thailand. For example, a trader who buys cheap items from a Chinese dealer and resells the items at a higher price in the local market is likely to profit. However, the import of such items will displace some of the indigenous companies producing them.
Many Chinese companies now have locations in Thailand, thanks to tourists and even students who have established businesses to build Thai-China relations. That has also helped to further grow the economy of Thailand.
Chinese Tourism Boom
In 2008, the R3A highway that connects China and Thailand through Laos was opened. Another bridge connecting the Chinese Kunming province to Thai’s Chiang Rai province and Laos was opened in 2013. This has brought about an increase in the influx of Chinese campers and caravans, bringing about an increase in recorded road accidents, as well as in the number of people seen camping on the streets.
However, steps were taken by the government to control the influx of vehicles from China to Thailand. This decision had an adverse impact on the economy, especially for businessmen in northern Thailand.
The Regional Economic Dominance of China
Over the past few years, the economy of China has dominated that of other countries. Here are some statistics to justify this claim:
- The level of foreign direct investment was ranked second globally in 2015. This brought about a 200% growth in Chinese investment, which was a great advancement for ASEAN countries.
- According to the Commerce Ministry, the highest share in Thailand’s export market belongs to China.
- China also has the highest share in Thailand’s import market, with a trade value of 16%
- When China had a setback in its economic growth in 2015, most of the neighboring countries, including Thailand, felt it. That is because they export different goods, raw materials, and electronic parts to China.
There’s a lot of environmental concerns regarding different Chinese development projects. This includes the Heavy-chemical banana farms in Thailand, the thermal power plants in Vietnam, the paper pulp mills in Vietnam, and the copper mines in Myanmar.
For some people, the power of these Chinese investors in Thailand is like a threat to their sovereignty, but that’s not the case for everyone. A lot of people have criticized China for not paying attention to certain local concerns.
However, the beneficial impact of China on Thai’s economy cannot be overemphasized because of these few criticisms.
Thai’s Current Economic State
There are different economic news and forecasts for 2021. One of the most recently released forecasts is from the Organization for Economic Cooperation and Development (OECD). In this forecast, global economic growth was raised to 5.6% in March. This increase in growth can be attributed to the rapid distribution of the Covid-19 vaccine, Chinese increased economic growth, and large US stimulus packages.
It is expected that China would grow by 7.8% and the US economy by 6.5%. China and the US account for up to 41% of the global economy. That implies that growth in their economy will increase the growth of global economies.
However, not every economy will experience this growth equally. It completely depends on each economy. Taken Japan as an example, even though the current global economic growth is at 5.6%, Japan’s economic growth is at 2.7%.
The story is different for Thailand. Thailand experienced downward economic growth in 2020 due to the COVID-19 pandemic. This is the first time the economy will record negative GDP growth since 1998. However, a 4% growth is expected in 2021 and a 4.4% in 2022. This is with respect to the post-pandemic economic recovery in the world.
However, the growth projections for Thailand were revised in January, after which it was placed at 2.7% in 2021 and 4.6% in 2022. The country is currently faced with many challenges, particularly relating to the ongoing pandemic’s social, public health, and economic impacts. The unemployment rate is currently very low because of a lack of social insurance and a low birth rate.
China is a major economic force in the world and a center of attraction for many investors. Today, most people are seeking investment opportunities in China because of the profits they guarantee. The impact of China’s economic development is being felt by Thailand and other ASEAN countries and on an international scale.
Due to the relations between China and Thailand, which has existed for many years now, and which continues to solidify, it is expected that Thailand’s economy will enjoy many benefits in 2021. That implies that growth in China’s economy will also help improve that of Thailand.
Another way that China impacts the economy of Thailand is through the Chinese people. Many Chinese citizens are moving to Thailand for business and for other economic activities. Thailand is a center of attraction for tourists from different parts of the world, and this has the potential to boost the economy in 2021.