Issara Sereewatthanawut

Eye on Asia | Thailand must not make the mistake of choosing between China and the US

Thai trade, like much of global trade, has been hit by the US-China trade dispute. With its deep ties to China and solid friendship with the US, Thailand must carefully find a balance in this time of US-China tensions

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A visitor browses at an international trade fair in Bangkok in April. Thailand draws much interest from various developed countries as an economic partner, and it should set policies to maintain negotiation power. Photo: EPA-EFE

Issara Sereewatthanawut

Published: 12:00pm, 6 May 2019Updated: 12:00pm, 6 May 2019

Thailand has just held a long-awaited national election. As the dust settles, not only are domestic issues waiting to be resolved, many foreign policies are also pending. Chief among them would be a response to the trade war between the United States and China, which has made an impact on Thailand and many other countries around the world.

For example, the tariff war has triggered a domino effect on Thai exports. According to Eurostat, the European Union’s statistics office, Chinese exports of automotive products to the EU increased by 10.8 per cent in 2018, while Thai exports of similar products there decreased by 10.2 per cent.

With the trade war and the changing geopolitical climate, global trade has suffered. Generally, Thai exports to international markets have lagged significantly. The trade dispute has left the world’s two biggest economies with massive overcapacity, for which they need to find new markets – like the EU – and offer attractive prices. To other economies, this means fierce competition.

In addition, Chinese companies are considering moving production to other countries including Thailand. First, a move to Southeast Asia could provide an opportunity to reach more than 640 million consumers. Second, Chinese companies could benefit from the US’ Generalised System of Preferences (GSP) in certain product categories, by expanding their businesses in Thailand and other GSP beneficiaries, using local resources then exporting their products from GSP countries.

To Thailand, an industrial migration from China would be nothing new or unusual. Thailand regards China as its big brother, and their relationship goes back centuries and includes commercial and military ties. However, Thailand is also good friends with the US. Just last year, the two countries celebrated 200 years of diplomatic ties, with activities including a “Great and Good Friends” exhibition. (The phrase comes from a missive president Abraham Lincoln wrote in reply in 1862 to a letter from King Rama IV.)