Economic Concerns Bring Thailand Closer to China

The Thai economy has been underperforming since the 2014 Coup d’état, lagging the growth rates of its neighbors. Overall economic growth is only around 3.3%, compared to its neighbors who grew at around 6%.

As the military government completes its third year in power, there are growing concerns about the economy. This has presented the Junta with increased pressure to spur economic growth, as it faces challenges to the legitimacy of the government leadership.

The solution that the Junta has chosen is to align the Thai economy with China’s economy, an unusual move given the amount of years of U.S. alignment and hostility with China. However, as western backers lessened their ties with the Junta, the government has been forced to align with eastern powers.

China has embraced this in open stride, seeing it as an opportunity to expand its influence in the region. It also hopes that the Thai government will become a supporter of ASEAN, backing Chinese security policies.

This economic alliance has begun to show returns to the Thai economy. China is now the second largest foreign direct investor in the Thai economy, with investments at around $1 billion. There have also been huge returns in trade, where Chinese trade generates a $17 billion surplus.

The influx of Chinese tourists in Thailand has increased, making up about one third of total tourism. Construction for a joint Sino-Thai high speed rail, worth $5.2 billion, has also begun as an effort to expand China’s One Belt One Road network.

Figure 1 Source: The Nation

But the economic growth also comes with some costs. Many of these proposed infrastructure projects are expected to have terrible environmental impacts. The Junta has also been using broad constitutional powers to override regulations and opposition as needed. This has included granting highly favorable contracts in Thailand to Chinese companies.

This has created worries that the Junta is becoming beholden to China in an attempt to stay in power. This is reinforced by the increasing military ties between the two countries.

The first Sino-Thai joint military production factory is being built, with the purpose of supplying the Thai military with Chinese weapons. This also comes amidst Thailand's recent decision to purchase 3 Chinese submarines, 34 APC’s, and 28 Tanks.

Thailand’s increasingly restricted press, as well as the government’s continuous deferment of elections, already fuel concerns of the military’s willingness to control and maintain power.

Now, with China bulwarking the regime, there is a heightened sense of worry that democracy will not be returning for some time.