Thailand's exports to China in April 2010 exhibited slower growth at a 28 percent pace YoY, declining 14% from the growth in March. That figure represented the lowest value since November 2009, partly because of China's tightened monetary policy to curb lending by raising the reserve requirement ratio (RRR) among commercial banks for the third time in May this year. There were alsoother austerity measures to prevent asset bubbles that have led to a general slowdown in industrial production and investment in most of their metropolises in April, thus inhibiting their need to import goods.
As a result, a number of Thailand's major exports to China were hurt, including computers/parts, rubber, chemicals, polymers, cassava products, rubber products, integrated circuits, wood and wooden products, plus electrical appliances and related parts, etc. However, China remained our largest export market in April and within 4M10, constituting 11.3 percent of Thailand's total export value, followed by Japan (with 10 percent) and the US (with 9.7 percent), respectively.
There are several challenges facing our exports to China over the remainder of 2010 These include uncertainty within the European economy that may adversely affect China's exports, as well as those of other countries serving as China's major export markets – e.g., the US – while China's attempts to tighten their monetary policy to control inflation, plus other stringent measures to prevent asset bubbles will continue to dampen private consumption and investment there. This will weaken their import requirements from many countries, including Thailand. While inflationary pressure and asset bubbles remain problematic to China's economic stability, uncertainty in the European economy stemming from the debt crises in Greece, Portugal, Spain, Ireland and Italy as a result of significant fiscal deficits and public debt could cause the EU economy to slow, so China's exports to Europe during the remainder of 2010 may not grow well.
This leads to an expectation that China will take a cautious stance toward adjusting their policy rate or raising the value of the Yuan over the remainder of this year to prevent any effect on their export sector – China's key growth engine. However, it is expected that the Chinese authorities might raise their policy rate and the value of the Yuan during the second half of 2010 (2H10) to curb inflation and asset bubbles. As a result, our exports to China should not perform well during that period. KASIKORN RESEARCH CENTER (KResearch) expects that our exports to China in 2010 will grow 18-25 percent YoY, down from the staggering growth of 70 percent YoY in 1Q10.
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