Thailand's exports to China grew at a slower pace in August 2010, reaching USD1,798.9 million, increasing only 22.2 percent YoY, which was lower than the 29.6 percent growth recorded in July. Also, it was the lowest growth seen in nine months. This decline has been attributed partly to the Chinese economy that has begun to cool as a result of commercial bank lending controls and because of weakening exports dented by the Yuan's rise. Also, the rapid appreciation of the Baht has weakened the pricing competitiveness of our exports to China.
Over the remaining months of 2010, it is expected that Thailand's outward trade to China will decelerate further because of a number of downside risks, including the slowing Chinese economy, as well as uncertainty in the recoveries in major economies, e.g., the USA, EU and Japan, that will inevitably make it harder for Thai exporters to compete for a greater share in the ever-increasingly competitive Chinese market. In addition, our exporters may face increased volatility in raw material prices and further appreciation of the Baht.
Nevertheless, several developments in China, including ongoing economic development specifically in Beijing, Tianjin and Hebei, plus government efforts to maintain economic stability through increased domestic investment, plus China's status as one of the world's most attractive investment destinations, may help spur demand for Thai goods, thus supporting sustained export growth over the remainder of 2010, albeit slower than in 1H10. Given this, wemaintain our forecast for Thai exports to China in 2010 at 25-30 percent growth.
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