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27 Jan 2012


Exports to China, 2012: To Expand at a Lower Rate than in 2011 (Business Brief No.3238)

Thailand's outward trade to China in 2012 may continue to thrive, albeit at a decelerating rate from 2011 due to a softer Chinese economy in line with bleak global economic prospects amid numerous risks. However, the People's Bank of China (PBOC) is highly likely to inject more liquidity into the system via Open Market Operation (OMP) and to further cut reserve ratio requirement (RRR) for commercial banks. Chinese monetary policymakers may also issue guidance to commercial banks to focus on credit extension to local SMEs, farm sector and enterprises in rural areas. Emphasis may also be placed on a more accommodative fiscal policy via tax cuts to prevent a Chinese economic hard landing, which is seen as a possible prelude to social turmoil.

KResearch forecasts that our exports to China may maintain growth of 10-15 percent, albeit being smaller than the 27.6 percent rate achieved in 2011. The Chinese economy may continue to outperform other major economies, including the US, Europe and Japan, which may take some time to resume their growth potential.