Thai exports to China in 1Q12 experienced relatively low growth of only 1.4 percent YoY, the lowest in 2.5 years, against the growth of 2.5 percent (YoY) in 4Q11. Excluding refined and crude oil products, exports contracted (-) 3.2 percent YoY, due primarily to sluggish demand globally, the Eurozone debt crisis as well as volatile commodity prices in global markets that are dampening Chinese economic stability as witnessed by their economic growth in 1Q12 of 8.1 percent YoY, falling from 8.9-percent growth YoY in 4Q11, thus resulting in falling demand in China during the first-three months of 2012.
It is possible that the Chinese authorities may focus on stimulating domestic consumption to boost their economy overall via government sector efforts to compensate for falling exports. Moreover, the People's Bank of China (PBOC) has widened their trading band to reduce any burden in supervising the Yuan movements, thus adding flexibility to their implementation of monetary policy (including interest rate, Reserve Requirement Ratio (RRR) at commercial banks and the Yuan-related measures) and fiscal initiatives in order to minimize any risk of a dramatic slow-down in China. As Thai exports to China over the remainder of 2012 will likely grow at the slower pace of 10-15 percent, China should remain our top export market for the third consecutive year.