Over the first ten months of 2013 (10M13), Thailand's outward trade to China contracted 0.9 percent YoY amid the economic slowdown there, after its new leaders – that came into office during March – have been undertaking sweeping economic reforms. Thai exports to China began to improve during 3Q13 and this growth momentum will likely continue during the final two months of this year, though it may not be sufficient to bolster 2013 exports overall because of a high export base in the final two months of 2012 . As a result, we at KResearch expect that our goods sent to China will contract perhaps (-)1.0 percent YoY to only USD26.6 billion overall for 2013.
Bilateral Trade between China and Thailand
|
|
2012
|
2013f
|
2014f
|
|
|
Base Case
|
Projected Growth
|
|
Exports to China (YoY)
|
(+)2.4
|
(-)1.0
|
(+)3.3
|
(+)0.5 – (+)7.5
|
|
Value (USD Millions)
|
26,870
|
26,600
|
27,500
|
26,700-28,600
|
|
Imports from China (YoY)
|
(+)21.7
|
(+)1.4
|
(+)4.7
|
(+)3.5- (+)8.7
|
|
Value (USD Millions)
|
37,121
|
37,600
|
39,400
|
39,000-41,000
|
|
Trade Deficit (USD Millions)
|
10,251
|
(-)11,000
|
11,900
|
12,300-12,400
|
Note: f = Projected by KResearch, December 2013
Meanwhile, Thai businesses that are part of China's supply chains will need to make major adjustments because China will press ahead with its economic reforms adopted at the 3rd Plenary Session of 18th CPC Central Committee Congress in November, which are aimed at building a prosperous society, creating more balanced and stable economic growth and furthering the integration of its economy with the world. The Chinese government has implemented many policies and measures to reach those goals as seen in their efforts to promote advanced technologies for its agricultural and industrial sectors to achieve quality growth, along with improvements in the quality of life for the Chinese proletariat. These initiatives will be key economic drivers forcing local businesses to allocate manufacturing resources more effectively.
During 2014, KResearch believes that Thai exports to China will be supported by a more stable Chinese economy, based on improvements in domestic initiatives as well as higher volume of exports to its trade partners. That, coupled with a relatively low 2013 export base, should help Thai exports achieve a 3.3 percent growth – about USD27.5 billion in value – or somewhere within a range of 0.5-7.0 percent, valued at USD26.7-28.6 billion.
We expect that our agricultural exports – including rubber, cassava and fruit – will perform well in China next year due to strong demand nurtured by their energy and automotive industries, as well as robust domestic consumption. However, our industrial exports, especially computers and related components, will likely decline. Our primary raw materials, such as rubber, chemicals, polymers, electrical appliances/related components, electrical circuit boards, electric machinery/ motors will continue to do well in the Chinese market, but Thai exporters may have to make some adjustments over the long-term, focusing on technologies and the environment, to maintain market shares amid steeping competition there. With China's focus on achieving a consumption-led growth economy in the future, it is expected that many Thai exports will benefit from this with such items as canned fruit, beverages, chewing gum, confectioneries, jewelry, ornaments, yarn, other synthetic fibers, electrical equipment and auto-parts.
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