Over the past three decades, China has recorded the highest growth in the world. Presently, the country is ranked as the world's fourth largest economic powerhouse. It could be said that 2006 was another golden year for China in which they posted economic growth of 10.5 percent, close to the 10.2 percent in 2005. The Chinese GDP stood at USD2.55 trillion last year, ten times higher than Thailand. The visceral economic growth of China has been in line with their leapfrogging growth in consumption, investment and international trade.
On the global front, China's international trade volume is third-ranked, behind the US and Germany. The fast-growing Chinese economy and trade has been a boon to bilateral trade between Thailand and China. Currently, China is Thailand's third largest market and its second largest source of imports. It is also among Thailand's top five trade partners, having recorded the highest trade growth (compared to the four others, e.g., the US, Japan, Singapore and Hong Kong). Against this backdrop, the Chinese economic situation in 2007 will not only have significant implications to themselves, but also to the trade and economic growth of Thailand and East Asia.
Chinese Economy in 2006-2007
KASIKORN RESEARCH CENTER (KResearch) forecasts that the Chinese economy will grow in a range of 9.0-9.5 percent in 2007. Investments in fixed assets there are expected to increase 20.0 percent, a bit slower than in 2006. Likewise, China's exports and domestic consumption are likely to exhibit decelerating growth, with exports growing in a range of 15.0-17.0 percent, down from the 24.9 percent in 2006. However, their imports should record steady growth of 20.0-22.0 percent, thanks to the strengthening Yuan. Even so, China will still post a huge trade surplus, thus likely lifting the country's foreign reserves to USD1.29 trillion by the end of 2007. Meanwhile, China's retail sales may rise by 12.0-13.0 percent, close to what was seen last year.
The Key Economic Index of China
|
|
2005
|
2546*
|
2007*
|
|
GDP (Percentage of Change)
|
10.2
|
10.5
|
9.0-9.5
|
|
Fixed Assets Investment (Percentage of Change)
|
27.2
|
26.5
|
20.0
|
|
Value Added of Industrial Sector
(Percentage of Change)
|
16.4
|
16.5
|
15.0-16.0
|
|
Retail Sales (Percentage Change)
|
12.9
|
13.0-13.5
|
12.0-13.0
|
|
Consumer Price Index (Percentage Change)
|
1.8
|
1.3
|
2.2
|
|
Export (US$ billion)
|
762.0
|
969.1
|
1,110.0
|
|
Export (Percentage Change)
|
28.4
|
24.9
|
15.0-17.0
|
|
Import (US$ billion)
|
660.1
|
791.6
|
984.0
|
|
Import (Percentage Change)
|
17.6
|
22.0
|
20.0-22.0
|
|
Foreign Investment (US$ billion)
|
72.4
|
69.5
|
65.0-70.0
|
|
International Reserves (US$ billion)
|
818.9
|
1,065.0
|
1,292.0
|
|
Rate of Exchange (US$/RMB)
|
8.07
|
7.80
|
7.50
|
Source: The National Bureau of Statistics of China, Ministry of Commerce, The Asian Wall Street Journal
Note: Estimates by KASIKORN RESEARCH CENTER
Trend of Trade between Thailand and China
In the first 11 months of 2006, exports from Thailand to China were valued at USD10,625 million, rising over the same period of the preceding year by 28.41 percent, and close to the growth of 28.85 percent in 2005. Key exports from Thailand to China in 2006 ranged from computers and parts, rubber, chemical products, ethylene polymers, propylene, electronic integrated circuits, raw crude, tapioca products, motor fuels and lubricants, rubber products and wooden products respectively, with the export value of these 10 categories accounting for 72.8 percent of all exports from Thailand to China. Other exports that have had rapid growth are lenses, printed circuits, plus copper and rice products. Indications are that the Chinese economy will slow in 2007 and as a result, there may be a deceleration in Thailand's exports of raw materials and parts for industries to re-export to third countries. It is projected that Thailand's exports to China in 2007 will rise in a range between 20.0-25.0 percent compared to the 27.0-30.0 percent in 2006.
As for imports, Thailand's imports from China in the first 11 months of 2006 rose by 21.3 percent to a total value of USD12,339.8 million, compared to 2005 when imports had increased 37.3 percent and were valued at USD11,159.8 million. Despite falling growth, this expansion is deemed quite high because Thailand's aggregate imports from the rest of the world grew only 7.52 percent in the first 11 months of 2006. Key items that Thailand imported from China ranged from electrical machines, computers, iron/steel, other machinery, chemical products, electrical appliances, fabrics, waste metal, miscellaneous goods and electronic integrated circuits. In 2007, it is projected that Thailand's imports from China will still be high, but decelerate somewhat because Thailand's exports and economic growth are cooling in general. Declining Chinese imports are likely to include industrial raw materials, industrial parts, including capital goods utilized in production for export, e.g., iron, waste metal, electronic integrated circuits, cathode ray tubes (for television), general machinery and electrical machines. However, consumer goods, e.g., electrical appliances, fabrics, plastic products, fruit and vegetables, etc. are still showing healthy growth due to the strong Baht over the Yuan, which has helped lower the prices of imported goods from China.
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