A 7.9-percent drop in our 2014 shipments to China reflect the impact of slowing Chinese economic growth on Thai manufacturing and exports. We at KResearch project that the Chinese economy will continue to slow to 7.2 percent growth, and thus have adopted a more cautious view towards situations there due to risks seeming to loom large. China's economy could grow at a slower pace than thought due to risks in the following areas:
Financial Sector: The weakening Chinese economy could lead to deterioration in businesses' debt servicing ability that could trigger defaults and thus undermine confidence towards China's financial system, and more importantly, its overall stability.
Property Sector: The economy has been largely dented by a downturn in the real estate and construction sectors that represent about 13.0 percent of the nation's GDP. Declining property prices have also had a psychological effect through a wealth effect.
Global Economy: Major economies like the EU and Japan are now struggling to achieve recoveries, while emerging market economies are faltering. These uncertainties do not fare well for international trade, particularly for China, which is the world's major manufacturer and exporter.
We have estimated that Thai exports to China may perform within (-)0.5 to 4.5 percent growth in 2015. Our traditional best-sellers, e.g., rubber and intermediary components, are still under pressure, but cassava and fruit continue to sell well.
Over the long-run, however, opportunities for Thai businesses could be enhanced with greater proportion of consumer product exports. We should also utilize new sales channels, notably online platforms that are now trending well among Chinese consumers, as well as branching out into China's inland cities and other locales in the western part of the country where economic development and urbanization can be expected later on.
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