In the latest 14th plan for national and economic development, China has set a target to become a carbon -free nation by 2060 or over the next four decades. KResearch, however, is of the view that it will take China some time to achieve that target as its carbon emissions are growing unabated post-COVID pandemic. Presently, Chinese industries that are responsible for greenhouse gas (GHG) emissions, such as coal, iron and steel, cement, thermal energy, chemicals and automobiles, have been under the government's stringent control. Thai exports related to energy and minerals to China amount to only 2 percent or USD693 million of Thailand's total shipments during 2020.
KResearch views that China's road map to reduce carbon emissions by shifting from fossil fuels to clean energy may take at least a decade to achieve. China's endeavor will directly benefit Thailand as we will be able to export more products that are related to clean energy such as cassava, solar cells and automobiles. Thailand's cassava exports to China look promising, following a 70.7 percent surge during 5M21. Presently, Thailand is China's largest import source of cassava for the processing of animal feeds and ethanol because prices of Thai cassava products are lower than their locally produced maize. Other Thai exports that are set to perform well in China are those that have resulted from the relocation of production bases from China to Thailand, such as solar cells. During 5M21, Thailand's solar cell shipments to China accounted for 5.0 percent or roughly USD44 million of the total solar cell exports, representing an increase of 60.3 percent YoY. Meanwhile, Chinese investors have begun to increase investment in the production of automobiles and components of electric vehicles in Thailand.
Indirect impacts from China's drive to become a carbon-free nation over the medium to long -term may include a decline in commodity prices as consumers will increasingly switch to clean energy. China's policy on the reduction of GHG emissions will likely be implemented more specifically on the production processes in the industrial sector, plus the transportation and agricultural sectors. It is also likely that China will adopt certain GHG emission standards that are on par with those of European countries and the US, such as carbon footprint labeling. If adopted, this may have an impact on China's demand for some Thai products. Related Thai entrepreneurs are therefore advised to ensure that their manufacturing processes are in alignment with Chinese regulations in the future.