Growth rate of Thailand's exports to China in June fell to 26.3% YoY, after expanding 39-percent YoY in May. As a result, our exports to China in 1H10 grew only 47.8 percent YoY, down from a lofty 70-percent growth recorded in 1Q10. The decline in our June exports to China was consistent with the slowdown in the Chinese economy in 2Q10. Against this backdrop, it is expected that our outward trade to China will slowdown further in 2H10 due partly to the higher base effect of last year and the China's attempts to cool their overheating economy and property sector, thus lessening their import requirement in the face of steady declines in domestic consumption and investment ahead. Our major export categories that began to slowdown in June included rubber products, rubber, and electrical appliances & parts. It is expected that the slowing down in the Chinese export sector during the remainder of 2010 will inhibit their needs to import intermediary goods, including computers & parts, polymers, chemicals and cassava products, from Thailand.
Nevertheless, the Chinese economy will continue to be driven by the government's policies of promoting development in the western region and the use of eco-cars. These policies will, therefore, help invigorate consumption and investment ahead. However, risks stemming from uncertainty in the export sector and the easing of inflationary pressure may prompt the Chinese government to suspend the implementation of tight monetary policy through higher interest rates and other measures to ensure that the Yuan would not appreciate too high to affect their export sector. KASIKORNRESEARCH (KResearch) expects that those policies intended to maintain economic stability and domestic consumption in China will somewhat help support our exports to China to grow around 12-16 percent YoY in 2H10, which would be considerably lower than the 47.8 percent YoY growth recorded in 1H10. As a result, our exports to China in 2010 may expand about 25-30 percent. China has still been our important export market that will help support overall outward trade in 2010.
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