JSCCIB rings alarm bells over growing trade deficit with China

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has expressed concern over the widening trade deficit between Thailand and China
 
In the first six months of 2024, imports from China increased by 7.12% year on year, amounting to over US$37.569 billion (approximately 1.33 trillion baht). This resulted in a trade deficit with China of $19.967 billion (about 720 billion baht), up 15.66% year on year.

This situation impacts over 23 industrial sectors, compounded by the rise of e-commerce platforms that open markets by selling factory-direct products to consumers at low prices — a new trading model from China — putting further pressure on SMEs, which cannot compete on price and face higher production costs, the JSCCIB said..

"To enable Thai businesses to compete under global mega-trends with an influx of substandard goods due to oversupply, the JSCCIB meeting proposed that the government enforce stricter import standards, regulate goods evading taxes, and rigorously apply domestic trade laws. The aim is to create an ecosystem that strengthens Thai businesses and the Thai supply chain for sustainable competitiveness," JSCCIB chairman Payong Srivanich said.

The Thai Chamber of Commerce, the Thai-Chinese Chamber of Commerce, and the Embassy of the People's Republic of China in Thailand have established the Thai-Chinese Center for Business Sustainability to resolve trade and investment issues between Thailand and China, ensuring mutual benefits within the legal frameworks of both countries and international rules.

The chairman of the Federation of Thai Industries (FTI), Kriengkrai Thiennukul, highlighted the urgent issues the private sector wants the government to address. These include the continuous influx of Chinese goods into Thailand, establishing production bases in Thailand, and opening online sales channels that allow Chinese manufacturers to sell directly to consumers, bypassing middlemen and reducing costs, thus lowering prices.

This new sales channel directly impacts Thai businesses, especially small and medium-sized enterprises (SMEs), the backbone of the economy. This is evidenced by the high rate of factory closures — 667 in total, mostly SMEs — while new factory openings are predominantly foreign-owned. The overall impact spans 23 industrial sectors, with the latest affected industries being pulp and leather.

"The JSCCIB will propose that the government support the use of domestically produced goods to strengthen Thai businesses. Government agencies should prioritise purchasing these goods, and the government should increase the advantage for Thai products from the current 5% to 5-20%, implemented over at least two years to allow businesses to recover," said Kriengkrai.

The proposal to increase the advantage for Made in Thailand products is a straightforward initial measure the government can support immediately, applying it to government procurement. Currently, Thai businesses have a 5% advantage, meaning if their price is within 5% of the lowest foreign bidder, the government should choose the Thai supplier. 

Kriengkrai added that the influx of Chinese goods into Thailand was being closely monitored by the JSCCIB, and urgent government intervention was needed to prevent the collapse of the foundational economy and a shift to a consumer society unable to produce its own goods. He urged the government to block these goods, starting with thorough inspections at import checkpoints, with the Ministry of Finance and Customs Department strictly enforcing tax collection.