Thailand to pursue FTA with China despite nearly US$30 bn deficit
Thailand and China plan to resume bilateral free trade agreement (FTA) negotiations this year despite Thailand’s mounting trade deficit with China of nearly US$30 billion.
The two countries have held several rounds of talks since 2019, but have yet to reach an agreement.
The Thai government is hoping that an FTA with China will help reduce the trade deficit and boost trade and investment between the two countries. China is Thailand's largest trading partner, and the two countries have close economic ties.
However, there are some challenges to a bilateral FTA. China has a much larger economy than Thailand, and it is concerned about losing jobs to Thai businesses. Another challenge is that Thailand is concerned about protecting its domestic industries from Chinese competition.
Despite the challenges, the Thai government is determined to reach an FTA with China. The government believes that an FTA would be beneficial for both countries.
The ASEAN-China Free Trade Agreement data for January-October 2023, updated as of December 25, 2023, reveals that Thailand's total trade with China amounted to US$87.62 billion, a 1.10% decline year on year, according to the Commerce Ministry.
Thai exports to China amounted to US$28.92 billion, while imports from China reached US$58.70 billion, resulting in a trade deficit for Thailand of US$29.77 billion. Among the top 10 exported goods to China were fresh durians, compounded rubber products, tapioca, among others.
Imports from China in the top 10 included smartphones, electrically powered vehicles, laptops and various steel or iron-made products.
The Thai government is hoping to reduce the trade deficit with China by 20% within five years of the FTA being implemented.
The FTA is expected to cover a wide range of goods and services, including agriculture, manufacturing, and services.
The Thai government is also hoping to negotiate an agreement on investment protection with China.
The Commerce Ministry expects FTA negotiations between Thailand and China to continue for several more months.
