Thailand and China Reaffirm Economic Ties

 

CHIANGRAI TIMES– Prime Minister Yingluck Shinawatra’s four-day visit to China this week will reaffirm Thailand as pivotal to China’s foreign policy towards Southeast Asia and vice versa. Since the two countries established diplomatic ties in 1975, Thailand has served as a conduit for China’s inroads into the region.

But in 2000, unshakeable bilateral ties suddenly encountered economic and political challenges due to turmoil and social transformation inside Thailand.

China began to look elsewhere as Thai domestic politics unpredictability marred Beijing’s ability to formulate long-term strategies. Hence, Myanmar, Cambodia and Laos were considered new outposts. These countries have political stability and room for further engagement.

However, with rapid political reform inside Myanmar in the past year, longstanding Myanmar-China ties have been strained due to the democratization process and the halt in construction of the US$ 3.6 billion China-funded Mytsone Dam in Kachin State at the end of last year. With sanctions easing, coupled with growing contacts with the international community and foreign investment flows, Nay pyitaw has more diplomatic options than before. Both countries are now readjusting their relationship.

However, on the eastern side of the Thai border, China has made impressive headway in its economic and political/security presence and cooperation with Cambodia and Laos. China’s investment and financial assistance there has begun to affect its traditional relations with Vietnam.

In comparison to Thailand, however, the two small countries with a combined population of nearly 20 million still lack the strategic values that would propel and sustain China’s influence in continental Southeast Asia. Therefore, when the Pheu Thai Party won the election last year, China quickly changed its attitude and refocused on Thailand with a big show of support for the Yingluck government.

The high profile visit of Chinese Vice President Xi Jingping to Bangkok in December was a clear manifestation of Beijing’s preference. It confirmed that the current Thai policymakers, both civilian and military, prefer to see Thailand travel the road with China. Simply put, they appreciate China’s immediate response to Thailand’s requests. Hence, the Thai pivot is towards China.

Concerning future Thai-China relations, two emerging trends – developmental and military – must be discerned. The current situation is akin to Thai-U.S. relations during the post Second World War period, which witnessed the rapid expansion of their economic and security cooperation. At the time, economic development and the threat of communism topped the bilateral agenda. The U.S. did much to provide economic and security support for Thailand.

Fast forward to the 21st century, there is a reversal of roles. While the prospects for Thai U.S. relations are not as bright as they used to be, Thai-China cooperation is more dynamic and multidimensional. Despite our ongoing political uncertainty, the Chinese leaders continue to view Thailand under this government as a reliable Asean voice with predictable views and positions on China, particularly on sensitive issues related to the South China Sea and Tibet. Within Asean, Thailand has adhered strictly to the one China policy, which has in the past jeopardized ties with Taiwan, one of Thailand’s top three investors.

Thailand would never say “no” to China in a confrontational way as some Asean members have done. Arguably, today is China’s most ideal time to consolidate ties with Thai elites and politicians – particular the Pheu Thai comrades – who have become disgruntled with the Western countries’ attitude on terrorism, Myanmar and problems related to human trafficking, which they label as hypocritical. For the record, China has never made a fuss on these issues.

During the floods last year, China responded fastest and provided the largest assistance to Thailand, ahead of Japan and the US, two regular and generous donors. China provided a total of 719 million baht in contributions both in cash and in kind. In fact, Beijing would have given more if Thailand had the sufficient capacity to dispose of its assistance packages.

As Western financial assistance dwindles and more strings are attached, Thai policymakers will seek further help from China’s deep pockets when necessary. In December, Thailand and China inked a 325 billion baht swap deal allowing import export settlements in the Chinese currency.

As other Asean countries conclude such deals, financial dependency on China will grow proportionately, which could lead to a new financial institutional arrangement in the region. During Yingluck’s visit, Thailand and China will sign two five-year action plans (2012-2017) – one covering strategic and the other economic matters. These two plans will propel the most important bilateral ties China has with Asean members.

Secondly, both countries have started joint military exercises and training, especially with the Thai special forces. The “Strike” program, which began in earnest in July 2007 off the coast of Guangzhou, went very well. Truth be told, at the time the Thai Navy wanted to send a strong message to the U.S. that Thailand was able to cooperate and receive training from other major powers when it faced political isolation due to the 2006 coup.

At the end of last year, Thailand was instrumental in assisting China in forming a multilateral coordinated patrol along the Mekong River, following the murder of 13 Chinese sailors in Chiang Rai Province. Thailand quickly responded to China’s concerns by ordering investigations and agreed to Beijing’s proposal of joint coordinated boat patrols with Laos and Myanmar.

While China is generous and understanding regarding developmental assistance and security cooperation, on trade and investment issues it shows a tougher side. Various huge infrastructural and developmental projects proposed by China to Thailand and neighboring Lao include the construction of thousands of kilometers of high speed train lines, which now face hurdles due to rigid conditions imposed by the funders in terms of logistic requirements and concessional demands. But Thai businessmen also say that the Chinese investors aboard are beginning to use their soft power and are practicing corporate social responsibility to improve their image.

Beginning in July, Thailand will serve as country coordinator for Asean-China relations, which are currently going through turbulence due to increased tension over South China Sea disputes. The Philippines was the coordinator for the previous three years, when the Asean-China friendship was constantly under challenge, with the Philippines being one of four Asean claimants in the maritime disputes. Expectations are high that Thailand will adopt a nonpartisan attitude in handling the relationship. During Thailand’s stint as chair of Asean from July 2008-December 2009, the issue was not on the main agenda.

Even with strong financial and strategic links with China, it is hoped that Thailand will be able to maintain an independent foreign policy in pursuing ties with other major powers such as the U.S., Russia and India. This will help the country to maintain its diplomatic maneuverability in the global arena. – Kavi Chongkittavorn is a columnist for The Nation in Bangkok and a long-time observer of Southeast Asia and China.