Thailand signed two memorandums of understanding with China on the development of a key rail link project and the purchase of agricultural products. China plans to construct two parts of railroads linking northeastern Nong Khai province to Bangkok and the eastern port of Map Ta Phut starting in 2016, according to the Thai government. The north-south rail link, covering 870 kilometers (544 miles), is expected to facilitate the transport of goods from China’s southern region to Gulf of Thailand ports via Laos.
The project is valued at around 400 billion baht or $12.2 billion, the Thai government has said.
Everybody in this region knows that Thailand – no matter which government is in power – wants to be the first among equals in engaging with China. Up to this point, every country has had to look forward to deals with China, but now Thailand is at the forefront.
Prayut has also helped fulfil a Chinese financial ambition to make the renminbi yuan a regional currency. During his visit to Beijing on Monday, Thai and Chinese central banks signed an extension of the Renminbi-Thai Baht Bilateral Swap Agreement (BSA) and an MoU to establish renminbi clearing arrangements in Thailand.
China has a BSA with many countries in this region, including Malaysia. The yuan clearing-house would facilitate access to and use of the Chinese currency for trade and investment in Thailand and the region. This will be more convenient as economic transactions increase, and if western currencies like the US dollar, fluctuate.
Two-way trade between the two countries amounted to $64.7 billion (2.1 trillion baht) last year, an increase from $42 billion in 2010. Two way trade is projected to reach $100 billion in 2016.
China has also promised to purchase about 2 million metric tons of rice and some 200,000 tons of rubber. The large purchase is expected provide the Thai government a much-needed channel to offload its rice and rubber stockpiles it inherited from the previous administration’s subsidy programs.
In 2013, China overtook over Japan as Thailand’s top trade partner, accounting for about 14% of the total trade this year.
SOURCES – Wall Street Journal, Asia One, Bangkok Post
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