Three import channels intensify pressure on Thai SMEs
Aat identified finished Chinese products as the most pressing concern because Thailand already has the capacity to manufacture many competing goods but struggles to match Chinese prices.
He outlined three main channels through which Chinese finished products are entering the Thai market.
The first is cross-border sales through Chinese e-commerce platforms. The second involves Chinese traders establishing businesses that import products directly into Thailand.
The third is a shift among some Thai manufacturers towards importing and reselling Chinese products after finding it increasingly difficult to compete on price.
According to Aat, six factors are accelerating the flow of Chinese goods into Thailand.
These include lower Chinese product prices, the expansion of e-commerce platforms and the ASEAN–China Free Trade Agreement, which provides zero import tariffs on many products.
The use of warehouses in Thai free zones also enables online orders to reach consumers within one or two days.
Meanwhile, the China–Laos railway has shortened delivery times to markets in northeastern Thailand.
Another factor is foreign direct investment from mainland China and Hong Kong. Chinese investors establishing operations in Thailand often continue importing machinery and production materials from their home markets.
Although cheaper Chinese products and machinery offer benefits to Thai consumers and businesses, Aat believes the wider economic disadvantages outweigh those gains.
He cited the outflow of money associated with the trade deficit, closures of Thai SMEs unable to withstand price competition, and insufficient technology transfers from Chinese investors to domestic businesses.
Thailand recorded a trade deficit with China of approximately THB2.262 trillion in 2025, reinforcing his concern that the imbalance is growing rapidly rather than gradually.
Rising US trade surplus brings additional scrutiny
The widening deficit with China could also expose Thailand to greater pressure from the United States, according to Aat.
Thailand recorded a trade surplus of THB1.67 trillion with the US during the first nine months of 2026, an increase of 38% from a year earlier.
He attributed the growth to two main developments.
First, US importers accelerated purchases ahead of potential changes to tariff policies under President Donald Trump.
Second, American buyers reduced imports from China and increasingly sourced products from ASEAN countries, particularly Thailand and Vietnam.
Aat described the situation as a snake eating its own tail: as the US reduces purchases from China, more Chinese goods are redirected towards ASEAN markets, including Thailand.
At the same time, Thailand’s exports to the US continue to expand, widening its trade surplus with Washington.
He cautioned that this pattern could prompt closer US scrutiny of Thailand over concerns about transshipment, including goods potentially being routed through third countries to circumvent trade restrictions, and industrial overcapacity.
Both issues are important in negotiations over the Thailand–US Agreement on Reciprocal Trade (ART), alongside discussions about access to the Thai market for certain American agricultural products, including pork.
Four measures proposed to strengthen Thai industry
Aat called for a revised trade strategy towards China, stressing that Thailand should aim to secure greater domestic economic benefits from Chinese investment rather than restrict investment itself.
His proposals centre on four areas.
First, stronger local-content and supply-chain requirements. Chinese companies investing in Thailand should be encouraged or required to use more locally sourced materials and Thai SME suppliers instead of relying almost entirely on imported machinery, components and labour.
Such measures would help create employment, strengthen domestic production networks and support technology transfers.
Second, greater opportunities for Thai products on Chinese e-commerce platforms. Aat proposed allocating space for locally manufactured products, establishing minimum shares for Thai goods and ensuring that platform fees do not prevent Thai businesses from competing effectively.
Third, temporary restrictions on selected agricultural imports. Thailand could consider limiting imports of products such as vegetables and garlic during domestic harvest periods.
He suggested that imports could be temporarily suspended for around three months, drawing on measures used by Indonesia to protect local agricultural producers.
Fourth, stricter product-standard inspections. Aat highlighted the need to strengthen enforcement of Thai Industrial Standards, particularly for imported steel products.
Thailand’s steel industry is operating at approximately 30% of production capacity, he noted.
Should utilisation fall to 25%, he believes the industry could face a serious threat to its survival, potentially allowing Chinese investors and suppliers to gain greater control of the domestic market.
Aat also encouraged Thailand to examine trade policies adopted elsewhere in Asia.
He pointed to India’s decision not to join the Regional Comprehensive Economic Partnership (RCEP), alongside its measures to protect domestic farmers and SMEs.
Vietnam, meanwhile, has introduced measures to protect selected industries, including local-content requirements in the steel sector, he noted.
Aat emphasised that Thailand’s objective should be to develop a more balanced economic relationship with China while ensuring that foreign investment contributes meaningfully to domestic industry.
“The challenge for Thailand is not to stop imports from China, but to ensure that trade benefits both countries,” he said.
“If Chinese investors establish operations in Thailand, they must create jobs, transfer technology and connect Thai businesses to their supply chains. Otherwise, Thailand will become merely a market for Chinese goods, while domestic manufacturers continue to weaken.”
Source: Thansettakij