Published daily by the Lowy Institute

Enter the dragon: Thailand gets closer to China

Thailand’s deepening economic relations with China come at a time of acute political polarisation and instability for the country.

General Prayut Chan-Ocha, June 2017 (Photo: Getty Images/Bloomberg)
General Prayut Chan-Ocha, June 2017 (Photo: Getty Images/Bloomberg)
Published 7 Jul 2017 

The recent announcement that the leader of Thailand’s ruling military junta, General Prayut Chan-Ocha, would use the controversial Article 44 to speed up construction of the delayed $US15 billion Sino-Thai railway confirms warming relations between Thailand’s military-led government and China.

Article 44 is a key section of the provisional constitution imposed by the military junta following the May 2014 coup. It gives General Prayut absolute power to issue virtually any order, the status of which is deemed 'lawful, constitutional, and final'. Previous uses of the order have tended to concern internal security and criticism of the monarchy.

The Sino-Thai railway agreement that the junta has pushed through controversially allows Chinese engineers and architects to work in Thailand exempt from regulations set by Thailand’s Council of Engineers and the Architects Council. Due to the military regime’s strict censorship laws, criticism of the decision has been muted (one activist calling for greater transparency over the deal has already been arrested). Despite this, a cartoon recently appeared in a leading Thai newspaper depicting an engorged General Prawit Wongsuwan (Thailand’s Defence Minister) getting a tattoo on his stomach saying ‘Made in China’, suggesting some opposition to the junta’s increasingly close commercial links with China.

As has happened elsewhere in Southeast Asia, China’s rapid economic rise has drawn Thailand’s economy increasingly into its orbit. Since 2012 China has become Thailand’s largest trade partner, having overtaken Japan. China has recently become the major country of origin of tourists to Thailand – there were 8.8 million Chinese tourist arrivals in 2016, making up over a quarter of the total number of tourists to the country, and double the number of the next largest country of origin, Malaysia. Tourism accounts for 12% of Thailand’s GDP, and remains one of the country’s most buoyant industries in a sluggish economy.

Chinese migration to Thailand has also surged. Some academic studies suggest that over the past decade up to 400,000 Chinese have taken up residence in the country. The number of Chinese expatriates in Thailand is rapidly rising, second now only to the Japanese. Over the last decade Thailand has also become the fifth most popular destination for Chinese real estate investment.

Chinese investment in infrastructure projects in Thailand is also on the increase. The Chinese state-overseen Global Times reported earlier this year that Wuhan Optics Valley Beidou Holding Group has begun work in Thailand on the construction of a ‘China-ASEAN Beidou Technology City’, located two and half hours from Bangkok and worth $US 1.45 billion. The project (along with a similar project in Sri Lanka) will enable the Beidou Navigation Satellite System to expand its coverage by 3000 kilometres into Southeast Asia and South Asia. Notably, at a time when many nations in the region are developing their cyber warfare capabilities, the system has commercial as well as military applications.

Thailand’s deepening economic relations with China come at a time of acute political polarisation and instability for the country and difficult relations with the West.

The US stridently criticised the junta’s actions following the 2014 coup. The view of many in Thailand’s royalist establishment, which backed the coup, was that the Obama administration was unfairly siding with the democratically-elected Yingluck Shinawatra government. Since the coup, the US has cut its military assistance to Thailand and scaled down its presence at the annual Cobra Gold military exercises, the largest in Asia. Europe and Australia also implemented sanctions.

Smarting from this Western isolation, the military regime has sought to strengthen relations with China and Russia. Cooperation between Thailand’s military and China in particular has been growing. In January this year the regime signed a $US383 million deal to buy a submarine from China, the first of an expected three submarine purchases together worth a total of $US1 billion. The junta has also agreed to purchase 28 VT4 tanks and 34 VN-1 armoured personnel carriers from Chinese military contractors.

In mid-2016 China and Thailand held joint military exercises at Sattahip naval base, southeast of Bangkok. The previous year the Thai and Chinese air forces held their first ever joint exercises.

With heightening tension between China and the US over the South China Sea, the Thai military regime’s apparent tilt towards China has obvious regional implications.

With hopes fading for a quick return to democracy, as well as the military regime’s apparent willingness to explore closer military cooperation with China, the US appears to have relented on its tough stance towards the junta. Earlier this year the US sent Admiral Harry Harris, the head of Pacific Command, to open the Cobra Gold military exercises. Harris is the most senior US military official to visit Thailand since the coup, but the total number of US troops participating is still down on pre-coup numbers). The regime has also just announced that US President Donald Trump has invited junta head, General Prayuth Chan-ocha, to visit the White House.

Often overlooked in discussions of geopolitics in the East Asian region, in many respects Thailand is a pivotal country. It was one of the first Asian kingdoms to leave China’s tributary system in the mid-nineteenth century and effectively substitute imperial China’s hegemony for that of the British Empire. Thailand subsequently become one of the US’s oldest allies in Asia, and one of its only two treaty allies in Southeast Asia (the other being the Philippines). It played a crucial role during the Vietnam War and in the coalition of forces that resisted and eventually ended the Soviet-backed Vietnamese occupation of Cambodia in the 1980s.

In recent months Thailand’s military regime has begun talking about a ‘legally-binding’ 20-year masterplan to reform the country’s politics. This suggests that unlike after the previous 2006 coup, the military intends to remain a guiding force in Thai politics. The unpopularity of the new king (even among royalists) may be another reason why this time the military is unwilling to leave the political scene. A clientelistic relationship with China may serve the military’s longer term political and business interests better than its existing relationship with the US.

For its part, a friendly military-led government in Thailand that keeps democratic forces at bay may suit China at a time when the US is working hard to enhance its relations with China’s neighbours in the region. If this is the case, such a geopolitical realignment would represent a change of historical significance for Thailand, and the East Asian region more generally.

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