During the past month, the Thai military junta has been attempting to improve relations with China in order to pick up economic growth and legitimize the new government. Economic growth has been sluggish in the country since a group of generals led by Prayuth Chan-ocha overthrew the democratically elected government of Prime Minister Yingluck Shinawatra last May.
Following the coup, growth has been slow due to poor domestic consumption and weak private investment. The Bank of Thailand has slashed its projections for GDP growth in 2014 from 1.5 percent to 0.8 percent compared with the 2.9 percent growth in 2013.
The coup has led to a cooling in relations with the West. Negotiations for a free trade agreement (FTA) between Thailand and the European Union have been halted, and the U.S. has partially cut military assistance to the country.
This has led the junta to put more importance on strengthening ties with China. A visit by Chinese premier Li Keqiang to Bangkok resulted in the signing of two Memorandums of Understanding (MoUs), with China stating that it would invest in a rail network in Thailand and buy two million tons of its rice.
Li, who came to Bangkok on December 19-20, 2014, for the Fifth Greater Mekong Sub-region Economic Cooperation Program (GMS), was the most high-profile foreign leader to come to Thailand since the military took power.
The first MoU stated that China will construct two dual-track rail lines that will cost around US $12.18 billion. The first will be 734 km long and will link the Thai-Laos border area to the deep-sea port and industrial areas on Thailand’s east coast. The second rail link will be 133 km long and will connect Bangkok with Eastern Thailand. Construction on the rail lines is expected to commence in 2016.
Premier Li Keqiang also said during the visit that China would double its imports of Thai agricultural produce, mainly rubber and rice. The Thai junta has a 17 million ton stockpile of rice that was created in a controversial buying scheme by the recently overthrown government. That plan has so far led to an estimated US $15 billion in losses and the junta is eager to move the supplies and get back some funds.
Li’s visit to Bangkok was followed by a state visit by Thai Prime Minister Prayuth to Beijing on December 22-23. During the visit, Prayuth praised China’s economic growth and indicated that the country could be a model for Thailand to emulate.
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Prayuth’s visit also led to a Joint Press Communique between the Government of the People’s Republic of China and the Government of the Kingdom of Thailand. According to the Communique, “China reiterated its understanding of the political situation in Thailand. China expressed support for the efforts by the Royal Thai Government in implementing the Roadmap on national reform, in promoting economic growth and in improving the well-being of the people.”
Thailand in turn offered its understanding to China’s own political situation, reiterating its “firm adherence to the One-China Policy” and “full support for the peaceful development of cross-strait relations and China’s peaceful reunification”.
These two quotes show that relations between Thailand and China should continue to strengthen and that the new military junta sees China as a strong partner for not only jumpstarting the Thai economy, but also legitimizing the junta’s rule.
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