Thailand’s Subscription to China’s Belt and Road Initiative

The list of countries expressing anxiety over the Belt Road Initiative (BRI) is fast expanding. After Malaysia, Thailand has joined the chorus and raised voice on the very concept of BRI. It has accused China of dumping practices, forced transfer of technology and unfair terms of repayment of loans and financial ramifications on the host country.

In 2014, Thailand invited China to help develop infrastructure in the hope that it would learn from Chinese technical expertise in completing large infrastructure projects. Besides, the political conditions were conducive as China came in support of military junta at international level but sought certain privileges and concessions in return for its BRI projects. It was decided to develop the Eastern Economic Corridor (EEC) and set up Thai-Chinese Industrial Zones (TCIZ) at Chonburi, Rayong, and Chachoen. According to the Thai Board of Investment Statistics as many as 80 Chinese companies have set up manufacturing units, research laboratories, and logistics hubs in these provinces. By 2018, there were an estimated 7500 Chinese workers in TCIZ and the EEC set up separate department to issue work permit visas to Chinese workers.

Under the BRI a high-speed railway is being built with Chinese financial support to link Thailand-Laos-Kunming (China) into one integrated railway network. Another proposal is to link Bangkok with EEC through high speed rail network. The current Thai Prime Minister Prayut Chan-o-cha, who is facing elections, has stated that the high speed connectivity would complement Thailand 4.0 economic model which is focused on innovation and new technologies. It would place Thailand into the league of high income countries. The Thai government is aiming for a substantial increase in FDI in the EEC and it is expected that it would attract investments of US $ 43 billion.

There have also been concerns with regard to bad debts and high interest rates. China has imposed stringent conditions for the high speed rail project, which include exclusive rights over land use and employment of Chinese workers. Railway project between Bangkok and Nong Khai was reduced from 607 kilometers to only 258 kilometers. As a result, there has been no visible progress on the Kunming-Singapore railway passing through Thailand. Furthermore, Thai people are apprehensive about these projects as it would mean relocation to new places. Also, Chinese workers in these projects would deprive Thai labour employment opportunities in these large infrastructure projects.

At another level, Thailand is of immense strategic value to China on account of the Kra Isthmus Canal project can potentially reduce Chinese dependence on Straits of Malacca. China is already developing a port at Sihanoukville in Cambodia as part of the BRI plan and this would help an unimpeded flow of crude oil through Kra of Isthmus to the port in Sihanoukville for further transshipment to China’s Southern provinces.

In January 2019, Thailand’s Prime Minister Prayut Chan-o-cha sought detailed report from the Thai national security establishment and the National Economic and Social Development Board (NESDB) regarding viability and funding possibilities for the Kra Isthmus canal. The estimated cost of the project is about US $30 billion but the completion of canal would completely change the maritime dynamics of the region. Earlier there were apprehensions with regard to financing of such a project; but with China showing keen interest in Kra Canal as a constituent of China's Maritime Silk Road, this might be possible in future. Longhao, a Chinese company has shown interest in the project. Interestingly, it is the same company that built structures in Chinese occupied South China Sea islands. However, many Thai NGOs and environmental groups have raised concerns related to the environmental impact of the project.

While the current government is facing elections, the Junta is busy placing orders for Chinese military hardware. These include Chinese-made VT-4 battle tanks, three S26T submarines and other military equipment. Since 2014 after military coup in Thailand, the country has purchased US $266 million worth of Chinese equipment. However, Thailand military government’s closeness to China has annoyed the US who would be closely watching Thai elections.

Supporters of Thai engagement in the BRI have stated that with sustained growth of the national economy and increased FDI in the EEC, the repayment of the debt would not be a big problem. However, many have ignored the precedents in history when Thailand went through severe economic crisis in 1997-98 and the real estate bubble went bust, financial institutions crumbled leading to depreciation of Thai currency and loss of jobs. The debt trap under BRI might be ignored but cannot be completely avoided.

Dr. Pankaj Jha is Associate Professor with Jindal School of International Affairs, O P Jindal Global University.

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