China's economic slowdown continues to hurt Thai exports, with shipments to the country expected to contract for the third straight year in 2016.
Aat Pisanwanich, director of the Center for International Trade Studies under the University of the Thai Chamber of Commerce (UTCC), said Thai exports to China will remain in the red this year, down 1.1% to US$23.47 billion. Exports to China will make up 10.8% of Thailand's total shipments this year, down from 11.1% in 2015.
Thailand's exports to China, one of its largest export markets, started falling in 2014, down 7.9% year-on-year to $25.08 billion, with shipments estimated at $23.72 billion in 2015, down 5.4%.
"China's problems will have a considerable impact on our exports," said Mr Aat. "This year we need to keep an eye on China's economic conditions. If China's economy manages to grow beyond 6.3%, Thai shipments have a chance to expand more than 2% this year. If not, Thai shipments may grow less than 2%."
He said China's yuan devaluation will also weaken not only the Thai baht but also other currencies in Asean and Asia. This will put pressure on dollar-denominated debt in the region.
Thai goods expected to bear the brunt of China's economic problems include rubber and rubber products, plastic and plastic products, machinery, wood and wooden products.
However, promising sectors remain, including electrical appliances and parts, optic equipment, automobiles and auto parts, and gems and jewellery.
Mr Aat said the slump in rubber prices was because of soft purchase demand in China as its economy slackens.
China is the world's largest rubber buyer, purchasing 3.7 million tonnes of rubber per year or 40% of the global market. Thailand is the largest rubber exporter to China, shipping 2 million tonnes per year or 30% of total production. The shipments are mainly for cup lump and rubber block to be used as raw materials for manufacturing.
Despite falling exports to China, the centre forecast overall Thai shipments to grow 2% this year to $218.3 billion. But it noted this export growth could be derailed if the Chinese economy worsens.
Thailand's shipments were forecast to contract by 5-5.5% in 2015 after falling 0.3% in 2013 and 0.4% in 2014.
In a separate development, Commerce Minister Apiradi Tantraporn said yesterday Thai companies should speed up creating chambers of commerce in Cambodia, Laos, Myanmar and Vietnam to accelerate trade and investment expansion there.
She said these four countries enjoy some of the highest economic growth rates in the world and Thailand is geographically competitive.
"The government is considering supporting measures both for investment and trade in those countries," said Ms Apiradi. "Closer partnerships with Cambodia, Laos, Myanmar and Vietnam need to be underlined in order to increase trade and investment."
The Thai government pledged on Monday after the first meeting of the public-private steering committee on exports and investment to unlock the remaining obstacles to exports and investment over a period of three months.
Deputy Prime Minister Somkid Jatusripitak plans to summon a meeting of Thai commercial counsellors and trade ministers worldwide on Jan 20 to evaluate the economic conditions of trading partners.