BANGKOK – The trade agreement signed by President Donald Trump and Beijing's lead trade envoy comes amid seismic shifts in supply chains and investment hastened by the tariff war that began in 2018.
For Thailand, that's meant some fallout from reduced demand for certain products but increased exports of other items, and a bump in investment by companies shifting away from China, officials in Bangkok said Thursday.
“Over the next two years, this is probably the best time for attracting foreign investment into Thailand, thanks to President Trump," Kobsak Pootrakool, an adviser to Prime Minister Prayuth Chan-ocha, told reporters at the Foreign Correspondent's Club of Thailand.
Throughout Asia, the clash between Washington and Beijing has had a mixed impact, with long-term consequences that have little to do with Trump's agenda for trade with China.
The landslide victory of Taiwan's President Tsai Ing-wen in last weekend's election partly was driven by an economic rebound thanks to revived demand from both the U.S. and China for Taiwan-made computer chips, analysts say.
Many in Asia are waiting to see what comes next, and in the meantime making the most of opportunities created by the disruption from the trade war.
Kobsak said visits to Thailand's Board of Investment jumped by half last year.
“Because of the trade war, they are thinking of alternative routes, and Thailand is one of them," he said. “Within the gloomy period, there is a good spot that we can work on."
The last two years have been a mixed bag for Thailand. With global trade slowing, exports fell 2.8% in January-November 2019 from a year earlier. A surge in the value of the Thai baht, which makes exports more expensive in overseas markets, has also hurt.
“It's been a challenging time for the past two years. Everyone wants to point fingers at President Trump. I am one of them," said Pimchanok Vonkorpon, director-general of the Ministry of Commerce's Trade Policy and Strategy Office.
But she added, “Trump and the trade war are just accelerating factors. There are a lot of things we need to do internally."
But the country has benefited from growing Chinese demand for Thai fruits, such as the odoriferous durian, cosmetics and auto parts, said Pimchanok.
“Sometimes the value of fruits surpasses the value of cars and electronics exported to China,” she said.
Watches encrusted with cheap jewels are popular for Indian wedding gift givers, she noted.
“You see bling, bling. I see another market," she said.
Chinese manufacturers have been moving factories overseas for more than a decade as costs have risen back home. Like Japanese, U.S, European and other companies, they also want to be well positioned to tap demand in increasingly wealthy, fast growing markets in Southeast Asia. The punitive tariffs imposed by Trump on a large share of Chinese exports to the U.S. gave them added incentive to move house.
In 2019, Chinese companies applied to invest 8.6 billion baht ($280 million) in Thailand, dwarfing the 2.4 billion baht ($79 million) from Japan, said Duangjai Asawachintachit, secretary-general of the Board of Investment.
“I have to thank Mr. Trump for trade diversion," she said, noting that electronics makers have been shifting production to Thailand.
Some companies that moved to China from Thailand are now moving back, she added.
With an economy heavily dependent on foreign investment and exports, Thailand is rushing to make doing business more attractive, the officials said. That includes streamlining somewhat onerous immigration procedures, offering bigger tax breaks and loosening restrictions, such as controls on 3-D printing.
At the same time, Thailand faces stiff competition from neighboring countries, such as Malaysia, Indonesia, Taiwan and Vietnam. That means investing more in infrastructure such as ports, railways and airports, as well as education and training, she said.
And with only a preliminary, “Phase 1" agreement signed, the lion's share of work on resolving grievances over the China-U.S. trade imbalance is still undone.
The tariff war caused uncertainty that “has slowed down order and movement of trade around the world. No-one knows if tariffs will be raised or go down. These have been quite disturbing factors," Pimchanok said.
"Even though the agreement was signed, still companies are looking at the long term," she said.