Understanding One Belt, One Road: Role of China Trade and Investment in Greater Mekong Sub-region(GMS): A case study of Thailand. Dr.

Transcription

1 Understanding One Belt, One Road: Role of China Trade and Investment in Greater Mekong Sub-region(GMS): A case study of Thailand. Dr. Nisit Panthamit

2 Nisit Panthamit, Ph.D. Director of ASEAN Studies, Chiang Mai University, Thailand(CMU) Wechat id: nisitp9009

3 Contents World Economic Power Role of China Trade and Investment A Case Study of Thailand 1

4 1. The new landscape of world economy (1) : Growth has been too slow for too long. Due to: -restructuring of world economy, especially China s economic transition -humanitarian disaster like Syria s millions of refugees

5 1. The new landscape of world economy(2): restructuring in major economies The US From over-expansion in financial market ( per capita GDP in the finance sector was 2.75 times as much as that in the manufacturing sector in 2007) to re-industrialization Artificial intelligence (AI), Robots and digital manufacturing and other strategic new industries like new energy, bio-engineering, etc., High-tech-oriented industrial policy Energy, environment protection Industry 4.0 EU Germany AI, application of 3D technology Japan

6 Economic Growth Models: China Vs. US Personal consumption expenditures Gross private domestic investment Government consumption expenditures and gross investment Net exports of goods and services USA 68.88% 68.40% 68.37% 68.40% China 36.71% 37.13% 37.26% 37.69% USA 14.43% 15.55% 15.99% 16.49% China 47.33% 46.45% 46.49% 46.04% USA 20.42% 19.55% 18.69% 18.17% China 13.53% 13.69% 13.78% 13.54% USA -3.73% -3.50% -3.05% -3.05% China 2.43% 2.73% 2.46% 2.73% In 2007, China s net exports accounted for 8.8% of GDP, reaching its peak.

7 1. The new landscape in the world economy (3): Asia is rising and transitioning from production base to both production and consumption bases Emerging and Developing Asia has becomes the world s growth engine In recent years, Asia has contributed more than 50% of world economic growth, and China contributed more than 50% of Asia s growth. In 2014, China contributed 27.8% of world s growth, while the United States contributed 15%; In 2015, China continued to contribute more than 25% of world s growth.

8 Rising Asia - Shares in world trade volume (%) China US EU Asia(excluding Japan) Asia(including Japan) 1980 n.a

9 Rising Asia - Shares in world FDI inflows(%) China US EU Asia(excluding Japan) Asia(including Japan)

10 Rising Asia - Shares in world FDI outflows(%) China US EU Asia(excluding Japan) Asia(including Japan)

11 Affluent financial resources in Asia As of March, 2015, Asia s foreign exchange reserves reached $7.8 trillion, accounting for 2/3 of world s total. China: $3.73 trillion Japan: $1.22 trillion Saudi Arabia: $0.698 trillion Republic of Korea: $0.358 trillion Singapore: $0.249 trillion

12 Rising Asia: another evidence Rising middle class Definition: a range of USD10 to USD100 in PPP per capita per day. Source: Kharas, Homi (2010): The Emerging Middle Class in Developing Countries, OECD Development Centre.

13 Numbers (millions) and Share (percent) of the Global Middle Class Size: From 1.8 billion people in 2009 to 3.2 billion by 2020 and 4.9 billion by % of this growth comes from Asia. Purchasing power: From USD21 trillion in2009 to USD56 trillion by Over 80% of the growth in demand comes from Asia.

14 A new shift underway in Asia

15 World Economic Power (GDP 2014) Rank ing Economy (millions of US dollars) 1 United States 17,419,000 2 China 10,360,105 GDP growth Other 28.7% United States 22.6% 3 Japan 4,601,461 4 Germany 3,852,556 5 United Kingdom 2,941,886 6 France 7 Brazil 8 Italy 2,829,192 2,346,118 2,144, Korea, Rep. 1.8% Australia 1.9% Canada 2.3% Russian Federation 2.4% India 2.7% Italy 2.8% Brazil 3.0% France 3.7% United Kingdom 3.8% Japan 6.0% Germany 5.0% China 13.4% 9 India 2,066, Russian Federation 1,860,598 ท มา: The World Bank

16 Greater Mekong Sub-region(GMS)

17 Guan Lei Port

18 Guan Lei Port

19 Goods Loaded at Guan Lei Port

20 Tourist at Guan Lei Port

21 ท าเร อกวนเหล ย Guan Lei Port

22 ท าเร อกวนเหล ย Guan Lei Port

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27 Myanmar Laos Bridge under Construction

28 Myanmar Laos Bridge under Construction

29 Myanmar Laos Bridge under Construction

30 Myanmar Laos Bridge under Construction

31 Myanmar Laos Bridge under Construction

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34 Myanmar Police ท าเร อบ านโป ง (พม า) Wan Pong Port (Myanmar)

35 Wan Mom Port (Laos) Laos Police

36 Chiangsean Port 1 (Thailand)

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39 Chiangsean Port 2(Thailand)

40 Chiangsean Port 2 (Thailand)

41 Chiangsean Port 2 (Thailand)

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43 Lanes of the commercial port of Chiang Saen port(thailand) - Guan Lei. (China's southernmost pier) total distance of 265 Kigometers Water depth from 1.5 to 7 meters in different seasons.

44 Mae Sai Myanmar Mae Sa rieng Maesod Yunnan Lao Vietnam Thailand Cambodia Chiang Sean Chiang Kong

45 Ruli Muze Route R3B Yunnan, China Jing Hong Mandaley Taung Gyi Myanmar TaChiLeik Mae Sai Chiang Rai Chiang Mai เช ยงต ง/Chiang Tung เ Chiang San เม องลา/Muang La สะพานข ามแม น าโขงเม ยนมาร - ลาว Huay Sai Chiang Khong Meng La Bo Ten Luang Nam Ta Viang Pu ka Route R3A Huay Kon Nan Bo-Han Luang Phra Bang Chaya Buri Dam Chaya Buri Laos PDR

46 Thai-Lao Friendship Bridge no.4

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50 Composition of Bridge Structure Acccess road Intermodal Facility Border Control Facility (Lao PDR) Border Control Facility (Thailand) Traffic Interchange Bridge

51 R3A Economics Road Thai-Laos-China

52 Boten Laos Border

53 Boten Laos Border

54 เส นทาง R3A

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56 Jing hong Gate

57 เส นทางรถไฟความเร วส ง จ น-อาเซ ยน

58 Why we have to understand China role for GMS? China is a major trading partner of Thailand. China's role in world political and economic stage. China is fast developing policies, strategies and goals for new releases. Note that Thailand trades with China less than Malaysia, Vietnam, Singapore trade with China. 58

59 Contents World Economic Power China of China Trade and Investment A Case Study of Thailand 1

60 Why Go Global ( 走出去 )? For economic and financial stability. For energy security Through the Silk Road Strategy 60

61 The investment objective of the Chinese economic and political power. ท มา : 61

62 Economic power, China Based on the Strait of Malacca has high risk From Russia From Canada Sudan and Angola Iran And Saudi Arabia Kazakhstan and Turkmenistan. Pass Myanmar Channel Japan From Venezuela and Australia Strait of Malacca 62

63 AIIB: Tools for success of the Silk Road. World Bank: USA ADB Japan China: President Xi Jinping is set concept. The Asian Infrastructure Investment Bank (AIIB) is 1. Sources of funding for developing countries 2. Leading international reserves to exploitation. 3. Linking transportation network in Asia. (For trade and investment in China). 4. Push the yuan as a major world currencies. 5. Co-founder of 21 member countries, 57 countries will embark in late

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68 China looks ASEAN as important and Challenges Economic Strength -ASEAN is an important partner of China (12%) were the major markets of China. -As a source of raw materials such as rubber, cassava, fruits. -Chinese investment is very low-wage Natural Resources. Energy supply gas and oil. -More countries are Partnering with China Challenges Economic FTA-ASEAN - China's tax cuts, but increased NTB. Different levels of economic development. Energy the Middle East are vulnerable Malacca Strait. Politics ASEAN is the strategic importance of China and the United States. ท มา : 68

69 Relations Between China-ASEAN o Relations with China (the latest). Thailand, Laos, Cambodia, the Philippines, while China has a problem with Vietnam, Myanmar, Malaysia. o Trade -Jan - Aug 15, Chinese trade with Asia 54% (China's trade with ASEAN, Thailand 12%, 2%). o Investment At the end of 2014, Chinese investment (cumulative) 68% Asia (ASEAN 5.4% Thailand 0.3%). o Financing BSA China and ASEAN countries Using Chinese renminbi trade with all countries. Latin America 6% Trade b/w China-other regions Europe 18% North America 16% Oceania 1% Asia 54% Africa 5% 69

70 The attempt to link the Silk Road to The ASEAN. In addition, there is a marine railway. The railway in Laos -Boten(Laos)- Vientiane (China). Indonesia (China) 16-Oct-58. Railway in Thailand China China - Bangkok - Nong Khai (China) Bangkok - Chiang Mai (Japanese. Japan China

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72 3. A Case Study of Thailand 1

73 Cooperation Thailand - China today Through various partnerships as part of the "Silk Road". The location is at the center of Thailand with ASEAN. As the strategic importance of the Silk Road on the sea. FTA trade cooperation in the field of agriculture. Cooperation investments such as railway eastern lines. Other areas of cooperation; tourism, exchange of personnel Etc. ท มา : 73

74 Security of China in the region. The Chinese interest to dig Kra Isthmus, Southern Thailand Strategic "marine Silk Road" For energy security To stabilize the political and military. China's expanding influence between the Andaman Sea. To stabilize the economic security Distance 102 km wide and 400 meters deep and 25 meters. 10-year investment of 28,000 million USD. The fleet sailed garden together. ท มา :

75 China is spearheading a gigantic financing scheme for the engineering part of the long-coveted and Chinese-dominated project of digging a 60 mile long canal across the Kra Isthmus in Southern Thailand on the Malay Peninsula.

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79 China is interested to Kla Isthmus more than Thailand because it has more benefits than Thailand Reason: 1. Tackling the strategic Strait of Malacca, Indonesia, Singapore 2. China's trade will grow because of increased shipping options. 3. Shorten the time and cost of shipping (1200 km). 4. China and Thailand will both benefit Affects to other countries: 1. The Strait of Malacca is greatly reduced. Singapore, Indonesia, Malaysia, the company reduced the bargaining power in the country 2. Reduce dependence on the US And turn to more Chinese. 3. Singapore, Malaysia and Indonesia will lose business interests. 4. US influence in the South China Sea decline. 5. Thailand increased security risk. ท มา : 79

80 China has tightening up relationship to Thailand China's policy of proactive strategies. Long-term ASEAN and its neighbors in the region. Located in the heart of ASEAN, Thailand Build networks with other countries in the region, Thailand is also a longtime ally of the United States. The Chinese government has a policy of not criticizing Thailand. Future strategic relationship Thailand - China will be more systematic.

81 China looks at Thai economy: Thailand is more important. Thailand s strength Thailand is a prime location as market base. (Vietnam as a production base. Singapore is finance and accounting bases). Thailand is a major food manufacturer for China. China is a major trading partner of Thailand, as Thailand is China's third largest trading partner in ASEAN. Thailand s Weakness Thailand has the people with knowledge of social science rather than science. Thailand s SME still lack the knowledge to take advantage of the Framework Agreement. Thailand has less skill language with English and Chinese. Thailand faced by SME's cost competitiveness of the CLMV. 81

82 In addition, Thailand is a country to invest. 1. The size of the market, high consumer price level stable and high levels of market opening 2. Thailand infrastructure is better than many countries in the region. 3. The level of openness and optimism. 4. Bilateral Cooperation Thailand - China. 5. Long experience of FDI from abroad. 82

83 CLMV competitiveness

84 CLMVT is a major potential market for Thai economy. Exports L K A Opportunities Market Production - Rising purchasing - Young Labor power Force - Organic Growth - Natural - Connectivity Resources - Production Network Investment 84

85 Thailand can easily access to CLMV as it is located in the center of the region. Nominal GDP Real GDP Growth (5 Year Average) Total Population Myanmar $64.3 bil 27.96% 53.4 mil GDP per capita $4,800 Nominal GDP Real GDP Growth (5 Year Average) Total Population Vietnam bil 5.86% 90.7 mil GDP per capita $5,700 Nominal GDP Real GDP Growth (5 Year Average) Total Population Cambodia $16.8 bil 6.95% 15.3 mil GDP per capita $3,300 Nominal GDP Real GDP Growth (5 Year Average) Total Population Lao PDR $12.0 bil 7.92% 6.7 mil GDP per capita $5,000 Source: World Bank, CIA, ASEAN 85

86 During the past decade, CLMV economies have been growing rapidly. Source: World Bank 86

87 Thailand is transitioning to the aging society while CLMV s labor forces are growing with younger population. Thailand and CLMV s Population Pyramid in 2016 Source: World Bank 87

88 Thailand is transitioning to the aging society while CLMV people is younger and more vibrant. Thailand and CLMV s Population Pyramid in 2050 Source: World Bank 88

89 CLMV market has become more important as Thai trading partners. Thailand Export structure to CLMV* * Exclude petroleum and petroleum products Source: International Trade Centre 89

90 CLMV market is more important in terms of Thailand s outward investment. Thailand s Outward FDI in CLMV Countries Source: Bank of Thailand Stocks of Thailand Outward Direct Investment (as of 2015 Q3) Source: Bank of Thailand 90

91 Currently, most Thai firms investing in CLMV are large companies. Food and beverages Chemical, Plastics, Paper Products CP, THAIBEV, MITRPHOL, KSL, BETAGRO CP, THAIBEV, MITRPHOL, KSL, BOONRAWD DOUBLE A CP CP, THAIBEV Mining and Petroleum PTT BANGCHAK, PTTEP PTT, PTTEP TOA Electricity BANPU, RATCHABURI ELECTRICITY, EGCO EGAT Construction SCG CK, SCG ITD, SCG SCG Wholesale & Retail Trade Financial Activities Real Estate Activities Others BBL, SCB TG, BANGKOK AIRWAYS BANGKOK HOSPITAL BBL, SCB, BAY,KTB, TG SAHAPAT BBL,SCB, KTB DUSIT,BAIYOKE TG CENTRAL GROUP BBL,SCB, BAY CENTARA, AMATA, PRUKSA TG, BANGKOK HOSPITAL Source: 91

92 WEAKNESSES However, CLMV still lack infrastructure and skilled labors. Infrastructure shortage Unskilled labor Low purchasing power High logistic cost High electricity cost Fair financial and banking system Small domestic market No marine borderline Source: Bolliger and Co. 92

93 Each government has promoted FDI by developing infrastructure and setting up Special Economic Zone. OPPORTUNITIES Developing infrastructure Special Economic Zone FDI openness policy Production for domestic and export Generalized Systems of Preferences (GSP) Trans-Pacific Partnership Agreement (TPP) Source: Bolliger and Co. 93

94 THREATS Unstable regulation is the primary obstacle for doing business in CLMV. Unstable regulation Skilled labor shortage Language barrier High competition Ethnic minority conflict Source: Bolliger and Co. 94

95 Thus, each country in CLMV has investment potentials due to untapped markets. Agro-manufacturing and Agriculture Products Construction and Construction Materials Cambodia Lao PDR Myanmar Vietnam Contract Farming Housing Projects Infrastructure Development (Transportation, Buildings, Electricity, Water and Urbanization) Processed Seafoods Textiles, Garments and Footwears Automotive Vehicles and Repair Shops Cars, Motorcycles and Repair Shops Motorcycles and Repair Shops Animal Food Electricity and Energy Minerals Rich (Natural Gas, Oil, Electricities, Mining, Water energy) Forestry Agricultural Machineries 95

96 The OFDI from Thailand accelerated since 2012 to facilitate economic integration, particularly in regional trade flows under the AEC. Inward FDI and outward FDI of Thailand, Source: Bank of Thailand 96

97 Northern Thailand Economy on ASEAN context Thailand Stand Point Trade Prefer intra-regional trade More Good flow across country using cooperations and agreements provided Services Increase competition, services plays more an economic driver Tourism and health care services FDI Competitive ability Loss make company moves out Invest outbound Labor Relaxing restriction for neighboring country Increase skill labor : language and International standard 97 Capital Movement More freely flow of capital, currency more votality alwww.tanitsorat.com Entrepreneurs need to accelerate the adjustment in management costs and exchange rate risks.

98 Opportunities and Challenges of Thailand Logistics Infrastructure North South Corridor in Northern Thailand Chiang Kong : International Road Gateway (KM BKK) Chiang Saen: Mekong River Gateway (Chiang Saen/Guan Lei) Mae Sod : Regional Road Gateway (Maewwadi Mae sod) 98

99 Opportunities and Challenges Positioning & Strategy Border Economic Special ZOne/Border Industry Zone Logistics Transportation Tourism Education/Health Care regional Hub Risk Management Study the regional-risk in each basis: Cross-border mobility of people,transnational circulation of goods&serives,and Transnational interactions and their results formed each transitions 99

100 Thailand : Opportunity AEC via NORTH SOUTH ECONOMIC Border Trade & Contract Farming, Investment Regional Logistics Hub Neighbor Investment (Industrial, Agriculture, Gas Resources) Border Industrial Immigrant Labor Agriculture Investment Regional Financial & Stock Market Tourism Hub Heath/Education/Service Center Port Link/Land Bridge/ Airport Link/ 100 Rail Link 100

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105 China's richest man, Jack Ma, says it will take '30 critical years' to get fully internet-integrated including replacing huge companies with small business. (Photo courtesy of Government House)

106 Jack Ma and Prime minister of Thailand on Oct Mr Ma reaffirmed the need for an "e-road", akin to the Silk Road, to help small businesses flourish.

107 Jack Ma said "In the future, no matter how small a country is [or] your business is, if you have a big heart, open mind, and embrace tech knowledge and inclusive globalisation, you can be powerful too." Jack Ma in ACD meeting in Bangkok, Thailand(Oct )

108 "Data will be the new resource. So the next 30 years are critical for all nations in the ACD. To Asia, it is very critical," he said. He recalled that few people believed Chinese e-commerce could grow rapidly due to poor infrastructure for online trading.

109 Q&A Thank you