As China’s adjustment of its GDP is, unsurprisingly, becoming an issue of global interest, Thai-Chinese Journalists Association held a seminar on March 20, discussing the global impact of China’s economic slowdown and how would it affect Thailand’s economy.
While China is managing to keep its position as the world’s second largest economy, the trade war with the U.S. and the slowing down of its economic growth pose various challenges for the country. However, in order to address the concerns of the global impact of China’s economic slump we need to understand the reality of the country’s current economic situation, stripped to the bare essential, and how a big of an impact would it has on Thailand and the rest of the world.
At the seminar, Mr. ArkomTermpittayapaisith, Minister of Transport of Thailand, and Mr. Lyu Jian, Ambassador of the People’s Republic of China in Thailand gave opening speeches. During the event, there were many guest speakers from both Thailand and China, along with other Chinese and Thai attendees.
At the beginning of 2019, China announced that its annual GDP growth in 2018 was only 6.6%, the lowest in 28 years. Though China’s economy in the fourth quarter of 2018 performed well, there were still concerns that the global economy may slow down as China contributes one third of the world economic growth.
The main reason for such a decrease was the trade war between China and the United States, as such a massive conflict undermined people’s confidence in the country’s economy and thus harmed consumption. To kick-start the economy, the Chinese government is gearing up this year to enhance investment in infrastructure projects such as high-speed trains in new routes, and roll out a new tax policy to encourage domestic consumption.
At the seminar, Chinese speakers stated that China has achieved impressively rapid growth during the last four decades, and considering that China growth is actually having a larger base than the past, the 6.6% GDP growth should be considered “stable”, rather than “terrible”. Therefore, there is no need to worry.
The growth of China in the year 2018, China has focused on quality development, not focusing on quantity which can be seen from the solution to the corruption problem, pollution control for better living and a product quality development under the policy ‘Made in China 2025’. Although GDP is not beautiful but the Chinese economy is growing in the form of a restructuring in preparing for a strong growth. It can be explained as ‘slow but sure’.
China has been shifting its focus from “quantity development” to “quality development” since 2018, as seen with the success in cracking down on corruption, the fight against poverty and the Made in China 2025 policy. Though the number may not appear as impressive as before, the Chinese economy is actually restructuring for a stronger growth. Slow, but certain.
The concern over numbers of China’s GDP also comes from specific groups, particularly investors. While uncertainty is the last thing investors would like to see, the trade war jarred investors’ faith in the global investment climate. In a sense, the escalating trade war is clearly causing more damage to the two economies than good.
With regard to the impact on Thailand, the forum concluded that though Thai economy, as a part of global economy, would surely be affected, investment between China and Thailand would not be influenced in a large scale. Thailand can also seize this opportunity to develop private trade, tourism industry and agriculture through understanding more about the Chinese culture and Chinese way of thinking.
In summary, from this seminar, speakers from both Thailand and China which all of them are expertise, insisted that GDP decline is not a concern, China’s economic and growth direction do remain ‘PLUS’.
If the trade war continues and intensifies, the global trade chain would certainly be affected and such effects would inevitably be detrimental to Thailand. Since Thailand produces components and parts exported to China for processing and assembling before shipping it to Japan and U.S. Case in point, the U.S. discontinues imports from China, then the effects will certainly spread downstream to Thailand.
In conclusion, speakers from both Thailand and China, all of whom were all experts, insisted that China’s GDP decline was not a concern, and the prospect of the country’s economic growth remains positive.