“China’s Belt and Road Initiative Hits a Roadblock in Thailand”, by Tang Siew Mun

Commentary 2016/12, 5 May 2016

China was given a jolt of reality when Thailand shelved the 867km Sino-Thai rail project. Given that this link, which connected Bangkok to the north-eastern city of Nong Khai near the Laos border, formed a vital node in the Kunming-Singapore railway, Thailand’s decision threatens the future viability of this showcase of ASEAN-China cooperation.

The scrapping of the project came as a surprise since China was long thought to have secured the joint project. Thai Transport Minister Arkhom Termpittayapaisith disclosed last week that the deal fell through over disagreements on the terms of the partnership.  China was reportedly pushing for the right to develop the land along the new railway track.

In uncharacteristically direct fashion, Minister Arkhom shared in a recent interview that “We told the Chinese there is no granting of land rights,” before adding that “Thailand is not the same as Laos.”

The Thai “disclosure” is instructive in three respects:

    • ASEAN states should learn from the Thai experience in weighing the economic benefits against strategic interests. Thailand would not only have to forgo its commercial interests over vast swathes of real estate had it acceded to Chinese demands, but it would also indirectly give China an economic foothold in the country at a very low entry cost.
    • The fact that China is using BRI – especially infrastructure financing – to gain political influence and economic penetration into Thailand suggests that China is using economic means as a strategic tool. ASEAN states need to carefully weigh the hidden costs of the seemingly attractive financial terms.
    •  Even though Thailand has been seen as leaning towards China after the 2014 coup, and has improved ties with Beijing at all levels – political, economic and strategic – it has clearly differentiated itself from Laos and affirmed that it is not a client state of China. Bangkok has shown that it will stand firm to protect its national interests when it is compromised by its much larger neighbour from the north.
Tang Siew Mun is Head of the ASEAN Studies Centre at ISEAS – Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.