• Mekong Chula

Thailand perspective towards China’s High-Speed Rail project: China threat or peaceful China?

Updated: Jul 28


Yingxue Guo




Background

The Belt and Road Initiative (BRI), as a symbol of China’s ‘going-out’, has become a center of China’s economic diplomacy by 2013 to increase its influence and strengthen global competitiveness in the world (Lauridsen, 2019). As a part of China’s BRI initiative, China exports its high-speed rail (HSR), both globally and regionally. By 2016, China has pushed HSR projects in the world (Pavlićević, and Kratz, 2018), including Southeast Asian countries (Chan, 2016), African countries (Xinhua, 2017) and Eastern European (Pavlićević, 2018). As Chinese scholar Zhang (2016) said, regional states cannot miss the ‘train’ of BRI.


In recent years, the Chinese government intended to expand China and the Association of Southeast Asian Nations (ASEAN) cooperation through the HSR project to connect China and Southeast Asian region (Punyaratabandhu and Swaspitchayaskun, 2018). In particular, Thailand, an important partner, was negotiating the HSR with China (Lauridsen, 2019). Since 2012, Thailand and China have discussed HSR development (ibid.). In 2014, China and Thailand launched the HSR line from Map Ta Put to the Nong Khai (bordering Laos) via Bangkok (ibid.). However, in 2016, Thai Prime Minister General Prayuth Chan-Ocha has announced the cancellation of HSR cooperation (Crispin, 2016). Through long-term negotiation, the Thai government and China have been working together to begin the construction work until 2017 (Hunt, 2017). Although both countries have cooperated for the HSR project for approximately a decade, the progress has been slow.


Managing Sino-Japanese HSR competition

The reason is that there are pockets of discontent for Sino-Thailand cooperation. According to Silver, Devlin and Huang in the Pew Research Center survey (2019), when China has emerged as a global economic superpower, people hold a negative attitude towards China in the Asia-Pacific region, specifically China’s neighbors are wary of its growth. Namely, China’s rise, including its HSR project,seems to be a threat to its neighbour countries. Also, it is still questionable whether the HSR project is beneficial to the host country. Some observers argued that China’s HSR aims to become regional power, or even seeking to replace the US (Bangkok Post, 2015); others recognize that Chinese HSR as a new kind of threat, which represents Chinese eagerness to expand its political influence in the world (Yu, 2017); HSR project is likely to be a Chinese “Marshall plan” when China invested in HSR project with tremendous assistance (Li, 2019). What factor causes these complaints? Thus, this essay seeks to explain why Sino-Thailand HSR cooperation is perceived as a threat to Thailand from political and economic perspectives. In the first section, this article attempts to explain how Sino-Japanese competition impose threats for Thailand. This is followed by an examination of interests behind China’s HSR project, and then figures the economic costs for Thailand in the HSR project.

Thailand is concerned about the issue of managing with the Sino-Japanese competition. In Southeast Asian region, such competition is prominent between Japan and China, and there is an increasing concern about the potential impact of great power competitions in ASEAN. Infrastructure contracts seems like evidence to show how two powers competed for geo-economic dominance to expand their influence. To respond to the crisis of great power competition, it is essential to understand how it threatens countries in ASEAN countries. Thailand is a promising market in Sino-Japanese competition and both of them have expressed their interests to implement the HSR (Pavlicevic and Kratz, 2017). On China’s side, China boosted its HSR project and negotiated agreement with Thailand at a state-to-state level (Pavlicevic and Kratz, 2017). Given the supports from Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, China has tended to offer more financial assistance and add-on project in connection with HSR in host countries (ibid.). On the Japanese side, the Japanese government has established strong bilateral relationships with the ASEAN states, as well as concerned about the construction for the KL-Singapore HSR project by taking advantage of the quality and safety of HSR construction (Pavlicevic and Kratz, 2017). It is worth noting that there is a universal consensus that the HSR project can improve economic growth for host countries and the result of HSR competition should be better for recipient countries (Preasad, 2018).

However, managing the Sino-Japanese competition has potential impact on Thailand, while it can be challenging to balance the interest between these two powers (Pavlićević, and Kratz, 2017). Thailand recognized The HSR competition is perceived as a zero-sum game and has potential impact on regional order with much pressure (ibid.). Essentially, those two powers have been locked in a competition for influence and leadership in Asian region. Japan, allied with the US, has been seriously concerned about China's growing influence and engagement in ASEAN, and Japan is determined to consolidate its interests in the region by strengthening ties with these countries to turn ASEAN into economic hedge opposing China (Zhao, 2013). Japan was striving to build a Japanese-dominant order to contain China’s rise. As Gao (2014,b) notes, the U.S. and its alliance might be maintaining forces and promoting an integrative economic and political partnerships excluding China, as China’s overseas investments expand political and economic influence in Asia. Likewise, China has been concerned about Japanese influence and suspected Japanese’s objective with a leading role to constrain against China in the region. China has discovered a balancing approach that is to facilitate regional economic integration through the HSR project in the geo-economic sense to make alliance and achieve profiles (Gao,2014, a).

For Thailand, China and Japan are the first and third export destinations respectively (OEC, 2019); Both countries contributed to trade and sources of FDI in Thailand (Kamolraksa, 2016). Importantly, Thailand needs to consider how to maintain economic ties with both partners. In terms of foreign policy, HSR cooperation means one’s stance or political performance. The partner of the HSR project will inevitably be seen as “choosing side”. (Pavlićević and Kratz, 2017). While choosing the HSR project’s cooperative partner, it inescapably leads to relations’ change with another state. Thailand has recognized that an escalation of Sino-Japanese rivalry could destroy the regional stability and prosperity. Its interest are better protected by maintaining friendly relationships with both countries, instead of creating unstable risks and proceeding geopolitical conflicts.


Financial risk

Another growing concern for Thailand relates to China’s intention behind the HSR projects. Views on the HSR project from these perspectives were generally positive, as it was seen as an approach to support diplomatic relationships with China as well as a potential economic benefit (Kamolraksa, 2016). In contrast, international media and host countries have raised criticism for China’s HSR project. Thanathorn Juangroongruangki, a politician and the leader of the new and dissolved Future Forward Party in Thailand, opposed the 5.6 billion dollars of HSR project signed by Thailand’s military government and China, and claimed that if Thailand invests HSR project, it needs to import everything from abroad (Bangkok Post, 2018). Lauridsen (2019) suspected that China’s HSR is used to facilitate its commercial interests and satisfy commercial purpose. The project dominated by China will hardly create these benefits for host countries (Kriengsak, 2015), because the involvement of SOEs in HSR projects reflects China’s strategic with influence-seeking motivations (Pavlićević, 2018).

That is to say, China failed to get local companies from host countries to be involved and therefore host countries have to depend on importing material and labour (Pavlićević, 2018). These projects inevitably damage Thailand interests, rather than promoting welfare for local people. Indeed, HSR construction works generally connect with ‘made in China’ idea and all the plans relied on China to complete the relative line, buying Chinese trains and system (Lauridsen, 2019). Notably, the HSR market offers not only large business for China, but it also boosts to export high-value product and services in order to relocate low value-add manufacturing facilities (ibid.). Yu (2014) pointed out that China’s HSR is better to understand as being motivated by its national economic interest through supporting China’s overseas investments, transferring industry towards high-value-added products by restructuring industrial development, and raising domestic manufacturing-led economic growth, which implies that these projects are served for Chinese interests.

The high costs of HSR construction increases the financial risk for Thailand. The view supported by Pavlićević and Kratz (2018) is that the HSR projects create financial risk over profits for most ASEAN countries. China has provided financial support technological support, rolling stock and increased financial burden to the host country has been seen as inequality placing the risks related with the profitability of HSR (ibid.). For example, Laos’ government spent 80% of annual budget on the Laos-China line, which increases Laos’ total external debt from 32.5% of GDP to about 125% (Barney, 2014). Likewise, Sino-Thailand and HSR project negotiation was stalled on the problem of construction, financial costs and interest rate. One report indicated that the Sino-Thailand project’s cost had already grown to an estimated 500 billion baht, which caused the Thai government to try to force the Chinese government to take on more of the cost and responsibility of the project (Lauridsen, 2019). Notably, the Thai-Chinese HSR project impression Thailand’s overall debt, and the Thai government spend 179 billion baht for the project (Lam, 2019). Scaling budget up for the whole route, the cost will increase to 300 billion baht, which account for 2 percent of Thailand’s economy in 2017 (ibid.). Thus, too high expenditure, would massively increase Thailand’s budget burden, which creates an imbalanced creditor–debtor relationship between Thailand and China.

Conclusion

Although China’s HSR project will promote mutual benefits for both China and Thailand, Thailand is living under the shadow where China and Japan were competed for HSR construction. Economically, the benefit to the inhabitants of Thailand was limited. China was responsible for the majority of works and shared a large part of profits. Most importantly, the vast financial expenditure and increasing risky restrict Thai people willingness to push the HSR project forward. Overall, both political influence and distribution of economic benefits impede HSR cooperation. To sum up, this paper explains the reason China’s HSR is perceived as a threat to Thailand from political and economic influence. Besides, due to sovereignty dispute with other SEA countries and Thai domestic politics, these divergences also impact the Chinese HSR project on Thailand and practice in China threat context. Given the current situation, the HSR project will face delay due to outbreak of the Covid-19, with limited progress.


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About the Author

Yingxue Guo, a student at Department of International Relations, Xi’an Jiaotong-Liverpool University. At Institute of Asian Studies, Chulalongkorn University ,Thailand from January to February 2020. Guo, as an internship is interested in China 's High-Speed Rail Diplomacy on the track in Thailand and S.E.Asia.

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