Concerns about a drop in exports to China, along with a drop in Chinese tourists heading to Thailand, is fuelling concerns, especially in tourist-dependent areas, like Phuket.
Many of the problems are happening because of an emerging economic downturn in China. China’s economy is slowing down, and this is affecting Thailand’s tourism and local exports headed to China.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, says that China’s real estate business is in “big trouble’. After China stopped strict rules over Covid-19, the economic recovery has been hampered by the downturn in the property market. Lately that ‘downturn’ has become a collapse of some of the largest property developers in China.
Developers used to borrow a lot of money to fund big projects, and they used THOSE projects to secure funding for even more projects, etc. The whole scheme came tumbling down after the Chinese government changed rules over borrowings. Even though that was over 2 years ago, the affects are only being felt now as the largest property developers have defaulted and filed for bankruptcy.
These new rules were supposed to stop the risky borrowing and help with the problem of houses losing value. But only a small number of Chinese companies were able to comply with these rules, whilst others had over-extended and were caught out.
Evergrande, the largest of these distressed developers, says it couldn’t pay its debts and had to stop trading.
Downstream, in the retails sector, anything related to homes – decorations, furniture, renovations and homewares – have suffered accordingly.
For Thailand, Chinese tourists are the number one source of visitors to the Kingdom. Now, because of the problems in China, fewer Chinese tourists are coming to Thailand, causing concerns for the country’s tourist-dependent areas like Phuket, Pattaya, Chiang Mai and the capital.
And, because of the real estate downturn and drop in their investment returns, Chinese people are not buying as much. This is affecting what Thailand sells to China, especially things like chemicals and plastic that are used for building, along with fruit and other agricultural products.
Mr. Poonpong said that Thai business owners and tourism stakeholders should watch China’s real estate situation closely.
“China is the main country that Thailand trades with. It buys a lot of things from Thailand. So, if China has problems, it’s like a wave that affects Thailand.”
