China can’t always get what it wants in Thailand

Long before BRI projects were seen as sovereignty-eroding debt traps, Bangkok’s military rulers were tactfully resisting the terms and reach of Beijing’s advances

Bangkok, September 12, 2018 5:22 PM (UTC+8)
Thai Prime Minister Prayut Chan-ocha (L) and Chinese President Xi Jinping reach to shake hands in a file photo. Photo: AFP/Pool

When Chinese Vice Premier Zhang Gaoli attended last year’s royal cremation for deceased Thai King Bhumibol Adulyadej, the high-level official raised an undiplomatic fuss when told new King Maha Vajiralongkorn was unavailable for a private audience because of his central role in the sacred ceremony.

The Chinese official aired further displeasure when told neither was Prime Minister General Prayut Chan-ocha available for a one-on-one meeting during the elaborate event, attended by global dignitaries to pay condolences and last respects to a monarch many Thais viewed as semi-divine.

Zhang was only placated after Mandarin-speaking Princess Sirindhorn, Bhumibol’s daughter, agreed to interpret part of the ceremony from his diplomatic viewing box, though the palace had earlier forbade simultaneous translation of the chants in line with historic protocol, according to Thai officials familiar with the events who requested anonymity.

Zhang had aimed to extend another formal invitation to Vajiralongkorn to visit China before other countries soon after his still-pending coronation. But the vice premier’s behavior at a sensitive time still rankles nearly a year later with some Thai officials who saw his overreach as emblematic of China’s hard drive for more influence over the kingdom.

The consensus view is that China has made marked diplomatic, economic and strategic gains in Thailand since the mid-2014 military coup that suspended democracy, curtailed rights and thus isolated the country from its traditional allies in the West, including most crucially the United States.

But while China undoubtedly stole a realpolitik march in Thailand while the US and European Union, at least initially, stood hard on ideological demands for a restoration of democracy, what’s gone less noticed is just how much Bangkok’s ruling military leaders have subtly withheld from Beijing, often in the name of upholding sovereignty and independence.

Thai Prime Minister Prayut Chan-ocha in a June 20, 2018 file photo. Photo: AFP/Niklas Hallen

Nowhere has that tactful duplicity been more apparent than with the long-stalled but supposedly on-track China-Thailand railway, an 873-kilometer high-speed line that in theory will link Thailand’s east coast ports and industrial zones to China’s southern city of Kunming traveling through neighboring Laos.

The US$5 billion line is an especially crucial link for China’s US$1 trillion Belt and Road Initiative (BRI), without which Beijing’s trade-promoting designs to connect Kunming as far south as Singapore and east-west through envisioned spurs across mainland Southeast Asia will remain untracked.

When Prayut’s military regime first took power, junta officials said the railway would be completed by March 2018; ministry of transport officials now say it won’t be finished until at least 2023. Independent analysts monitoring the project’s implementation say that projection, too, is likely overly optimistic.

The China-backed US$6 billion railway under construction in Laos, an endeavor which entails cutting tunnels and building elevated stanchions through highly mountainous terrain, underscores the importance China places on a line that could easily become a white elephant in the sparsely populated nation without a connection to and through Thailand.

The China-Thailand railway has arguably become all the more crucial for Beijing as it desperately seeks alternative markets for its manufactures amid an escalating and potentially devastating trade war with the US. China already enjoys a hefty trade surplus with Thailand, a trend that has accelerated since the opening of Mekong River trade in 2006.

Investment analysts project that Thailand could be one of the region’s bigger winners from the US-China trade war, due to its manufacturing potential to ramp up and re-gear factories to fill market gaps created by Trump’s high tariffs on China-produced goods. While Thailand recorded a US$18 billion trade surplus with the US in 2017, 11th highest in the world, it has notably not been targeted by Trump for “unfair” trade.

Chinese and Thai negotiators had wrangled on financial terms and land rights along the proposed track long before BRI infrastructure deals elsewhere were looked upon as potential sovereignty-eroding “debt-traps”, as critics now see certain BRI-related projects in Sri Lanka, Pakistan, Myanmar and elsewhere in Asia.

Map of the envisioned 873-kilometer Thailand-China Railway. Image: Twitter

Those nettlesome negotiations and slow progress were factors in premier Prayut’s absence at the Belt and Road Forum staged in Beijing and attended by various global leaders in May 2017. Thai officials say Prayut’s no-show was due to a scheduling snafu, not a train-related tiff, and maintain the project the junta once signaled would be its main engine for economic growth is still on track.

Last December, Prayut ceremoniously broke ground on a first phase 250-kilometer link connecting Bangkok to the northeastern Thai city of Nakorn Ratchasima, situated a distant 500 kilometers from the Lao border. Prayut has also symbolically used his absolute powers under the charter’s Article 44 to waive labor regulations on foreign workers to allow Chinese engineers to help design the project.

Eight months later, however, the project has still made little building progress beyond a two kilometer track stretch reaching to the outskirts of Bangkok, analysts monitoring the construction say. The junta government has comparatively emphasized building new modern rail lines in and around Bangkok rather than connecting to China, they say.

One investment banker familiar with the situation claims that China has become so peeved by the slow progress that it’s officials have lobbied for the removal of Transport Minister Arkhom Termpittayapaisith, a careful technocrat who has stood steadfast on maintaining regulations that have delayed the project’s construction.

In an interview with Asia Times, Deputy Transport Minister Pailin Chuchottaworn would neither confirm nor deny that Chinese counterparts have pushed for Arkhom’s ouster, saying only that his ministry boss was “doing a wonderful job” and that train-related negotiations have been held on “an equal basis.”

China’s National Development and Reform Commission’s Wang Xiaotao (L) and Thai Transport Minister, Arkhom Termpittayapaisith (R) at a signing ceremony for the railway, Bangkok, December 3, 2015. Photo: NurPhoto via AFP/Wasawat Lukharang

“Connectivity is always good,” Pailin said in the interview. “We are living here next to China, so it is always good whenever our big brother is feeling good, then we feel good.” At the same time, he underscored that the line’s first segment will be built and financed only by Thais, not Chinese.

“We decided to do it the way that best serves Thailand,” Pailin said when queried on the risk of Chinese debt traps. “In the end, we decided to do it ourselves,” he said, emphasizing that the railway’s second link to the Lao border will be designed exclusively by Thai engineers.

To be sure, China has made certain strategic inroads into Thailand since the coup, some at the expense of the US’ long-held strong position in the country. US officials were peeved by the first-ever China-Thai joint air force exercises held in 2015 because they allowed China an up-close view of US-made advanced fighters sold to and operated by the Thais.

Bigger American concerns surround the junta’s US$1 billion purchase of at least one, and potentially as many as three, yet-to-be-delivered China-made submarines. The deal was brokered by Defense Minister General Prawit Wongsuwan, who has steered several recent big ticket, and critics say somewhat opaque, military procurement deals to China.

If the new subs are parked and Chinese maintenance crews are present at the strategic Satthip naval base, long a safe harbor for US ships transiting the Gulf of Thailand, the US has suggested it will forego using the facility in future due to particular concerns that Chinese spies may eavesdrop on the sound of the engines of certain of its sensitive naval assets.

Even with the maneuvers and sales, it’s not clear China has made irreversible gains vis-a-vis America’s strategic position in the kingdom. Indeed, some suggest those gains could be eroded or even reversed as US President Donald Trump’s administration looks to re-engage Bangkok’s military leaders in his “Indo-Pacific” gambit to contain China’s influence.

US President Donald Trump (R) and Thai Prime Minister Prayut Chan-ocha (L) at the Oval Office of the White House, October 2, 2017. Photo: AFP/Mandel Ngan

One government advisor suggests that the first submarine will now more likely be parked at a less strategic base on the country’s Andaman coast, where the US does not have a strategic interest. Sidelined politicians, meanwhile, suggest they will give priority to scrutinizing, and perhaps cancelling, the submarine deal if and when democracy is restored.

None of this underestimates the growing importance of China to Thailand’s economy, which has grown apace under military rule. Prayut has openly embraced Chinese business delegations, including a high-profile visit by Alibaba chairman Jack Ma in April, but economic analysts note that China has so far actually invested very little in Thai industry or services.

A surge in Chinese tourist arrivals since the coup, rising from around one million per year at the time of the putsch in 2014 to an estimated 13 million, or nearly one-third of all arrivals, at present has provided the regime an important economic lifeline while other economic sectors have sagged or sunk. Goldman Sachs research shows Chinese-specific tourism now accounts for around 4% of Thailand’s GDP.

So when Defense Minister Prawit impolitically blamed a Chinese boat operator for the drowning deaths of 47 Chinese tourists in July off the Thai island resort of Phuket, some suspected Beijing could retaliate by officially clamping down on its tourist flows to Thailand – as it has with other countries that have irked it for different diplomatic reasons.

But China isn’t likely to weaponize its tourists against Thailand precisely because of its unrealized strategic ambitions in the kingdom. High on that list is the Kra canal, also known as the Thai canal, a long envisioned channel through the country’s southern isthmus that would connect the Indian and Pacific Oceans and significantly shorten east-west shipping routes by bypassing the Malacca Strait.

China is known to covet the channel to alleviate its so-called strategic dilemma at Malacca, a narrow shipping chokepoint through which as much as 80% of China’s fuel imports travel and which strategic analysts note the US and its allies could readily block to squeeze China’s economy in a conflict scenario.

Thailand’s King Maha Vajiralongkorn takes part in a procession to transfer the royal relics and ashes of late King Bhumibol Adulyadej from the crematorium to the Grand Palace in Bangkok, October 27, 2017. Photo: Reuters/Jorge Silva

Prayut’s junta has not seriously considered the canal, despite Beijing’s reported strong urgings. That’s in part because any move to dig the channel and physically separate the nation into two would require the royal endorsement of new King Vajiralongkorn, with the envisioned scheme’s retired military backers saying it needs to be the “king’s canal” to be built.

That would explain Vice Premier Zhang’s hard push to personally invite Vajiralongkorn to visit China soon after his official coronation. China has a clear interest and need to cultivate the new monarch, who has taken a notable hands-on approach to national affairs since his father’s passing.

If Vajiralongkorn accepts Beijing’s invitation, it would mark the first time a Thai monarch has visited the People’s Republic of China. Some note that Vajiralongkorn came of age during his military training at a time the kingdom was fighting Beijing-backed communist guerillas who were ideologically bent on overthrowing the Thai monarchy.

While that episode has by now been largely overlooked as the two countries cultivate strong diplomatic, economic and strategic ties, it will likely remain – like Zhang’s perceived by some as brusque behavior at King Bhumibol’s royal funeral – an unspoken factor in ensuring, now as ever, that China does not always get what it wants in Thailand.

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