According to the Thai Board of Investment (BOI), in 2023, China became the primary source of Foreign Direct Investments (FDI) in Thailand. Over the first three quarters of the year, nearly US$2.84 billion was invested across 264 projects, accounting for 24% of Thailand’s total FDI. Over the past two years, China has submitted 588 investment projects totaling US$7 billion.
The relationship between China and Thailand is strategic. China is Thailand’s main trading partner, absorbing 40% of its agricultural exports. On its part, Thailand ranks as China’s third-largest trading partner within ASEAN.
China and Thailand share a strong economic partnership, with bilateral trade hitting $126.3 billion in 2023. A major highlight of their cooperation is the ambitious transcontinental railway project, aimed at linking the Indochina Peninsula to the Strait of Malacca. This initiative promises to enhance regional connectivity and stimulate tourism growth.
As Thailand’s Ministry of Foreign Affairs announced in 2024 its intention to join the BRICS economic cooperation league, the country aims to attract more foreign investments to strengthen its economy and contribute to key sectors, particularly green energy and electric vehicles (EVs). Thailand seeks to integrate into the global value chain and position itself as a leading player in Asia and the world.
The two countries signed a strategic cooperation agreement in 2013 to foster economic ties. Thailand supports China’s Belt and Road Initiative, which facilitates trade and mobility, as tourism and exports make up the largest share of the Thai economy.
Against this backdrop, Chinese investments have grown significantly, mainly in EVs, the digital economy, and the manufacturing industry.
Why invest in Thailand?
A strategic region
Thailand holds a key position in Southeast Asia. As a central member of ASEAN (the Association of Southeast Asian Nations), a regional organization promoting economic, political, and cultural cooperation, Thailand boasts strong infrastructure and attractive investment policies. China, seeking to solidify its leadership in Asia, views Thailand as a strategic ally.
China’s interest in Thailand is also underscored by the Belt and Road Initiative (BRI), which aims to enhance regional connectivity and economic integration. Key projects, such as the high-speed rail link connecting China to Thailand via Laos, highlight the deepening economic ties between the two nations. Beyond economics, cultural and diplomatic exchanges have further strengthened their bilateral relationship, with both countries emphasizing mutual respect and shared development goals.
Investor-friendly policies
In December 2024, Thailand’s Industrial Estate Authority (IEAT) announced a new initiative to attract Chinese investors. Named “Two Countries, Twin Parks,” the initiative aims to make Thailand a key destination for Chinese investments by facilitating exchanges, according to Minister of Industry Akanat Promphan. This measure builds on previous agreements that have already eased investment procedures and reduced trade barriers between the two countries.
The “Two Countries, Twin Parks” initiative is expected to strengthen economic ties between Thailand and China, fostering collaboration in sectors such as manufacturing, technology, and logistics. According to officials, the program will include the development of industrial zones designed to cater specifically to Chinese enterprises, offering streamlined services, tax incentives, and infrastructure tailored to their needs. Minister Akanat Promphan emphasized that this initiative aligns with Thailand’s broader economic strategy to position itself as a regional hub for international trade and investment.
The Automotive Industry: A Comprehensive Example
The Thai government aims to establish the country as a regional hub for EV production. The “30@30” initiative targets having EVs make up 30% of total vehicle production by 2030, with goals of producing 725,000 zero-emission cars, 675,000 electric scooters, and 24,000 electric buses.
The government also encourages Thai consumers to purchase EVs. Currently, 80% of EVs sold in Thailand are Chinese brands.
The “30@30” policy includes subsidies and tax reductions that attract investors, manufacturers, and suppliers in the electric vehicle industry. Research and Development (R&D) funding allows Thailand to maintain its competitive edge and establish itself as a leader in the sector.
Some Chinese car manufacturers have already set up operations in Thailand. BYD and Great Wall Motor have invested nearly US$1.5 billion to build factories in the country. Meanwhile, the Chinese company CATARC has opened an R&D facility.
Thailand’s appeal to Chinese investors in the EV sector is driven by financial incentives, infrastructure, a skilled workforce, and a deep understanding of the industry, allowing it to integrate all stages of the production and supply chain, including battery manufacturing.
Diverse investment sectors
The Thai Board of Investment recently announced that TikTok, owned by Chinese company ByteDance, plans to invest 126.8 billion baht in Thailand for a data hosting project. This announcement follows major investment commitments from leading American tech companies, such as Google (US$1 billion), Amazon Web Services (US$5 billion over 15 years), and Microsoft, which is building its first regional data center in Thailand. As Thailand becomes a strategic hub for the digital economy, it is also attracting significant Chinese investments in this sector.
Many other industries benefit from Chinese investments. In 2024, the Eastern Economic Corridor (EEC) met with a delegation of Chinese entrepreneurs to explore opportunities for Sino-Thai cooperation in green infrastructure, including solar farms and energy storage systems.
China is also investing in Thailand’s tourism sector. Chinese investments in hospitality and dining help strengthen ties between the two countries, boosting Thailand’s economy by improving services and infrastructure, which attracts a larger influx of tourists.
Impact on the Thai economy
Chinese investments contribute to job creation. The entry of Chinese companies into the Thai market fosters the recruitment of skilled labor, the development of expertise, and the transfer and creation of technological knowledge in future-oriented industries.
By leveraging its strategic location in Southeast Asia, Thailand aims to attract not only Chinese investors but also global businesses seeking access to ASEAN markets. Analysts predict that this partnership could significantly boost bilateral trade volumes and create new opportunities for local industries to integrate into global supply chains. The Thai government has also hinted at plans to expand similar initiatives with other key trading partners, signaling its commitment to fostering a more open and dynamic investment environment.
However, Thai businesses must adapt to competition from new entrants benefiting from advanced technology and lower production costs. They need to adjust by collaborating with these new players and establishing business relationships.
It is also the Thai government’s responsibility to ensure that opening its economy and infrastructure to China remains beneficial, allowing Thailand to assert its influence in the Asia-Pacific region.
However, some Thai analysts are wary of China’s rising influence, fearing that Thailand might become overly dependent on China. Despite these concerns, the Thai government remains bullish on Chinese investments, seeing them as a vital component of the country’s economic growth strategy.
Sources:
Bangkok Post – IEAT unveils plan to attract Chinese investment to Thailand
