# Are Low-Cost Chinese Imports Undermining Thailand’s Economy?

- Link: https://www.thailand-business-news.com/china/245484-are-low-cost-chinese-imports-undermining-thailands-economy
- Published: 2025-09-30T15:58:11+07:00
- Author: Vivian Wei

Cheap Chinese imports have been a growing concern for Thailand’s economy, particularly
in recent years. While these imports provide affordable goods to consumers, they
are accused of undercutting local manufacturers through practices like dumping—selling
products below cost to gain market share.

This has led to factory closures, reduced industrial output, and calls for protective
measures. However, China argues that its trade with Thailand is mutually beneficial,
emphasizing investments and supply chain integration. The issue has intensified 
amid global trade tensions, including potential U.S. tariffs under a possible second
Trump administration.

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### Impacts on Thai Businesses and Economy

Thailand’s economy has faced considerable strain from low-cost Chinese imports. 
In 2023, nearly 2,000 factories shut down, partly due to competition from these 
imports, with key sectors like manufacturing, e-commerce, and electric vehicles (
EVs) being the hardest hit. Industrial output fell by 2% in the first half of 2024
compared to the previous year, lowering economic growth projections to 2.6%. By 
2025, Thailand recorded five consecutive months of negative inflation, with headline
inflation declining by 0.79% in August and rising only 0.08% over the first eight
months of the year. While core inflation remained stable at 0.8%, experts attribute
this to supply-side issues and weak demand, further exacerbated by cheap imports
that pressure local prices and businesses in both domestic and export markets.

Specific examples illustrate the impacts. The entry of Chinese e-commerce platform
Temu in July 2024 sparked concerns over unfair competition, supply chain disruptions,
and a 10-20% drop in sales of local products by the end of the year. In the automotive
industry, often dubbed “Asian Detroit” due to its dominance by Japanese firms, Chinese
EV manufacturers like BYD, Changan, and Neta are gaining traction, leading to factory
closures and rising land prices. Other affected sectors include steel, textiles,
and consumer goods, where local producers struggle to compete against subsidized
or overproduced Chinese items. The Federation of Thai Industries (FTI) has warned
that competition could intensify further in 2025.

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Experts have highlighted the severity of the situation. Poon Panichpibool, a strategist
at Krungthai Bank, notes that while Thailand is not in full deflation, the influx
of cheap goods poses a “significant concern” for businesses, compounded by high 
household and SME debt and a sluggish economy. Economists like Pavida Pananond and
Nisit Panthamit emphasize the need to protect SMEs, as basic Thai products are increasingly
replaced by lower-quality Chinese alternatives in local markets.

### Chinese Perspective and Benefits

China defends its export practices, asserting that they are not intentionally harmful.
According to the Chinese Embassy in Thailand, nearly 80% of Thai imports from China
consist of capital and intermediate goods used for production and export, while 
less than 10% are daily consumer items like food, clothing, and accessories. Over
1,000 Chinese companies have invested in Thailand, with 588 projects worth nearly
$7 billion in the past two years, focusing on EVs, digital economy, renewable energy,
and advanced manufacturing. These investments are viewed as enhancing Thailand’s
industrial capabilities, though critics argue they risk turning the country into
a transshipment hub for Chinese goods evading U.S. and EU tariffs, particularly 
in solar products.

### Thai Government and Industry Responses

Thailand has implemented several measures to address the issue. By December 2024,
stricter import controls reduced low-quality imports—mostly from China—by 20%. In
August 2024, a task force comprising 28 agencies was formed to review regulations
biweekly and curb cheap imports. The Ministry of Industry mandated that Chinese 
EV manufacturers use at least 40% local components, prompting commitments like Changan’s
$282 million investment and Neta’s plan to increase local parts usage from 60% to
90%. Former Prime Minister Srettha Thavisin called for investigations into platforms
like Temu for tax compliance.

The Federation of Thai Industries (FTI) has urged additional action, including invoking
the 1999 Anti-Dumping Act and the 2007 Safeguard Measures Act against substandard
imports that fail to meet environmental standards. They also advocate for upgrading
industries to green technologies, improving SME financing, and eliminating outdated
regulations. The Industry Ministry has tasked the Thai Industrial Standards Institute
and Customs Department with inspecting 143 imported products for quality and safety.

### Future Outlook

With China’s overcapacity likely redirecting more exports to Southeast Asia amid
U.S. tariffs, Thailand may face increased pressure, including further factory closures
in sectors like steel and textiles. Experts recommend long-term strategies such 
as boosting household and SME incomes, cutting policy rates by the Bank of Thailand,
and fostering collaboration between government and the central bank to stabilize

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