Thai Industry Chiefs Call for Higher Tariffs on Chinese Imports

Thai industry leaders have called for the government to provide tariff protection against an influx of cheap products from China, which is decimating the local manufacturing sector.

The Federation of Thai Industries (FTI) raised the alarm this week, saying more than 20 industries had been affected by the influx of Chinese products and the situation was expected to worsen with the entry of online retailer Temu.

Some 667 factories closed down in the first half – at a rate of more than 100 a month, which was an 86% rise on the previous year, according to FTI chairman Kriengkrai Thiennukul, who said the rules of the ASEAN-China free-trade deal permitted the government to consider applying tariffs to better protect local manufacturers.

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“If the government has no new measures to better protect Thailand against Chinese products, more companies are likely to shut down,” Payong Srivanich, chairman of the Thai Bankers’ Association, who chaired a Joint Standing Committee on Commerce, Industry and Banking meeting on Wednesday, was quoted as saying.

The market share of Thai electrical appliances and autos made in Thailand had fallen significantly across the ASEAN region in the first quarter.

The entry of discount e-commerce site Temu was expected to make things worse for local small and medium-sized enterprises, as energy and wages are lower in China, the FTI warned.

China has been exporting more goods to ASEAN since the rise in trade tensions between China and the US, it said, and more Thais have been buying products online since the Covid pandemic.

Sectors hit hard by low-cost Chinese products include steel, textiles and garments, plus consumer products, the group said, but the 7% value-added tax imposed on imports with a value of up to 1,500 baht (US$42.50) may not be enough to protect local companies.

Thai industry officials are said to be closely monitoring the situation, which appears to stems from what US officials have called China’s “industrial overcapacity”, and President Xi Jinping’s preference for bolstering manufacturing with major injections of state funding, instead of trying to boost domestic demand through social welfare support.