Strong Supply, Weak Demand — Why China's Plan Means More Exports to Thailand

Five years of Thailand–China trade

Data from the Trade Policy and Strategy Office of Thailand's Ministry of Commerce shows the direction more clearly than any commentary.

Year	Exports to China	Imports from China	Trade balance
2021	37,265.6	66,758.4	−29,492.8
2022	34,430.1	70,766.7	−36,336.6
2023	34,173.3	70,826.6	−36,653.2
2024	35,277.1	80,614.5	−45,337.4
2025	39,722.9	107,615.6	−67,892.8

Unit: USD million · Source: Trade Policy and Strategy Office, Ministry of Commerce

Three numbers are worth remembering. First, Thai exports to China barely moved across five years, from 37,266 to 39,723. Second, imports from China rose from 66,758 to 107,616, roughly 61%. Third, imports from China accounted for about 31% of all Thai imports in 2025, while exports to China accounted for about 12% of all Thai exports.

For 2026, the Director-General of the Trade Policy and Strategy Office stated that the first-half deficit with China reached USD 46,222 million, USD 17,633 million higher than the same period a year earlier.

Why this pressure will not ease over five years

The answer is structural, not a question of anyone's intent. MERICS notes the plan gives relatively limited attention to "common prosperity" and contains no large-scale fiscal reform capable of shifting meaningful purchasing power to households, while the production side continues to be accelerated through industrial policy and the push to embed AI into production lines.

When capacity grows faster than domestic demand, the surplus has to go somewhere, and export markets are the natural outlet. This is an economic mechanism, not an accusation about anyone's intentions.

Reading trade numbers more carefully than the headline

Trade statistics are among the most frequently misread figures, because a single report often contains several similar-looking series. Three common traps:

One: separate the bilateral balance from the global balance. These can differ several-fold and often appear in the same article. In 2025 Thailand's deficit with China was USD 67,893 million, while its overall trade deficit with the world was only USD 5,308 million, because surpluses with other markets offset it. Quoting the global figure as if it were the China figure understates the situation dramatically.

Two: separate actual data from projections. Full-year 2026 figures circulating in some outlets are academic projections rather than ministry-published data. Both are useful, but you need to know which you are reading before planning around it.

Three: watch the order of magnitude. Misreading billions for tens of billions shifts a figure by a factor of ten, and this appears in more than one news summary. The quickest check is to compare the figure against GDP or total trade and see whether the proportion is plausible.

What Thai businesses are actually experiencing

Department of Business Development figures for the first half of 2026 need to be read in two layers.

Item	H1 2026	Year on year
Businesses dissolved	7,024	+12.49%
Registered capital of dissolved businesses	THB 98,857 million	+223.66%
Newly registered businesses	44,773	+2.13%
Registered capital of new businesses	THB 111,200 million	−25.4%

The first layer is a roughly 12% rise in closures — noticeable but not extreme. The second is that the registered capital behind those closures rose more than 223%, meaning the businesses closing this round are substantially larger than before. Combined with a 25% fall in the capital behind new registrations, the picture is a contraction in the capital base, not ordinary churn.

Not everything traces back to imports

Attributing every Thai business problem to Chinese goods leads to bad analysis. NESDC figures show Thai imports grew 42.3% in Q2 2026, the fastest in 20 quarters. Reporting on the same quarter attributes a significant share of that surge to capital goods for data centre construction rather than to consumer products.

The result was a Q2 current account deficit of USD 17.7 billion — roughly 12% of that quarter’s GDP, and the first quarterly deficit in eight quarters — while private investment grew 13.4%, the strongest in 54 quarters. For the full year, NESDC forecasts a current account deficit equal to 1.2% of GDP.

Read together, Thailand is investing heavily in digital infrastructure, but almost all of that investment is imported. That contrasts with China, which ties AI investment to building domestic industry, as the plan sets out. We explored this theme in our piece on technology sovereignty.

The pressure is not evenly distributed

Type of product or service	Pressure	Workable adaptation
Standard goods, directly price-comparable	Highest	Cut product lines with negative gross margin, focus on those still carrying a spread
Build-to-print contract manufacturing	High	Move toward work requiring precision or certification competitors lack
Goods needing local after-sales service	Moderate	Convert one-off sales into annual service contracts
Food and processed agriculture with traceability	Lower	Invest in end-to-end traceability, which cheap prices cannot substitute for
Work tied to regulation or audit	Lowest	Keep documentation and audit capability as the differentiator

Investment is flowing in as well

The picture is incomplete if you only look at goods. Thailand's Board of Investment reported 1,299 investment promotion applications worth THB 1,473,718 million in the first half of 2026, up 37% year on year, of which foreign investment accounted for 877 projects worth THB 1,368,493 million, up 80%.

Within that, China ranked third by value at THB 45,766 million but first by project count with 321 projects — a pattern of many investments at a smaller-than-average size per project. For Thai businesses this cuts both ways: more projects means more buyers looking for local suppliers, but if those projects mainly import components for assembly, the benefit reaching Thai supply chains is smaller than the headline investment figure suggests. That is why policy proposals around raising local content requirements keep resurfacing.

What is within your control

Policy-level proposals already under discussion — requiring foreign investors to use more local materials, opening e-commerce channels for Thai SME goods into China, and attracting investment to process Thai agricultural output rather than exporting it raw — sit outside any single company's hands. What sits inside is this:

What you need to know	Why it matters when prices are compressed
Unit cost per product	It is the line telling you how far you can discount before losing money — it cannot be guessed, only calculated from real data
Gross margin by product, not company-wide	Many businesses lose money on a handful of products without noticing, because they only watch the total
Stock ageing and dead stock	When market prices fall, slow-moving stock is an unrecorded loss sitting in the warehouse
Cash flow three to six months forward	Most businesses close because cash runs out, not because losses accumulate

None of these questions is new, but all of them are very hard to answer when production, purchasing, sales and finance data live in separate files across departments. When margins thin, the speed at which you learn a number is worth as much as the number itself.

A simple test: if you want the unit cost of one product, does the answer arrive within a day or after a week? The difference is not how hard the accounting team works. It is whether production, purchasing and payment records were linked at the moment they were entered, or are reconciled afterwards. If reconciliation comes later, the number always arrives after the moment you needed it. We covered this in detail in our piece on the Thai economy and the role of ERP, and the underlying integration problem in how to make every ERP system communicate.

Conclusion

The price pressure Thai businesses face is not a temporary episode. It is the result of a structure written into a five-year plan that has only just begun. The practical conclusion is to plan on continued price compression, and to build the ability to know your own costs faster than your competitors know theirs.

The final part of the series covers how an organisation can apply five-year planning to itself — indicator design and the data needed to measure anything. Read part six.

In a market where prices fall every year, the businesses that survive are not the ones with the lowest costs. They are the ones that learn their own costs fastest.

- Sureeraya Limpaibul · Managing Director, Grand Linux Solution Co., Ltd.

References

• Bangkok Biznews — Five-year Thailand–China trade figures from the Trade Policy and Strategy Office
• Isranews — Trade Policy and Strategy Office briefing on 2025 exports and trade balance (23 January 2026)
• Bangkok Biznews — Three models for reducing the trade deficit with China (29 August 2026)
• Bangkok Biznews — Business registration and dissolution statistics, H1 2026 (Department of Business Development)
• THE STANDARD — Registered capital of dissolved Thai businesses surges (20 August 2026)
• THE STANDARD — Q2 2026 trade deficit and the data centre import surge
• Bangkok Biznews — NESDC Q2 2026 GDP briefing (17 August 2026)
• InfoQuest — Thailand BOI investment promotion applications, H1 2026
• Congressional Research Service IF13204 — China’s 15th Five-Year Plan: S&T and Economic Priorities
• MERICS — Deciphering the 15th Five-Year Plan