As exports from China continue to face challenges with new regulations and restrictions imposed by the government, the European Union is upping the ante with its efforts to limit the import of environmentally damaging products. This move by the EU to protect the planet has also been dubbed as “green imperialism” by some critics. In this article, we’ll explore both the challenges faced by Chinese exports as well as the controversial stance taken by the EU on environmental policies and how it could affect global trade.
Thailand’s economy is currently being supported by a strong banking system, well-controlled inflation, and a recovering foreign tourism industry that is expected to bring a 3-4% growth this year. Although the February factory output showed reduced output, Thai planners are now focusing on export markets and are facing new challenges in a world environment with rising geopolitical tensions and a more cautious banking system due to recent scares in the United States and Switzerland.
Thai exporters are also facing challenges in China and Europe, where local regulations and the EU’s “Green Deal” have been described as regulatory imperialism. The Ministry of Commerce has tasked trade missions and embassies with exploring regulatory hurdles facing Thai exports, while the Fiscal Policy Office is monitoring trends and potential impediments in the export sector. The Ministry of Finance has acknowledged that economic growth in 2023 will be dependent on foreign tourism and an uptick in domestic spending since Thai exports have slowed continuously since the end of last year.
The Thai central bank has raised interest rates on Wednesday, despite inflation at only 3.8% in February, to keep inflation moving downwards. Meanwhile, the country’s economic ministries have prioritized the promotion of Thai exports against the backdrop of a more risk-averse world banking system, higher borrowing rates, and reduced demand.
Thai banks are reported to have well-capitalized AT1 bonds at only 3% of Tier 1, and analysts in Asia are not overly concerned about the losses experienced by AT1 bondholders in Switzerland. However, the AT1 bond debacle in Switzerland has led to greater caution in the bond market, with analysts scouring bank balance sheets across the world for potential weaknesses.
While western markets have recovered, there are growing fears of a widening rift between China and the US due to China’s active efforts to harness its alliance with BRIC countries, including Russia. China is promoting the renminbi as a new reserve currency to rival the US dollar, with a potential deal to price some of its oil sales in the Chinese currency reportedly in the pipeline with Saudi Arabia. This trend is potentially leading to two blocs in the world economy, contrasting with the unipolar world dominated by the US.
In summary, Thailand’s economy is currently facing a challenging external climate of rising geopolitical tensions, higher borrowing rates, and regulatory hurdles facing Thai exports in China and Europe. However, the country’s well-capitalized banking system, recovering foreign tourism industry, and cautious economic planning can help the country maintain its growth trajectory in 2023.
