Thai-Chinese visa deal: High hopes and high stakes! Optimism soars as Thailand eyes 8 million Chinese tourists in 2024. As the Minister of Foreign Affairs Parnpree Bahiddha-Nu-Kara prepares for talks in Beijing next month, there are hard questions. Is the permanent visa scheme linked to ongoing diplomatic engagement as well as the trade game between the countries which Thailand is losing?

In the aftermath of Prime Minister Srettha Thavisin’s big announcement last week of a permanent Chinese Thai visa waiver, the PM confirmed that Minister of Foreign Affairs Parnpree Bahiddha-Nu-Kara would travel to Beijing in February to sign the deal. At the same time, a Chinese spokesman at the Foreign Affairs Ministry in Beijing spoke of intense discussions on the matter. In particular, he said it was hoped it would be finalised ‘as soon as possible’. 

Thai Minister of Foreign Affairs Parnpree Bahiddha-Nu-Kara is preparing to travel to Beijing in February. At length, he expects to sign the permanent visa waiver scheme announced last week between Thailand and China. However, questions arise about the ongoing Chinese submarine contract. At the same time, trade figures in 2023 showed Thailand running a massive trade deficit with Beijing.

It has also emerged that the visa waiver plan came to the fore after Mr Srettha met with President Xi Jinping in October last year. Formerly, Thailand sought to cancel a S26T Yuan class submarine order for ฿13.5 billion and order instead, a frigate. It is not clear if the two matters are linked.

Officially, in Bangkok at least, it would appear not. Undoubtedly, Thailand sees the move as a boost for its foreign tourism sector. 

However, Thailand has a massive trade deficit with China. For the first 11 months of 2023, figures released show that the country imported $29.7 billion more than it exported to the Chinese mainland. To bridge the gap, Thailand would need to attract over 27 million Chinese tourists in 2024 compared to 3.5 million last year.

Last week’s announcement was big news in Bangkok. At the same time, it sparked genuine questions among Thais on their lack of ability to travel the globe

The announcement last week of a two-way visa waiver between China and Thailand caused excitement in the kingdom. Additionally, it was an international news story suggesting deeper Chinese-Thai relations. At the same time, it sparked questions in Thailand about the ability of the country’s citizens to travel more freely.

On Thursday, a Bloomberg report cited a Henley and Partners passport index which placed Thailand’s passport in 63rd place. 

Essentially, Thai citizens may only travel to 82 countries without proper permission or a formal visa. In contrast, European countries as well as Japan and Singapore, can access nearly every nation in the world with their passports. They command visa free entry to over 192 countries.

In the meantime, the permanent visa waiver between China and Thailand is seen as a significant move in reshaping diplomatic ties. Undoubtedly, it looks set to turbocharge the tourism industry in 2024.

Permanent visa waiver scheme seen as historic. Date set for March 1st 2024 but the proposal was first put to Beijing a decade ago by Yingluck Shinawatra

Thailand’s Prime Minister, Srettha Thavisin, announced that Foreign Minister Parnpree Bahiddha-Nu-Kara will travel to China in early February to finalise the deal. The permanent visa exemption agreement is seen in Bangkok as a historic move. 

In brief, it is set to take effect on March 1, 2024. Additionally, the deal has far-reaching implications for bilateral relations.

The decision to grant Chinese citizens permanent visa-free entry into Thailand came after extensive negotiations between the two countries. 

Thailand, China forge closer ties with permanent visa-free access between both countries on March 1st 2024

At length, Prime Minister Srettha, last week, highlighted Thailand’s long-standing commitment to the idea. He pointed out it had its genesis during the tenure of former Prime Minister Yingluck Shinawatra.

Mr Srettha thought this significant, explaining: ‘It demonstrates that the Pheu Thai Party has not halted where we left off. And it’s a good thing; we’ll keep doing it. I am confident that it will be an important tool in driving the two countries’ relationship, including supporting tourism.’

Ongoing efforts to strengthen Thai Chinese ties. Thailand’s foreign tourism sector yet to recover from the pandemic shutdown. Income only 60% of 2019 

Similarly, the negotiations, ongoing since the days of the Pheu Thai government overthrown in 2014, underscore the persistent efforts to strengthen diplomatic ties between Thailand and China. Explicitly, this permanent visa exemption agreement is seen as a commitment by both nations to fostering closer relations.

Obviously, the new exemption policy firstly benefits Thailand’s tourism industry.

Especially, as it has not recovered from the COVID-19 shutdown.

Foreign tourism revenue in 2023 was only 60% of the level seen in 2019. While Chinese visitors were granted visa-free entry last September, this privilege was set to expire on February 29 2024.

At the same time, the visa fee regime was less successful than anticipated with China sending 3.5 million tourists last year.

China has historically been the top market for tourists to Thailand, contributing substantially to the country’s economy. Last year, it took second place to Malaysia.

In 2019, nearly 11 million Chinese visitors accounted for 27.6% of all arrivals. The same year foreign tourists injected an estimated 1.95 trillion ($56 billion) into Thailand’s economy.

Thai Airports preparing for up to 11 million Chinese tourists. However, estimates of actual arrivals range from 6 to 8 million in 2024

In 2023, Thailand saw 28 million foreign tourist arrivals. 3.5 million came from China. As a major driver of the tourism sector, the agreement to extend visa-free entry aims to rebuild the industry.

This week, the Airports of Thailand (AOT) announced it was preparing to welcome 11.1 million Chinese arrivals in 2024. This would mark a recovery since the pandemic shutdown

Mr Sistiwat Chivarattanaporn, President of the Thai Tourism Association (ATTA), was more cautious. 

He anticipated a significant economic impact as a result of the visa exemption agreement.

At the same time, he only predicted 6-7 million Chinese tourists would visit Thailand throughout 2024. Evidently, the exact numbers will be clearer after the upcoming Chinese New Year.

In the meantime, the announcement has sparked optimism within the tourism and airline industry. The hope is that the visa exemptions will not only benefit inbound tourism but also encourage more Thais to visit China.

The removal of visa concerns is expected to ease travel and foster greater people-to-people exchanges.

Beijing Foreign Ministry spokesman welcomed the move by Thailand. Simultaneously, he said both sides were involved in close discussions on the matter

In Beijing, Foreign Ministry spokesperson Wang Wenbin welcomed the Thai move. He highlighted that it was in the fundamental interest of both countries.

He stated: ‘The competent authorities of both sides are currently in close communication on the specific matter, and we look forward to the relevant arrangements coming into effect as soon as possible.’

Significantly, he did not confirm the March 1st 2024 date announced by authorities in Bangkok last week.

Thapanee Kiatphaibool, Governor of the Tourism Authority of Thailand (TAT), emphasised the strategic benefits of the visa exemption. She sees it as a catalyst for increased flights between the two countries, leading to reduced airfares.

This, in turn, is anticipated to encourage more travel, with tourists exploring new destinations, particularly in China’s second-tier cities.

Thai tourism and transport agencies are already capitalising on the visa waiver plan announced between the two countries last week. 8 million expected

Furthermore, TAT has signed a Letter of Intent (LOI) on tourism cooperation with eight leading Chinese companies.

It is working with Chinese airlines to restore confidence in Thai tourism. Initiatives include partnering with Chinese streaming platform iQIYI for movies and serials filmed in Thailand aiming to attract Chinese tourists.

Keerati Kitmanawat, President of Airports of Thailand Public Company Limited (AOT), says preparations are underway at airports to handle the expected influx of Chinese tourists. 

AOT estimates that over 8 million Chinese tourists could enter Thailand during the visa-free period in 2024, marking a 75% recovery from 2019.

AOT is in talks with the Tourism Authority of Thailand (TAT) to launch campaigns attracting tourists and airlines.

Increased flight connectivity is the target as Airports of Thailand (AOT) offers discounts to world airlines opening up new routes to and from Thailand

In addition, there is a performance-based incentive scheme at its airports designed to attract airlines.

The coordinated efforts aim to ensure a seamless travel experience for both Thai and Chinese travellers.

Minister of Foreign Affairs to negotiate with China in February on a scheme raised during last October’s meeting with President Xi in Beijing

The negotiations leading to the permanent visa exemption have showcased economic diplomacy at play.

The negotiations involve high-level officials from both nations. Deputy Prime Minister and Minister of Foreign Affairs Parnpree Bahiddha-Nukara is taking a lead role.

At length, talks on the visa-free deal began during PM Srettha Thavisin’s official visit to China in October 2023.

Subsequent talks with Chinese leader Xi Jinping and Mr Srettha underscored the importance of a visa-free arrangement.

Consequently, this led to the formation of a working group to finalise the details.

Political sceptics also note that those talks also took place amid tense exchanges on another issue.

This is Thailand’s request to scrap its Chinese S26T Yuan class submarine order for ฿13.5 billion. 

Instead, the Thai government, with cabinet approval, sought to order a frigate instead.

The government offered to purchase an above-water naval vessel for ฿17 billion. Of course, this was conditional on the ฿10 billion already paid being credited to the new purchase.

Difficulties in the contract between Thailand and China

The completion of the submarine faced difficulties when the Chinese Shanghai-based contractor could not supply the German-made MTU-396 engine.

Instead, it proposed a Chinese-made substitute. Previously, this was considered a potential contract breach by the government

In Beijing, there appeared to be a reluctance by President Xi Jinping to accept the Thai proposal. PM Srettha left China with the promise of a response in due course. 

Afterwards, the Royal Thai Navy came forward suggesting the original contract may not have been broken by the Chinese contractor. 

Naval chiefs spoke of unreleased information. They suggested the certified Chinese engine was the contractual equivalent of the German product.

Naval Commander-in-chief now says that the Chinese-made CHD-620 engine built under licence from Germany fulfils the terms of the 2017 contract

In any event, the submarine contract legally expired at the end of 2023.

This week, the Office of the Attorney-General (OAG) informed the navy that any extension or amendment to the contract was a matter for the cabinet.

In response, a tight-lipped Minister of Defence Sutin Klangsaeng told reporters that the cabinet’s decision on the matter was final.

That decision was to seek a frigate instead of a submarine.

Submarine issue may turn into a legal tussle between China and Thailand. Although both are anxious to forge closer ties and create economic opportunity

At length, this issue may see a legal tussle between China and Thailand.

While the contract was between the Royal Thai Navy and the China Shipbuilding and Offshore International Co (CSOC) of Shanghai, it is also a government-to-government one.

Eventually, this was confirmed this week by the Office of the Attorney-General (OAG).

Subsequently, ministers including the Minister of Defence Mr Sutin and the PM, accepted the prospect of a legal dispute.

At the same time, an economic downturn in China and Thailand’s eagerness to attract Chinese tourists are key factors. They make negotiations for the visa waiver deal urgent.

The fundamental interest of both nations remains the driving force. In brief, the proposed permanent visa exemption is seen as a mutually beneficial arrangement. However, there is some belief that China has the whip hand in the talks.

Signals that the planned permanent visa waiver is a winner for Thailand with surges in online activity in China from potential travellers and tourists

Previously, the announcement of the permanent visa-free measure had an immediate impact according to Chinese travel service provider Ctrip Group.

Within one hour, searches for the word ‘Thailand’ on the Ctrip platform increased by more than 90%.

Searches for flights on the Shanghai-Bangkok and Beijing-Bangkok routes surged by over 40%. Travel bookings to Thailand between January 2, 2024, and Chinese New Year increased by more than 1000%.

The rapid response from Ctrip Group signifies a heightened interest among Chinese travellers in visiting Thailand. 

The visa-free measure is expected to stimulate the travel industry, with increased bookings and flights.

Significantly, the mutual agreement between Thai and Chinese authorities is being viewed by a nationalistic Chinese audience as a sign of closer ties between the two countries.

Certainly, the reciprocal nature of the permanent visa exemption is expected to strengthen Thai-Chinese relations.

On the other hand, a contract dispute over the proposed Chinese submarine would have the opposite effect.

Chai Wacharonke, the Thai government spokesperson, was quick to highlight the news of the online interest in China about Thailand. He stated: ‘After news reports about the permanent visa-free measure for Chinese tourists, in just 1 hour, the number of searches for the word Thailand on the platform of Ctrip Group, a travel service provider, increased by more than 90%.’

Downside to closer ties between China and Thailand. It is not just the criminality threat but also that Thailand is the net loser in trade between the two 

However, there is also, significantly, a negative side to closer Thai Chinese ties. 

Firstly, the increased threat from Chinese criminal elements who have infiltrated Thailand over the previous decades. Moreover, this is a trend that accelerated during the pandemic. 

Concern about Chinese influence in the kingdom persists after disturbing revelations in 2023 linked to mafia groups and Beijing’s aggressive posture
New visa-free regime plan for Chinese tourists will see more criminal elements entering Thailand

At the same time, there are, evidently, disturbing economic ties between the two countries’ economies. Especially so, given China’s growing problems. 

This includes a dearth of inward investment and capital flight from its shores. Significantly, Thailand’s economy began to suffer headwinds at the onset of the US trade war with China in 2017.

This trend was particularly pronounced last year as Thailand’s exports lag mirrored the falloff in China. Similarly, when the Chinese stock markets lost value. 

For instance, the Shanghai SE B Share Index, fell by 17.87% last year. Simultaneously in 2023, the Stock Exchange of Thailand (SET) in Bangkok dropped 15.15%.

In contrast, the stock market in Taiwan rose by 16%, South Korea by 12.9% while India’s bourse surged by a record 16.7%.

Actually, while China is Thailand’s largest trading partner, it is not its biggest export market. That remains the United States by a wide margin.

Thailand’s stock market fell last year as did China’s while other Asian bourses showed corresponding gains. A disturbing pattern given China’s problems

However, China is Thailand’s biggest trading partner. Figures just released under the ASEAN China Free Trade Agreement show that from January to October 2023, Thailand’s total trade with China was $87.62 billion, down by 1%.

Thailand’s exports to China were $28.92 billion but it imported a whopping $58.7 billion leaving a trade deficit with its Communist neighbour of $29.7 billion.

To balance this deficit out in terms of the kingdom’s current account would take approximately 27.3 million Chinese tourists spending an average of ฿43,000.

Thailand exported $47.19 billion in goods and services to the United States in 2022. For the first 11 months of 2023, this was $44.9 billion, up by 3.02%.

In contrast, Thailand has a trade surplus with the United States which came in at $31.39 billion in 2022.

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