Asian Political Science Review (e-ISSN: 2730-3624) [13]

Volume 5 Number 1 (January - June 2021)

The Impact of the US-China Rivalry War

on Thailand’s National Economic Security Policies
Polwasit Lhakard
College of Social Science, National Chengchi University, Taiwan
E-mail: Polwasitlhakard@gmail.com

Article History
Received: 20 October 2021 Revised: 23 November 2021 Published: 23 November 2021

Abstract
According to the trade war between the United States and China, it has given an important
lesson to Thailand’s economy and society. The United States has been focusing on protecting
the industrial sector in its own country, since residence Trump launched campaign “America
First” policy. In addition, China has adopted the Made in China 2025 policy for economic
development, especially in high-tech industries that have been extremely expanded and have
great influence on world markets. So, the question in this research is how will Thailand frame
its economic security policy. The method of collecting qualitative data by analyzing documents
and collecting data to present economic policy recommendations for Thailand needs to be able
to adjust itself and create effective and efficient by formulate new foreign policies for ensuring
its national economic security stability. The aim of this article is to examine and propose
present policy recommendations to formulate improve economic security policies which are
appropriate for Thailand to adapt and be ready to handle the spiraling effects of the Sino-
American trade war for the two great powers in terms of economy as well as to point out the
frameworks of policy formulation for future development of the country.
Keywords: Policy, Economic, Security, Trade war

Introduction
The China-United States trade war started when the U.S. accused China of unfair trade and
investment practices and this war is likely to get more intense all the time. The US leader
continues to put up tariff walls in hopes of pulling investment back to the US, technically called
reshoring (Carvalho et al., 2019) which aims to create jobs to stimulate the economy. Although
Joe Biden, the new president of the United States will have a more conciliatory policy than the
Trump administration, in the long run, the United States is desperate to reduce China's growing
influence in the economy and security across the IndoPacific region. Thus, the trade war based
on nationalism and protectionism will probably continue to go on but in a different way from
the Trump era. Meanwhile, on the Chinese side, in order to achieve the goals of the “China
Dream” in 2021 and in 2049 to make China a wealthy, modern country according to socialism
with Chinese characteristics and to have complete sovereignty over its territory, including
Hong Kong, Macao, Taiwan and the South China Sea, it seems to be something that makes
China itself is unavoidably inevitable to excel exert its economic influence and maintain its
national interest’s security in the Indo-Pacific region. This requires wider economic battle with
the former of superpower, like the United States, leading it could lead to various serious impact
on national economic security of whole

Literature review
The trade war between the two countries has occurred through various types of wars that affect
the whole world, including a global stock market crash. In particular, the US stock market
Citation Information: Lhakard, P. (2021). The Impact of the US-China Rivalry War on
Thailand’s National Economic Security policies. Asian Political Science Review, 4(1), 13-21.
https://doi.org/10.14456/apsr.2021.2

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dropped the most this year. Oil prices have also fallen on concerns that there will be a global
economic downturn. GDP growth rates of the countries around the world tend to decline.
The Rivalry of Two Superpowers
Regarding the trade war to currency war between the two nations, China responded to Trump's
tariff hikes with the lowest yuan devaluation in 10 years. Previously, Trump administration
already warned China that if Yuan was allowed to fall below 7 per US$1, the US Treasury
would announce China a currency manipulator. Also, according to the U.S. laws, the countries
that are declared currency manipulation will be penalized by various economic measures. In
the statement from the US Treasury, it designated that the government of China intervened in
the yuan’s devaluation, and so the United States declared China as a currency manipulator. The
People's Bank of China has responded strongly, saying that the U.S. action will break an
international covenant and it will have a large impact on the global economy and finance. After
China was being identified as a currency manipulator, the Chinese government let the yuan
continue to weaken. This is clearly signaling that China is ready to continue its collision with
the United States in a trade war. A tariff war has taken place after the U.S. government under
Trump administration announced to increase tariffs of 25% on $250 billion worth of Chinese
goods, and then China responded to that by raising tariffs on US goods by US$ 250 billion as
well. After that there was a truce in the U.S.-China trade war that allowed negotiation, forcing
China to accept the U.S. requests. However, the negotiation was eventually failed. Then, there
was a G20 meeting in Osaka, Japan and also another truce was declared for negotiation to put
pressure on China again.
The U.S. announced a ban on Huawei phones and a ban on US companies from exporting parts
and components to Huawei. The key part was to ban Qualcomm from selling chips to Huawei,
and Google also announced that it would not sell its Android operating system to Huawei.
Regarding this, the U.S. wanted to stop China’s rise to become the world's technology leader.
Even though Huawei's overseas sales have fallen due to Trump's sanctions, Chinese market
sales have increased significantly. This led the overall sales of Huawei in the first quarter of
the year increased by 1% because the measures carried out by the U.S. to destroy Huawei
become an issue that the Chinese government took up to awaken Chinese patriotism to make
Chinese people buy more Chinese products and also influence Chinese people to be committed
to create more innovations and new technologies. Thus, Trump's measures to destroy Huawei
have allowed China to develop technology more quickly and stir up a huge increase the Chinese
people's sense of patriotism (Reuters, 2019).

Methodology
In this article, the method of collecting secondary data and analyze data through online books
and websites according to the following;
Content scope
The study identifies the scope of the conceptual content on trade and competition policies of
the two superpowers affecting economic stability policy and formulate policies in Thai
economic policy.
Data scope
Document information, including research documents related to the planning and design of
Thailand's management policy towards trade competition through Internet website, Electronic
books, Newspaper, Journal articles, Research articles.
Data analysis
In this study, the researcher used the content analysis method and thematic analysis to
familiarize with the initialization information. By searching for substantial and
re-examination by identifying and naming themes in order to formulate a policy proposal.

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Strengthening
US-China
Impact on Economic security economic policies to
Strategic
Thailand policy formulation cope with the US-
rivalry
China Rivalry War
Figure 1 Research Framework on The Impact of the US-China Rivalry War on Thailand’s
National Economic Security policies

Results
Even though the trade war between the U.S. and China at the end of 2018 was a political
conflict, this war also affected the economy of Thailand both positively and negatively as
Thailand is part of the supply chain of both nations. Therefore, Thailand must prepare itself
and develop its competitiveness in global markets. Thailand has long good political and
economic relationships with the two great powers, especially with the United States during the
Cold War as an Allied nation in the liberal camp. Nevertheless, after the coup by the National
Council for Peace and Order (NCPO), the relationship between the two countries did not go
well. However, when Donald Trump was elected as the president of the United States, after
Mr. Barack Obama, Thai-U.S. relationship tends to get better because Donald Trump is more
interested in benefits than political values. The United States is Thailand's second-largest
trading partner in terms of exports. With the information from the Department of International
Trade Negotiations (Ministry of Commerce, 2021) stated that during January-July 2018, Thai-
U.S. trade was valued at US $ 15,865 million. Most of Thailand exports to the U.S. are
computers, components/parts, rubber products, gems and jewelry, canned and processed
seafood, canned and processed fruits, apparel, etc.
Thailand has a good relationship with China, both politically and economically. One factor
comes from the geographic location with a short distance of transportation as well as a good
relationship between Thai people and Thai-Chinese community in the country. As a result, it
creates a favorable environment for making investment by China’s mainland entrepreneurs and
this leads to a good economic relationship between both countries. As to the political
relationship between the two nations, after the NCPO took charge of the country since 2014,
their relationship has become closer (Bamrungsuk, 2018). This can be observed from the
achievement of the agreement to build Bangkok-Nakhon Ratchasima high-speed rail in 2017.
However, although Thailand has a good relationship in both politics and trading with the two
great powers, the trade war between the U.S. and China quite affects the economy of Thailand,
both positively and negatively. The effects will be analyzed as follows:
Positive Effects
The positive side of a trade war that Thailand will receive is an increasing number of Chinese
manufacturers are moving their production bases from the United States to Thailand due to the
geography of Thailand which is in the center of the southeast region. The country also has
territory connected to an ocean, making it possible to distribute products to other markets as
well as to create jobs for workers. In terms of exports, Thailand can export more agricultural
products such as tropical fruits, nuts and grains as these products are in the product list that
Chinese authorities use to retaliate against the U.S. Therefore, China has to import agricultural
products from other markets to replace the U.S. imports and Thailand has the potential to
produce such products. On the other hand, in the United States, having announced tariff hikes
on imports from China by the U.S. authorities, the United States have to find goods imported
from other markets to replace the ones from China as well. Therefore, it is an opportunity for
Thailand to export electrical equipment and machinery and automotive parts; which are the
Chinese products excluded from the U.S. authorities. In the meantime, the goods imported from
the U.S. will be cheaper. This is because the U.S. blocks those imports from China and it
becomes more dependent on domestic raw materials, and so this results in lower production

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costs. Regarding American First policy and Trump’s protectionism policy, this has also
resulted in allied nations in Asia, like Japan, being affected as well. Consequently, Japan has
to invest more in Southeast Asia (Katz, 2018). This can be seen from the incident that Japan
and China have an agreement in smart city development in Chonburi which is in line with the
Thailand 4.0 policy. This policy emphasizes on the economic development of high-end
industries. Thus, the trade war between the great powers has given Thailand an opportunity to
develop economic competencies.
Negative Effects
However, this trade war has negative effects on the economy of Thailand as well. Due to the
U.S. government policy of tariff hikes on imports from China, this causes China have less
purchasing power and also affects Thailand’s exports to China. As Thailand is part of China's
manufacturing supply chain (Department of International Trade, 2020), when China has less
purchasing power, this may result in less Thailand’s exports of agricultural products and
electronic circuit boards because the U.S. blocks China’s technological products that rely on
electronic components from Thailand. Moreover, Thailand is also at risk of the two major
powers’ dumping due to the need to vent their products to foreign countries. Meanwhile,
Thailand is still facing the political instability because of having students’ protest group
demanding the Prime Minister to resign and constitutional amendments, including reform of
the monarchy. This leads to some foreigners delay their investment in Thailand.
As to the above-mentioned effects, even though this trade war is the political and economic
conflicts between the great powers: China and the U.S., it also affects ASEAN and Thailand
because ASEAN countries have economic relationship with both world powers. Obviously, the
countries like Malaysia, Vietnam, Singapore and Indonesia that interact in trade more with the
superpowers will be affected quite a lot. As for the countries that have quite less commercial
relationship with China or the United States, or exporting products outside taxable goods like
Brunei, Philippines, Laos, Myanmar and Cambodia, these countries will be affected relatively
little. As for Thailand, since the country has relatively large trade volumes with China and the
United States, it is also highly affected, but not really enough to cause economic stagnation.
On the other hand, Thailand is likely to benefit from this trade war and it also provides an
opportunity for Thailand to develop diversity competencies to meet future challenges.

Discussion
Regarding the geopolitical economies of ASEAN countries relate to the geopolitical economies
of Thailand, China’s One Belt One Road policy will have a bilateral impact on Thailand-China
relations. With various projects invested by China, it is not only drive economic growth in the
region, but also makes the economy of Thailand-China more connected and more mutually
beneficial. Since 2019 China has overtaken Japan position as the key investor nation in
Thailand for the year 2019 (Khan, 2019), China has the highest investment in Thailand for the
first time, usually it is from Japanese investors. The highspeed train projects investment is
partly from China. high-speed train projects. This opens up the opportunities for to allow China
to influence directions of the country's economic development inevitably, China will play key
role as a provider of since the investment funds, both in the forms of Official Development
Assistance (ODA) and Foreign Direct Investment (FDI) and Silk Road Funds always come
with favorable "conditions" for China. The bilateral negotiation with Thailand and ASEAN
member countries, these all a tactics are used by China in their foreign policy implementation
(Jinping, 2018), it may cause Thailand to lose its bargaining power, as well as economic lose,
as well as benefits and possible political conflicts. Thailand must consider these matters
carefully. This can be seen from a territorial dispute in the South China Sea, where China
continues to claim ownership of the islands, and has threaten to including the use of military
force to and violence against ASEAN countries that have a stake in the dispute, such as

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Vietnam, Brunei, the Philippines and Malaysia. Excessive economic dependence has made
some countries more inclined towards China than ASEAN. In addition, economic conflicts
among each other caused by the One Belt One Road policy in the case of developing port and
train routes in Malaysia may cause Singapore to lose some benefits. Obviously, the economic
benefits between ASEAN and China are highly interrelated and could cause ASEAN to lose
its bargaining power and their original position of the organization. Thailand, as a co-founder
of ASEAN, therefore, should strengthen cooperation and foreign policy among each other in
order to make a bargain with great power large countries.
On the side of the United States, after the country has been leading by got a new President Joe
Biden, whose policy is not as fierce as Trump and has a much more conciliatory approach.
However, in terms of economy, based on an analysis of understanding Biden's policy towards
Thailand, Biden has a standpoint for free trade with a universal code of conduct in his trade
policy. Thus, there is a chance that Biden will bring the United States back to the World Trade
Organization (WTO) rules, which, if this happens, the conflict with China may be easier to
resolve rather than confront each other. However, it does not mean that Biden will not wage a
trade war with China. Biden was a supporter of the Pacific Economic Partnership (TPP) at the
time. He suggested that if the United States withdraw from the TPP, it will give China an
advantage to be able to guide the direction of a global trade (Fels, 2018). It will be also difficult
to negotiate and resolve the issues of intellectual property theft and dumping of China's
agricultural product. Hence, as to the new policy of the new US leader, the United States choose
to be the author of the World Trade Covenant rather 10 than undertake a trade war which causes
the problems of legitimacy and puts other countries in difficulties. The trade war with China
has had negative impacts on China as well as the United States itself, but it is good for Thailand
and Southeast Asia as a whole. This situation has forced China to seek "nominees" in product
distribution to avoid the U.S. trade war. Meanwhile, other countries also relocated from China
to ASEAN. For example, Japan will relocate its manufacturing bases previously in China to
Thailand and Vietnam. Looking at the economic terms, if the trade war is over, it will have a
negative effect on Thailand. Nevertheless, if Biden does not stop confronting with China, it
may also benefit Thailand that might turn out to be a new alternative of in terms of its
production base. According to the U.S. policy, it may reduce the degree from "Trade war" to
be "trade confrontation", which is in line with Biden's interview at a talk with the Council on
Foreign Relations (CFR) in 2018 (CFR, 2018 citation source is not found from reference list).
That is to decline less America's intervention emergence in the Middle East and changing
direction or rebalance to Asia. The U.S. may want Asian friends to help resisting Chinese
influence which is not a commercial influence, but a political one. Allowing the U.S. to join
the TPP again in order to use it as a leverage against China, and if the U.S. rejoins the TPP
(which is now CPTPP), Thailand will be increasingly forced pushed into corner the deal, where
Thailand was already under hard a lot of pressure from by Japan. If consider best on Biden's
words, “You have to organize the world to deal with China to stop the ongoing corruption.”,
Thailand has to consider carefully, Also, based on Biden's words, “You have to organize the
world to deal with China to stop the ongoing corruption.”, it means that Thailand will face with
have difficulty in playing gambit to deal with both sides of great power and Thailand must
choose either side anyway. Biden himself pointed out that he wanted to form "friendly" allies
of the United States to against China. In Biden’s responding word to a CFR interviewed, he
said, “Going forward, my goal is to unite the U.S. allies in Asia and Europe to set regulations
for the 21st century and work with the United States to tackle China and trade and technology
violations” (CFR, 2018 citation source is not found in reference list). The U.S. has seen that
this way is more effective than President Trump's policy so-called America First policy, which
in practice, it is America Alone (Foot & King, 2019). This alienates America's allies and
destroys the power of mutual benefits. On the other hand, when Democrats has taken the lead

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the US., turned its policy focusing will be on human rights, women and children, and this will
be more worry relevant to Thailand. If there is any action against human rights while Thai
politics are still insecure and as mounting of protestors are fighting for democracy within its
own sovereign state, the United States will resume its role as a world police and put pressure
on the government or any action that is against democracy. Even though the return to the role
of the world police may not be the same as in the past, like in the time of President Josh W.
Bush, or Barack Obama’s government, the return is expected more influence than Trump's era.
Moreover, the problems of child labor, acts of violence against women right abusing and
manufacturing products that effect on world climate environment destroy the world will affect
Thailand in terms of if Generalized System of Preferences (GSP) might be being revoked. In
addition to this, the U.S. will return to be a NATO member and join the Paris Agreement on
Global Warming
Policy Suggestions
Based on the positive and negative impacts analyzed above, I think Thailand should accelerate
advancing its economic competitiveness such as improving economic infrastructure to
facilitate entrepreneurs, business searching for alternative markets or new markets to invest,
developing competence to become a source of research and development. Thailand is a country
with potential and role in this ASEAN region, the country should play a leading role in ASEAN
to achieve the Regional Economic Partnership Agreement. If this is achieved, Thailand and
ASEAN, as parts of the world's large economic cooperation, will bring stability and wealth to
the region. In this article, I have analyzed the policy frameworks that are useful in enhancing
economic security as follows:
Policies for Promoting Competitiveness
To drive Thailand to become a developed country and to support investment from the China’s
One Belt One Road policy and influence expansion of the U.S. investment that is expected to
return to this region to counterbalance the power of China, Thailand has to adjust itself to
improve economic stability. The way to do so is to use free trade policies and to open the
country to accommodate investors. This leads Thailand to focus on developing Eastern Special
Economic Zone (EEC) as a regional industrial development center, especially focusing on the
development of high-end industries. Moreover, there are more high-tech industries in the
eastern economic zone that Thailand has to drive forward such as digital industries, automation
and robotics industries, etc. These are the industries of the future that many countries are
interested in. Thailand needs to restructure the economy for future stability. Thailand’s
industries and services must be ready to tackle and create opportunities from the challenges
posed by the Fourth Industrial Revolution (Jones & Pimdee, 2017) caused by shaping of digital
technology, biotechnology and physical technology together. This has caused rapid, broad and
profound changes in the whole system like never before. Hence, Thailand needs to change the
industrial and service structure by creating future industries and services that drives Thailand
into a developed country through future innovation and technology (Porter, 2004). The country
should increase people with skills and knowledge according to market needs, build the right
industrial ecosystem and service ecosystem and support sustainable industrial and service
development. These have been analyzed as follows:
Bio-Industry: Thailand must create benefits from biodiversity in order to extend the Thai
agricultural sector and move towards eco-friendly, biodiversity-based industries including
biomass energy by increasing the proportion of high-value-added bio-industries such as bio-
chemicals, biomaterials, dietary supplements, cosmeceuticals, vaccines, biopharmaceuticals
and herbal extracts. In addition, Thailand should increase its production and promote uses of
bioplastics, transform agricultural and industrial waste to be valuable chemicals and bioenergy,
and make the most use of biomass products to generate electricity cost-effectively to reduce
global warming and generate more income for farmers. Besides, the country should focus on

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research and development and bring research results for more commercial use as well as place
importance on an open innovation system to develop biological industries faster. This is in line
with the United States' green energy support (Kwan, 2020), helping alternative energy
production industries in Thailand to attain benefit as well. Although Joe Biden's preliminary
policy would contribute to the economy and overall world trade to be more liberal, this may
affect the major export products of Thailand in the future, in particular, the policies that focus
on a green economy. For example, the support of electric cars may affect the export of Thai
auto parts, which are mainly produced for internal combustion cars. As a result, Thailand has
to quickly adapt itself to strengthen economic and energy stability since the U.S. aims to reduce
energy usage from fossils in order to achieve a net zero emission target by 2050 (Banchanont,
2019).
Comprehensive medical industry and services: Using Thailand’s expertise in medical
services to create related industries to support demands for medical services which will increase
more both from aging society and increasing medical demand domestically and internationally,
this will lead Thailand to become a center of industrial and medical services. This can be
achieved by improving medical industries and medical services, covering production of
medical instrument and device, artificial organs, medical supplies and medical equipment,
pharmaceutics, and biopharmaceuticals. In addition, related medical services should be
continually provided and also the development and use of new medical technologies should be
promoted to increase the quality of life for Thai people. Bringing digital technologies to
medical services will reduce the cost of medical treatment. Besides, the quality of medical
services should be elevated up to international level, and the stability of Thai public health
system should be also created. Moreover, in order to be a health promotion and healthcare
center and to treat patients both physically and mentally, healthcare industry and health tourism
should be linked together. The government has a policy guideline to open the country to treat
COVID patients. As a result of the coronavirus outbreak, Thailand has turned to promote
vaccine production and to cooperate with foreign countries in clinical trials.
Digital, information and artificial intelligence industries and services: Digital technology,
information and artificial intelligence should be used to increase the capacity and
competitiveness of industries and services which cover automation and robotics, smart
electronics and the Internet of things to enhance the efficiency of the Thai economy as a whole.
A platform for the future economy should be created and quality of life for people should be
increased by building digital, information and artificial intelligence industries and services to
drive Thailand and to promote investment among Thai public sector, private sector and the
world's leading companies in these industries. The aim is to make Thailand a center of
production and research and development. Raising awareness and educating people should be
carried out. Additionally, digital technology, information, and artificial intelligence should be
applied for production and service sectors in order to increase efficiency. An industry cluster
should be also created to expand Thai businesses in digital, information and artificial
intelligence industries and services, automation and robotics, and smart electronics to cover the
entire global value chain. This is in line with the promotion of such policy today. There is a
company, SIASUN Robot, from China (Prachachat, 2019) needs an area of 1,200 rai in the
Eastern Special Development Zone (EEC) for an investment in the Smart Industrial Park. It
will build Platform Industrial 4.0, which is a fully integrated service for robots and automation
in Thailand. Besides China, there are also Japanese companies that have already given
approval. For example, Nachi Company has set up a factory to produce robot arm parts in
Rayong and Angka Company has set up a factory to produce robot arm parts in Rayong as
well.
Transportation and logistics industries and services: Thailand must use its geographic
location to promote transportation and logistics to become a regional production base for

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exporting to global markets and to be a tourism center in the region. Logistics costs should be
reduced and values from being a geographic center should be increased. Related industries and
services must be also enhanced through promoting a regional logistics center and connection
with global logistics networks. The entire transformation of automotive industry to smart
electric vehicle industry should be driven. Thailand should enhance technologies and improve
industries of energy storage system and promote investment focusing on research and
development and technology transfer. Aviation and aerospace industries should be developed
to support the growth of industries and related services by upgrading aircraft maintenance
services and manufacturing aircraft parts which will eventually expand to spacecraft
components. In addition, technologies for aviation and aerospace should be developed. New
transport modes and related industries and services that are in line with Thailand’s context in
the future should be also promoted and improved. Moreover, personnel with skills and
expertise to meet the needs of automotive industries, aviation and aerospace industries and
logistics services should be enhanced. Facilitation for personnel as well as for regulators should
be established in order to attain international standards and cooperation to ensure international
industry standards should be created. For example, nowadays, Thailand places more emphasis
on aviation and aerospace industries as can be seen that the country has an Aerospace Industrial
Estate Development Plan (2016-2045), which will focus on the development of such
aeronautical industry. China is now also giving priority to the development of aviation
industries as we have seen that China had an experiment with the C919, the first Chinese
commercial aircraft. Another example was a spacecraft Shenzhou-11. Therefore, it is a good
opportunity for Thailand to build cooperation between the two countries (Pakdeenurit et al.,
2017).

Conclusion
The trade war between China and the United States has led to various forms of wars between
the two great powers. Even though the United States has already had a new president, I see that
no matter who comes up, the trade war will persist, just the methods of negotiation with the
two parties may differ. Currently, China's influence in the Asia-Pacific region in both strategic
term and trade is higher than the United States’. China uses soft approach and China acts as a
friend to countries in the Asia-Pacific region, especially ASEAN. Despite the fact that the trade
war continues, the concentration level may be different. Therefore, Thailand, as one of the
countries in the ASEAN region, negatively and positively affected by both countries, needs to
adapt and create appropriate economic policies to strengthen its economy. It is necessary for
Thailand to take the security policies of both countries into consideration in order to design
economic security policies to be in accordance with the policies implemented by the great
powers. Thailand has to create the policies which enable the country to handle risky situations
in the future. These policies include the policies of economic cooperation framework, policies
to enhance competitiveness, policies to strengthen infrastructure security. Such policies are
created in order to obtain bargaining powers and to survive in the midst of the trade war
between the two great powers as no one can see for how long the war will be and what form of
it will be in the future.

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Electronic copy available at: https://ssrn.com/abstract=3969663