Thailand urges exporters to join western China supply chains as US probes auto parts and batteries

BANGKOK — Thailand's Department of International Trade Promotion is urging exporters to view western China not simply as a market, but as a supply chain they can join.

In an analysis published this week identifying Chongqing, Chengdu and Xi'an as a "Western Triangle" of commercial opportunity, the department, which operates under the Ministry of Commerce, said Thai businesses should establish a presence in inland China, integrate into regional production networks and use direct rail links to reach markets in Central Asia and Europe.

The recommendations are tailored to specific sectors. Chongqing is presented as a base for industrial business-to-business partnerships, automotive components and raw materials. Chengdu is portrayed as a consumer gateway for lifestyle products, functional foods and wellness goods. Xi'an is positioned as an entry point to high-tech supply chains and cross-border e-commerce.

The numbers behind the pitch

The underlying data is striking in its own right.

China's national GDP grew 4.7 percent in the first half of 2026 to 69.57 trillion yuan, while high-tech manufacturing expanded 13.3 percent. Output of 3D-printing equipment rose 48.5 percent, lithium-ion battery production increased 39.3 percent and industrial robotics grew 28.0 percent.

Chongqing recorded first-half GDP of 1.67 trillion yuan, with lithium-ion battery manufacturing up 63.2 percent and automobile and component exports surging 66.9 percent. Retail sales reached 849.1 billion yuan, the highest among Chinese cities. Chengdu grew 5.0 percent to 1.28 trillion yuan, with services accounting for nearly 70 percent of output.

Xi'an was the standout performer. Its imports and exports rose 96.2 percent to 450.2 billion yuan, the fastest growth among China's 20 largest trading cities. Memory chips and integrated circuits accounted for more than three-quarters of the increase.

The other conversation

Thailand's Ministry of Commerce is also involved in a second set of discussions involving the same industrial categories.

Deputy Prime Minister and Commerce Minister Suphajee Suthumpun said on Friday that Thailand and the United States had agreed on the main terms of a reciprocal trade agreement following talks in Washington on Sept. 1 with the US trade representative. She said US officials had assured Thailand that tariffs resulting from a Section 301 investigation into structural excess production capacity would be "fair and competitive."

The investigation covers vehicles and automotive parts, rubber products and machinery. A second Section 301 case examines whether trading partners prohibit imports of goods made with forced labour. It provides for a 12.5 percent tariff on economies without such a prohibition and 10 percent for those making qualifying commitments.

Thailand's exposure in the first investigation is, by definition, tied to its manufacturing involvement in precisely the sectors into which the department is now encouraging exporters to expand.

Two positions, still unreconciled

Neither position is unreasonable on its own.

Trade promotion agencies exist to identify markets, and western China is clearly growing rapidly. Trade negotiators exist to secure favourable tariff terms, and Thailand's 19 percent reciprocal rate was fixed in a framework published last October. Both sides are doing their jobs.

But they are part of the same ministry, and the two messages point in different directions within weeks of each other. One urges Thai manufacturers to embed themselves in Chinese automotive and battery production. The other is negotiating tariff treatment in an investigation focused on the industrial capacity represented by that production.

Nothing published by the ministry reconciles the two positions, and nobody appears to have asked it to do so.

What the region's opinion-makers think

There is another layer to the issue, making the situation less straightforward.

The ISEAS – Yusof Ishak Institute's State of Southeast Asia 2026 survey, published on April 7, found that 87.5 percent of Thai respondents were concerned about China's growing political and strategic influence. That was among the highest figures in the region, alongside the Philippines and behind Vietnam.

The survey also found that 88.3 percent of Thai respondents were concerned about growing US influence, the highest figure recorded for any country surveyed.

Thailand, in other words, is not simply uneasy about Beijing. Its opinion-makers are more concerned about Washington than respondents anywhere else in Southeast Asia, and nearly as concerned about Beijing. When asked to choose between the two powers, 55 percent of Thai respondents selected China.

⚠️ The survey polled 2,008 opinion-makers and thought leaders — including academics, private-sector representatives, civil society and media figures, government officials and staff of regional organisations — across 11 countries. It was not a survey of general public opinion, and figures circulated as representing the views of "Thais" misrepresent what it measured.

What to watch

Whether the Section 301 excess-capacity ruling names specific sectors. If the published outcome distinguishes between industries, Thai exporters of automotive components will learn whether deeper integration with China carries a tariff cost. If it does not, the department's advice remains unaffected.

Whether the reciprocal trade agreement addresses supply-chain origin. Thailand's customs administration already operates an anti-transshipment regime and has identified 413 suspected cases from more than 43 million declarations since April 2025. The key question for any company following the department's advice is whether the agreement adds further obligations.

Whether trade promotion and trade negotiations are publicly coordinated. Two arms of the same ministry are currently addressing exporters and Washington separately. A single ministerial statement explaining how the two positions fit together would answer the question raised here. Its absence is itself informative.

Originally published on IBTimes Thailand