Thailand urges exporters to join western China’s 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 should join.

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

The recommendations are sector-specific. Chongqing is presented as a base for industrial business-to-business partnerships, automotive components and raw materials. Chengdu is positioned as a consumer gateway for lifestyle products, functional foods and wellness goods. Xi'an is described 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 per cent in the first half of 2026 to 69.57 trillion yuan, while high-tech manufacturing expanded 13.3 per cent. Output of 3D-printing equipment rose 48.5 per cent, lithium-ion battery production 39.3 per cent and industrial robotics 28.0 per cent.

Chongqing recorded first-half GDP of 1.67 trillion yuan, along with a 63.2 per cent increase in lithium-ion battery manufacturing and a 66.9 per cent surge in automobile and component exports. Its retail sales, at 849.1 billion yuan, led the country.

Chengdu grew 5.0 per cent to 1.28 trillion yuan, with services accounting for nearly 70 per cent of output.

Xi'an was the standout performer. Its imports and exports rose 96.2 per cent 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 engaged 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 September 1 with the US trade representative. She said American officials had assured Thailand that tariffs arising 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 concerns whether trading partners prohibit imports of goods made using forced labour. It provides for a 12.5 per cent tariff for economies without such a prohibition and 10 per cent for those making qualifying commitments.

Thailand's exposure in the first investigation is, by definition, linked to its manufacturing involvement in precisely the sectors the department is now advising exporters to enter more deeply.

Two positions, unreconciled

Neither position is unreasonable on its own.

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

But they are part of the same ministry, and the two pieces of advice 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.

What the region's opinion-makers think

There is another layer to the issue, complicating the straightforward interpretation.

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

It also found that 88.3 per cent of Thai respondents were concerned about growing US influence. This was the highest figure recorded for any country in the survey.

Thailand, in other words, is not simply anxious about Beijing. Its opinion-makers are more uneasy about Washington than those in any other Southeast Asian country, and are nearly as uneasy about Beijing. When asked to choose between the two powers, 55 per cent of Thai respondents chose 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 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 text 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. Whether the agreement introduces additional obligations is the key question for any firm following the department's advice.

Whether trade promotion and trade negotiation 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 by this article. Its absence is itself informative.

Originally published on IBTimes Thailand