By the Blouin News Business staff

Thailand delays China sub purchase — no snub intended

by in Asia-Pacific.

Thai Prime Minister Prayut Chan-O-Cha delivers a speech at an economic forum hosted by the Japan External Trade Organization (JETRO) in Tokyo on July 3, 2015. YOSHIKAZU TSUNO/AFP/Getty Images

Thai P.M. Prayuth Chan-o-cha delivers a speech in Tokyo, Japan on July 3, 2015. YOSHIKAZU TSUNO/AFP/Getty Images

Thailand put on hold its $1.06 billion purchase of three Chinese submarines on Wednesday, but the action seems to be more internally-driven than a geopolitical gesture. Thailand is reassessing the specific cost-effectiveness of the Chinese subs. Beijing’s package reportedly would include military technology transfer and training, which other countries would charge more for.

But the government is questioning the utility of having any submarines — it has gotten along fine for decades without them. Thai officials have previously said that the purchase of submarines makes strategic sense and could help ensure freedom of navigation in the Gulf of Thailand if territorial disputes in the energy-rich South China Sea blow up. But even with a deal, it would be 5-6 years before the subs are built and in service, and Bangkok does not need subs for any foreseeable maritime threat.

Neighboring Vietnam, despite being poorer, already has three Russian-built Kilo-attack submarines, with another three on order. But unlike Thailand, Vietnam has territorial disputes with China in the South China Sea— and both sides have aggressively asserted claims in those resource-rich contested waters.

Bangkok’s decision won’t please Beijing, but Sino-Thai relations are nevertheless quite good. China was the first major power to recognize Thailand’s ruling junta following its May 2014 military coup. Economically, the two countries are very closely linked. Approximately 11% of Thailand’s exports go to China, and from January through May they amounted to $9.55 billion (down 8.2% over the same period last year as China’s growth has slowed). HSBC estimates that every one percentage point increase in China’s industrial production raises Thailand’s export growth by over 2.5%. Furthermore, a China-ASEAN free trade pact went into effect earlier this year, and Thailand is cooperating with China and Myanmar to finance, build, and run a 7GW hydropower-plant project that will provide electricity to Myanmar and Thailand.

And last week, Thailand forcibly repatriated over 100 Uighur people to China, where the persecuted ethnic minority group is likely to face punishment. “Do you want us to keep them for ages until they have children for three generations?” asked Thai Prime Minister Prayuth Chan-o-cha.

It’s not publicly known if there was behind-the-scenes pressure from the U.S. on its longtime ally Thailand to rethink purchasing Chinese subs, which seemed a slap in the face for Washington’s “pivot to Asia” policy. But Thailand may still decide to follow through with the purchase after considering its options more thoroughly.