China and Thailand face economic strains with low growth, weak demand and fractious trade ties, as Trump’s return adds global uncertainty. Both nations struggle with cautious spending, job losses and strained tourism leaving citizens focused on survival.
Despite reports from Beijing on Thursday of 5% growth, there is growing scepticism about the state of the Chinese economy. At the same time, Thailand’s economy is also showing clear signs of strain, despite government data indicating modest growth. Significantly, both countries are experiencing weak purchasing power, low inflation, and deteriorating bank loan books. Additionally, there have been a number of fractious incidents between the two countries since the beginning of the year.
Amid rising discontent in China, particularly among the middle class, unease is growing over the country’s economic growth figures. This comes just days after China reported a 5% growth rate for 2024, a figure many openly question.
Similarly, in Thailand, the Chief Executive Officer of the supermarket chain Big C acknowledged that consumer purchasing power in the kingdom remains weak. Certainly, Thailand is only projecting 2.6% growth this year.
However, the reality on the ground for consumers and ordinary people appears to be the same: money is in short supply and the economy is weak.
Both nations face economic struggles underlined by weak demand, low inflation, and cautious consumer spending
Both nations are dealing with economic struggles, underlined by low inflation rates. In China, a deep property sector crisis has worsened conditions, while in Thailand, cautious spending continues to drag on the economy.
Meanwhile, trade relations between Thailand and China—on the 50th anniversary of their diplomatic ties—are increasingly fractious. Over the past year, Thailand has implemented efforts to halt what it views as exploitative practices by Chinese businesses. Undoubtedly, these have negatively impacted its manufacturing sector. In short, small Thai firms are going to the wall and people are losing jobs.
At the same time, VAT exemptions on Chinese imports were cancelled. In addition, inspectors, accompanied by police, raided outlets selling Chinese-made products.
The Federation of Thai Industries (FTI) has also warned of risks posed by highly scaled Chinese exporters. Furthermore, illegal Chinese grey capital is reportedly flooding Thailand. By using nominee company shareholding structures, Chinese investors are circumventing the kingdom’s restrictions on foreign business ownership.
As a result, Thailand has responded with a crackdown, while China has also been flexing its muscles. For example, in early January, Chinese authorities blocked ฿400 million worth of Thai syrup as it arrived at a Chinese port. This action was reportedly in retaliation for complaints about Thai factories.
Thailand-China economic relations disrupted as both nations respond to tensions and retaliatory actions
Last week, the price of Thailand’s prized durian fruit collapsed after Chinese authorities banned a colouring agent used to make the fruit appear healthier. This agent was deemed carcinogenic.
The bottom line is that the economic relationship and model that previously existed between the two countries is being disrupted. In brief, Thailand is increasingly discovering that China is a competitor rather than a benign partner.
China’s National Bureau of Statistics announced a 5% GDP growth for 2024, but this figure has raised eyebrows. Many Chinese citizens and analysts argue that the real economy feels stagnant or even in recession.
“I don’t know where this growth is supposed to be coming from,” said Hao, a printing business owner in Beijing. “For me, 2024 has been the worst year in my 20-plus years of running this business.”
Economists and senior officials have long questioned the accuracy of China’s GDP figures. Official data often matches government targets, but this consistency has led many to suspect exaggeration.
China’s reported 5% GDP growth raises scepticism amid property crisis and job losses among middle-class
An economist at a Beijing university suggested the distortion in GDP data could be as high as two percentage points. This discrepancy is highlighted by consumer price inflation remaining below 1% and producer price growth staying negative for over two years.
The economist also noted a striking shift: middle-class Chinese citizens are losing jobs for the first time in decades. “In 45 years, this never happened,” he remarked.
China’s property sector collapse continues to ripple through the economy. Local government investment and consumption, critical drivers of growth, have faltered. A credit officer in Anhui province revealed that the value of his loan portfolio had dropped by 20% this year.
“More people are repaying loans early,” he said. “It’s more cost-effective to reduce debt than to invest.” This trend reflects a broader reluctance to spend, affecting households and businesses alike.
State-owned enterprises are also under strain. A worker at a state-owned firm in Fujian province reported that salaries had been cut by over 20% compared to three years ago.
Consumers and businesses in China struggle as debt reduction becomes a priority over spending
For many Chinese citizens, official growth figures feel disconnected from reality. A Didi ride-hailing driver in Beijing expressed disbelief, saying, “They say 5% growth, but for ordinary people, it’s just about surviving.”
Discussing negative economic trends has become increasingly sensitive in China. Gao Shanwen, chief economist at SDIC Securities, faced backlash after suggesting China’s economy had only grown 2% on average in recent years.
Analysts at the US think tank Rhodium Group estimate China’s growth in 2024 was closer to 2.4-2.8%. These estimates highlight the struggles stemming from the property downturn and reduced consumer spending.
In Thailand, similar economic woes persist. Big C Supercenter CEO Aswin Techajareonwikul admitted that purchasing power remains sluggish, with consumers cautious about spending. Retailers are attempting to address the dearth of spending power with promotional campaigns, including discounts and government-supported tax incentives.
Retailers in Thailand offer promotions and incentives to address weak purchasing power and stimulate demand
Notably, Big C’s recent Chinese New Year promotion offers discounts of up to 50% on thousands of products. This campaign is designed to stimulate short-term consumer spending amid the broader slowdown. However, even these efforts reflect the challenges of a stagnant economy.
As Aswin noted, “The overall Thai economy in 2025, with GDP expected to grow by 3%, remains highly challenging.” Consumers’ lack of confidence has led to cautious spending, forcing retailers to innovate and adapt.
Economic strains have also affected tourism. Chinese visitors, a vital market for Thailand’s tourism industry, are travelling less. Recent concerns over Thailand’s security have led to a 25% cancellation rate among Chinese tourists.
Even before this, the number of Chinese travellers to Thailand had been declining. Many Chinese people, including small business owners and middle-class workers, are tightening their budgets, further impacting the sector.
Economic challenges and reduced tourism weigh heavily on Thailand as Chinese travellers tighten their budgets
Both China and Thailand face significant hurdles as they deal with uncertain economic conditions. In China, citizens remain sceptical of official data, while businesses struggle to adapt to weak demand. In Thailand, cautious consumer spending and volatility in global markets create challenges for growth.
With US President Donald Trump taking office and introducing potential policy shifts, the global economy faces additional uncertainty. Retailers like Big C are attempting to counter these challenges by promoting consumer activity. However, the underlying economic issues remain unresolved.
Thailand’s economy faces an uncertain 2025 with all eggs placed in the foreign tourism industry basket
Donald Trump’s second-term impact in the latter half of 2025 tops Bank of Thailand’s economic concerns
For ordinary citizens in both countries, the focus is not on growth but on survival. This marks a stark contrast to the optimistic narratives from official sources. Both nations, like others across the developed world, are also struggling with a massive demographic challenge.
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Further reading:
Economy sees sharp setback with lower private spending, investment and foreign tourism income
Trump’s trifecta triumph means Thailand will be more on edge as he prepares to take power in January
Ung Ing congratulates Trump as Thailand uneasily confronts the meaning of his second Presidency
Paetongtarn’s government set to tackle the evil of chronic debt in Thailand as the tide still rises
Srettha’s crisis is not just an economic one, it is a ‘3D debt crisis’ that is strangling GDP growth
