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Thailand and China: Brothers in arms

Bangkok looks to Beijing for military supplies after US relations sour

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The Thai navy has a submarine squadron but no subs. To rectify that, the country is purchasing one from China.   © Reuters

BANGKOK Thailand will buy submarines "not for battle, but so that others will be in awe of us," Prime Minister Prayuth Chan-ocha, the nation's former military chief and current head of its ruling junta, said at a 2016 press conference. Prayuth's regime took a decisive step toward that muscular view in January after the National Legislative Assembly, the country's rubber-stamp parliament, approved a bill to spend 13.5 billion baht ($383 million) to buy a Chinese submarine -- the first of an expected three-boat, $1 billion deal.

The Yuan-class S26T submarine will be delivered in about six years to the Thai navy's submarine squadron, which trained in Germany and South Korea but had no vessel to operate. That became glaringly obvious in July 2014, two months after the military seized power, when a $17.3 million submarine headquarters and training center was opened in Sattahip, a naval base on the Gulf of Thailand. The Thai navy decommissioned its last submarine in the early 1950s.

The new submarine order brings Thailand on a par with neighbors Malaysia, Singapore and Vietnam, which have all acquired submarines. Under Prayuth, the Thai government has boosted spending on military hardware, increasing defense expenditure by 5% in 2015 from the previous year, and by a further 6% in 2016. The defense budget for 2017 will be $6.1 billion, a 2% increase from the previous year, which will include allocations for the submarine deal.

"Our socio-economic well-being depends on this security, and now is the time to revamp our security capabilities during national reforms," Lt. Gen. Werachon Sukhondhapatipak, a government spokesman, told the Nikkei Asian Review. "The submarines are best value for money."

Analysts say that the deal reflects deepening Sino-Thai military cooperation, which has become a cornerstone of bilateral ties since the 2014 coup. Thailand signed an order last May for 28 VT-4 battle tanks, manufactured by China North Industries Corp., a major arms manufacturer. China was also mentioned as a supplier when the Thai air force floated plans in September to buy a new fleet of transport aircraft.

Deputy Prime Minister and Defense Minister Prawit Wongsuwan, Bangkok's point man on relations with China, visited Beijing in December to propose building a Chinese weapons maintenance and production center in Thailand.

Phill Hynes, head of political risk and analysis at ISS Risk, a Hong Kong-based consultancy, sees China's security engagement with Thailand as reflecting a change in Beijing's global strategy. "There is a slow, quiet shift in military influence, primarily now through a network of privatized military contractors, many of which used to be part of the state security apparatus in some shape or form," he said.

BRANCHING OUT China's shift has provided an opportunity for Thailand to look beyond the U.S., a traditional treaty ally that upset the military-led government by criticizing the coup. But Thailand's interest in Chinese military hardware goes back to the 1997 Asian financial crisis, when the Thai baht plunged and military equipment from the U.S., a longtime supplier, became prohibitively expensive. It prompted subsequent Thai governments to seek cheaper alternatives, which paved the way for the Chinese later to supply military hardware, including long-range multiple rocket launchers and anti-ship missiles.

In another sign of growing bilateral defense cooperation, the Thai and Chinese air forces conducted their first joint exercise in 2015, while their marine forces in 2016 participated in "Blue Strike," a joint drill at the Sattahip naval base. These exercises coincided with a decision by the U.S. to reduce its role in Cobra Gold -- Asia's largest annual multinational military exercise, held in Thailand -- in an effort to pressure the junta to restore democracy.

Thailand also has adopted positions that favor China when it comes to the South China Sea and the Mekong River region. Bangkok has maintained a neutral stance on China's growing military presence in the South China Sea, which has been welcomed by Chinese officials. The Thai government has also approved China's ambitious economic development plans in the Mekong River basin, a region shared by five Southeast Asian nations and China, after Beijing's blueprint was unveiled last March, triggering criticism from environmentalists.

"Thailand is amenable to China's position on the South China Sea and as a result, it has become the country that China trusts the most in Southeast Asia," said Benjamin Zawacki, author of a forthcoming book on Thailand's relations with the U.S. and China.

"Thailand's strategic location as the gateway to Southeast Asia makes it a bigger prize for the Chinese than Cambodia or Laos," he added.

China's expanding economic footprint across Thailand mirrors its strategic ambitions. It overtook Japan as Thailand's largest trading partner in 2014, and bilateral trade topped $75 billion in 2015. China also increased its foreign direct investment in the country over the same period, including projects in the renewable energy and construction sectors. In January, the Thai government confirmed that a $5 billion Chinese high-speed rail project to connect Bangkok to the Thailand-Laos border was back on track after many delays.

Analysts forecast more Chinese investment in Thailand. The improved relations are influencing Chinese companies to select Thailand, where "strategic fit, state directives, profitability, price and market access are the main drivers of most investment," said Joe Horn-Phathanothai, chief executive of Strategy613, which advises Thai and Chinese companies on investments. "Thailand's meaningfulness to China is deep and will outlive today's ephemeral set of circumstances."

China UnionPay, the world's largest credit card operation, entered Thailand last year with a deal to establish the Thai Payment Network in cooperation with Bangkok Bank, Thailand's largest commercial bank. This reflected the Chinese government's goal to "rebalance the global economic order" by pushing for "payment system reform," according to ISS Risk.

Thailand's growing ties with China may force the U.S. to soften its position on the junta. For example, Adm. Harry Harris, head of the U.S. Pacific Command, will become the highest-ranking U.S. military officer to visit Thailand since the coup when he opens the Cobra Gold military exercise in mid-February. With China supporting Prayuth, further engagement by the U.S. may be likely.

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