The effect of the development of China-Laos Railway on Thailand's export trade to China

Abstract

With the development of economic globalization, China's trade with Thailand has increased significantly. Trade performance and competitiveness have always been an important factor affecting Thailand's exports. The goal of this research was to analyze the effect of the development of the China-Laos railway on the export trade from Thailand to China. A literature review was undertaken to gain information regarding the main industries and provinces of Thailand involved in the export trade with China. Secondary data analysis was used to obtain information on the current main trade routes and on the new trade routes between Thailand and China that will be created after the completion of the China-Laos railway. The existing trade routes were compared with the potential new trade routes to identify and analyze the potential effect of the China-Laos railway on future China-Thailand trade, and the weighting of the various determining factors on the future export trade were calculated by applying the Analytic Hierarchy Process (AHP). The findings from that analysis were that the freight cost and journey time are the two most important determining factors in route selection, together with security, capacity and distance. TOPSIS method (Technique for Order of Preference by Similarity to Ideal Solution) was applied to compare the performance of the new and the existing routes based on these determining factors. Linear regression methods were applied to predict the export trade volume that the China-Laos railway will bring to Thailand in the future, The prediction arising from the modelling is that the China-Laos railway will help Thailand achieve a total of $2,246,400,000 of exports to China, which will account for 7.43%-9.29% of Thailand's total export to China. The conclusions arrived at included that the new route is likely to provide better transportation performance for all Thai industries doing business with China, both importers and exporters. It was concluded that the new route has obvious advantages in safety, convenience and time factors. However, there is little difference in terms of cost and transport capacity between the existing routes and the new route of the China-Laos railway. Based on the results of this study, a framework was developed that encompasses all necessary considerations to take advantage of the new routes. This framework will be important in informing governments and companies in taking advantage of the new routes. The framework introduces the key roles that will be played by the new routes in enhancing trade between Thailand and China and provides valuable advice to governments and exporters on the rational use of the new routes to improve trade performance and export competitiveness.

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