Measurement of trade facilitation level between China and Thailand in the context of "one belt and one road" and its impact on trade flows between the two countries Reporter: Xiaobo Yin

CONTENTS 01 02 03 04 05 The background and significance of the topic Characteristics of Trade Development between China and Thailand 02 Promotion of Trade Facilitation between China and Thailand 03 Measurement of Trade Facilitation between China and Thailand and Its Impact on Trade 04 Conclusions and Policy Recommendations 05

01 The background and significance of the topic ● The background and significance of the topic 01 ● With the deepening development of economic globalization, the impact of traditional tariff and non-tariff barriers on international trade has been decreasing. However, inefficient trade, as an invisible barrier to market access, has become increasingly prominent. People begin to seek more fairer, standardized and effective trade environment and institutional arrangements. As a result, the concept of "trade facilitation" aiming at eliminating trade resistance and reducing transaction costs has gradually attracted the attention of academia. ● With the further development of the "one belt and one way" initiative and the continuous development of economic and trade cooperation between China and Thailand, a comprehensive and systematic study of the level of trade facilitation and its impact on trade flows between China and Thailand is of great significance for further reducing transaction costs and promoting economic and trade exchanges and economic growth.

02 Characteristics of Trade Development between China and Thailand ● Characteristics of Trade Development between China and Thailand 02 Feature 1. The scale of trade shows an increasing trend. 2011 2012 2013 2014 2015 2016 2017 Thailand Exports to China(Ranking) 271.3 (1) 267.6 268.3 248.3 233.1 (2) 235.8(2) 294.1(1) Thailand ExportS to Japan(Ranking) 242.4 233.5 219.0 (3) 217.5 197.6 204.2(3) 220.7(3) Thailand Exports to the US(Ranking) 216.4 226.6 227.1 236.4 236.8 243.4(1) 265.2(2) 2011 2012 2013 2014 2015 2016 2017 Thailand-China(Ranking) 577.9 (2) 639.6 644.4 (1) 633.7 642.2 658.4(1) 741.4(1) Thailand-Japan(Ranking) 665.1 732.9 629 575.2 508.9 512.8(2) 544.6(2) Thailand-the US(Ranking) 349.8 (3) 352.6 373.4 382.4 375 364.7(3) 415.4(3) Thailand export to China, Japan and the United States from 2011 to 2017（Unit: $100 million） Bilateral trade volume of Thailand with China, Japan and the US from 2011 to 2017 （Unit: $100 million） 2011 2012 2013 2014 2015 2016 2017 Thailand Imports from China(Ranking) 306.6 (2) 372.0 376.1 385.4 (1) 409.1 422.6（1） 447.3(1) Thailand Imports from Japan(Ranking) 422.7 499.4 410.0 357.7 311.3 （2） 308.6（2） 323.9(2) Thailand Imports from the US(Ranking) 133.4 (3) 126.0 146.3 146.0 138.2 （3） 121.3(3) 150.2(3) After 2013, the bilateral trade volume between China and Thailand surpassed Japan, and China became Thailand's largest trading partner. Thailand import from China, Japan and the United States from 2011 to 2017 （Unit: $100 million）

● Year Bilateral trade volume(Percentage of Thailand's trade) Thailand Exports to China(Percentage of Thailand's exports) Thailand Imports from China(Percentage of Thailand's imports) Trade balance 2011 577.9（12.7%） 271.3（12.0%） 306.6（13.4%） -35.3 2012 639.6（13.4%） 267.6（11.7%） 372.0（14.9%） -104.4 2013 644.4（13.6%） 268.3（11.9%） 376.1（15.2%） -107.8 2014 633.6（14.0%） 248.3（11.0%） 385.4（16.9%） -137.1 2015 642.2（15.6%） 233.1（11.1%） 409.1（20.3%） -176.0 2016 658.4（16.1%） 235.8（11.0%） 422.6（21.6%） -186.8 2017 741.4（16.1%） 294.1（12.5%） 447.3（19.9%） -153.2 Summary of bilateral trade between China and Thailand, 2011-2017 （Unit: $100 million） Thailand's trade deficit in goods with China increased steadily from 2011 to 2016, reaching US$18.68 billion in 2016, accounting for 47.2% of the total deficit, which makes China became the largest deficit country in Thailand's foreign trade. Thailand's trade deficit with China dropped somewhat in 2017, but still reached 15.33 billion US dollars.

Feature 2. The structure of trade commodity is stable. ● Feature 2. The structure of trade commodity is stable. Thai's share of major imports from China. Thai's share of major exports to China. Thailand has an absolute advantage in importing manufactured goods from China in 2017, the proportion is as high as 81%. And primary products accounted for a large proportion of Thailand's exports to China, and basically showed an upward trend, accounting for about 75% in 2017. Thus, at this stage, the commodity struture of trade between China and Thailand is relatively stable.

Feature 3. Trade is interdependent and closely linked. ● Feature 3. Trade is interdependent and closely linked. 1. Trade Integration Index (TII) Year China (i) to Thailand (j) Thailand (j) to China (i) China (i) and Thailand (j) 2006 0.99 1.45 0.93 2007 1.00 1.56 0.94 2008 1.01 1.33 2009 1.12 2.16 1.03 2010 1.06 1.22 0.96 2011 1.10 1.26 2012 1.30 1.21 1.17 2013 1.13 2014 1.35 0.17 2015 1.55 1.18 1.41 2016 1.63 1.46 2017 1.19 1.38 Average Value 1.23 1.25 Used to reflect the close degree of bilateral trade between the two sides. The larger the value, the closer the trade ties between the two countries are. 2. Trade tightness index (I) Used to reflect the close degree of bilateral trade between the two sides. Trade Integration and Trade Tightness Index between China and Thailand, 2006-2017

● Generally speaking, trade between China and Thailand is interdependent and closely linked, and the degree of close ties is on the rise.

03 Promotion of Trade Facilitation between China and Thailand 02 01 03 ● Promotion of Trade Facilitation between China and Thailand 03 In recent years, high-speed rail, airports and ports have been constantly updated and replaced, the construction has been fruitful. Thailand has a relatively complete transportation network, but the development is slow, it will take time for the construction to achieve results. Infrastructure 02 China accepted the TFA in September 2015, and has been committed to promoting the construction of trade facilitation infrastructure. Thailand has very few policies and regulations in this regard. Agreement on Trade Facilitation (TFA) 01 China is in line with the advanced countries in the world and is building a "single window" to promote "one-stop operation", so as to achieve the world's advanced level. Thailand has not yet seen the introduction of relevant policies. Customs Clearance Facilities 03 China has developed rapidly and the scale of transactions has been growing continuously, the relevant laws and regulations are tending to be improved. Thailand's online trading volume is rising, and the Thai government also attaches great importance to online paperless trading, and has issued regulations to maintain its orderliness. E-commerce 04 Generally speaking, China's trade facilitation facilities are more perfect than Thailand's.

Index System for Measuring Trade Facilitation ● Measurement of Trade Facilitation between China and Thailand and Its Impact on Trade 04 01. Construction of Trade Facilitation Index System Index System for Measuring Trade Facilitation

02. Data Processing and Weight Determination ● 02. Data Processing and Weight Determination 1. Standardization of Secondary Indicators 2. Finding the Arithmetic Mean Value 3. Give weight according to contribution degree Assignment is made according to the contribution of four first-level indicators to trade flows. Referring to the research results of Wilson et al., this paper gives weight to TF. Among them, the port efficiency is 61.7%, the customs environment is 6.2%, the institutional environment is 23.0%, and the financial and electronic commerce is 9.1%.

● Year TFI Evaluation Value China Thailand Score Ranking 2008 0.5772 2 0.5836 1 2009 0.5936 0.5942 2010 0.5897 0.6195 2011 0.6014 0.5891 2012 0.5864 0.5884 2013 0.5946 0.5931 2014 0.6111 0.6000 2015 0.6164 2016 0.6179 0.5911 2017 0.6212 0.6071 China-Thailand Trade Facilitation Index (TFA) , 2008-2017

03. Model and Variable Setting ● 03. Model and Variable Setting 1. The classical gravity model 2. Logarithm for empirical analysis 3. By introducing the comprehensive indicators affecting the trade between the two countries, the trade facilitation indicators of China and Thailand and tariffs into the gravity model, an extended gravity model is obtained

● Explains the expected symbols and data descriptions of variables

04. Other Data Sources and Processing ● 04. Other Data Sources and Processing Year Gross GDP ($100 million) Per capita GDP (US dollars) China Thailand 2017 112183 4069 8113.3 5899.4 2016 111991.5 4070.3 7989.7 5742.3 2015 110646.7 3992.4 7589 5445 2014 104823.7 4065.2 6747 5674 2013 96072.2 4205.3 6075.9 5678.5 2012 85605.5 3975.6 5413.6 5394.4 2011 75725.5 3708.8 4382.1 4991.5 2010 61006.2 3411.1 3677.9 3939.6 2009 51099.5 2817.1 3315.3 4115.3 2008 45982.1 2913.8 2460.8 3736.8 Year Trade volume of China's exports to Thailand Trade volume of Thailand's exports to China 2017 447.3 294.1 2016 422.6 235.8 2015 409.1 233.1 2014 385.4 248.3 2013 376.1 268.3 2012 372 267.6 2011 306.6 271.3 2010 245.2 214.7 2009 171.5 160.9 2008 202.7 162.2 Gross GDP and per capita GDP of China and Thailand Trade between China and Thailand (Unit: $100 million)

05. Regression Estimation and Effect Analysis ● 05. Regression Estimation and Effect Analysis In this paper, the equations are solved by stata12 software. The corresponding values of , ...... and linear regression coefficients , and of each coefficient are listed in table below. The regression results show that trade facilitation is the most attractive source of trade between the two countries. The key to increase the flow of international trade is to improve the level of trade facilitation of each country.

05 Conclusions and Policy Recommendations 01. Conclusions ● Conclusions and Policy Recommendations 05 01. Conclusions 1. The implementation of the "one belt and one way" strategy has improved the level of China's trade facilitation. 2. Trade facilitation is the main factor affecting the growth of trade flows between China and Thailand. 3. The level of economic development promotes the growth of trade flows between the two countries by influencing the degree of trade facilitation. To sum up, improving the level of bilateral trade facilitation between China and Thailand can effectively improve the trade environment, reduce trade costs, and then promote trade growth. Therefore, in the context of "one belt and one road" construction, strengthening infrastructure interconnection and trade facilitation should be a priority area and key direction for China and Thailand to deepen regional economic cooperation. It is also an important way to enhance the level of China-Thailand economic and trade cooperation and consolidate China-Thailand relations.

02. Policy Recommendations 2. Actively improve the terms of trade, strengthen trade infrastructure construction and promote interconnection 02. Policy Recommendations 1. Actively promote policy communication between China and Thailand, strengthen political mutual trust and jointly develop the level of trade facilitation. 2. Actively improve the terms of trade, strengthen trade infrastructure construction and promote interconnection. 3. Seize the opportunity of "one belt and one road" construction tightly, enhance the level of trade facilitation and achieve mutual benefit and win-win results. 4. Innovating regional cooperation modes and mechanisms, actively participating in relevant actions of international organizations, and enhancing the voice in the formulation of national trade rules.

THANK YOU FOR LISTENING Date: 26 June 2019