Nonthaburi 23 Aug-Director of Trade Policy and Strategy Office (TPP) analyzes the impact of real estate problems in China on the Thai economy. especially travel Less was found in Thailand and the export sector was affected in some items.

Mr. Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office (FPO), revealed that business liquidity problems in the real estate sector It is considered a big problem for the Chinese economy that has influenced the economic recovery after the Chinese government lifted the strict measures to control the spread of the COVID-19 virus. This problem originated from the real estate business in China. mainly by borrowing money and create a large quantity of real estate projects Therefore, there is a risk of a bubble. As a result, in August 2020, the People's Bank of China announced the so-called "Three Red Lines" rules aimed at reducing the risk of a real estate bubble. And to reduce the expansion of debt in the real estate business strictly. At that time, only 6.3% of real estate businesses across the country met all criteria. As a result, almost all businesses are unable to borrow more money for revolving within the business.

coupled with declining sales during the outbreak of the COVID-19 virus As a result, many businesses lack financial liquidity severely. One of them is Chinese real estate giant Evergrande. There are more than 1,300 projects, accounting for nearly a quarter of China's economy. and is the most indebted business in the world It just filed for bankruptcy last August. And most recently, there is news that Country Garden, the No. 1 real estate company in China, is likely to default on interest payments on US dollar bonds.

The real estate sector is so large that it can have a wide-ranging impact on the Chinese economy. Its economic value accounts for about 29% of China's GDP, so the problem of the real estate sector has a significant impact on China's economic recovery. Most recently, in August 2023, economists from Barclays Bank lowered their 2023 economic growth forecast for China to only 4.5% after assessing that the government's fiscal and monetary policies are likely to increase. To stimulate the real estate sector of the Chinese government is not very effective. While the overall economy in the second quarter of 2023 grew by only 0.8 percent from the 1st quarter of 2023, at the same time still sending

Impact on people's financial status Because more than 70 percent of the population lives in urban areas. People create wealth by buying real estate for investment and speculation. and when housing prices drop sharply Investors therefore incur a total loss. It also creates an impact on the labor market. The construction sector is the source of more than 62 million jobs and workers are likely to be laid off. At the same time, new employment contracted. In particular, the employment of new graduates recorded a sharp contraction in the beginning of the year. This is caused by new investment in the real estate sector, which has decreased significantly since 2022 and is currently continuing to shrink. The latest in July 2023 contracted by 8. 5% as demand for housing decreases. also affects the retail sector According to the National Statistical Office of China's retail economic report, it was found that the retail sector of real estate-related goods such as retail sales in the home furnishing category. Only during January to July of this year contracted by 7.3 percent.

As for the impact on the Thai economy, the FPO has analyzed two important economic sectors: 1. The impact on the tourism sector Problems in the real estate sector that resulted in a slowdown in the Chinese economy Has affected the consumption and spending of overseas travel of Chinese people has decreased. and have side effects on the economy.

Thailand's tourism sector Since Chinese tourists account for approximately 28% of the total number of foreign tourists entering Thailand. During normal times before the outbreak of the COVID-19 virus in 2019, 11.1 million Chinese tourists entered Thailand, generating income of 530 billion baht, but in 2023 (Jan. -June) There were only 1.4 million Chinese tourists in Thailand in the first half of the year, and 2. The impact on exports. which has impacts transmitted through 3 channels, namely (2.1) the impact of the decline in purchasing power of Chinese people due to the economic slowdown Because the real estate sector is a relatively large proportion of China's GDP. It is also a large source of employment. tends to affect the labor market and continued to result in reduced consumption especially the consumption of non-essential goods (2.2) The impact on

There are only some exports of raw materials affected by China's real estate problems, including chemicals (such as chemicals used in construction) and plastic resins China is the number 1 export market with a proportion of 18% and 29%, respectively. It is also one of Thailand's top 10 export products, which in the first half of 2023, the two above products exported to China shrank by 20.9. % and 26.9%, respectively, while other goods related to the construction sector such as iron, steel and products aluminum products Construction machinery, cement, plastic products Expected to be affected quite a bit - very little because China is not the main export market and (2. 3) Indirect effects from price influences such as iron and steel Copper and articles thereof Because China is the world's largest consumer and importer of commodities. thus influencing the movement of product prices and Thailand as a price taker, exports of related products are therefore somewhat affected by price volatility that correlates with the growth of the Chinese economy. In particular, steel prices are more sensitive to the real estate economy than other commodities. According to JP Morgan, the relationship between new housing construction and Chinese steel imports is quite strong and in a trend. clearly the same

In this regard, the NPO recommends that Thai entrepreneurs periodically monitor the situation of the real estate sector in China, as it is an economic sector that has quite a strong influence on the recovery of the Chinese economy. This will continue to affect the Thai economy, especially in the tourism sector and international trade. for the commercial sector China is Thailand's No. 1 trading partner and No. 2 export market, accounting for approximately 12 percent of Thailand's total export value. Thai

Source: Thai News Agency