Why did China buy 1 million tons of rice from Thailand?

(Baonghean.vn) - Beijing is helping Bangkok relieve a big burden.

On August 10, Thai Commerce Minister Chatchai Sarikalya announced that China and Thailand have reached an intergovernmental agreement for Beijing to buy 1 million tons of Thai rice.

Rice fields in Thailand. Photo: Wikimedia Commons.

The agreement is part of a broader memorandum of understanding (MoU) signed by the two countries in December 2014 for China to buy 2 million tonnes of rice from Thailand. The sale will include Thai glutinous rice and 5% broken white rice, and will be conducted at market prices, Chatchai said. Negotiations for the sale of another 1 million tonnes of rice to China under the MoU are expected to begin in September.

The deal is significant because it allows Thailand, now the world’s second-largest rice exporter, to start reducing grain stocks it built up under a rice subsidy scheme under former Prime Minister Yingluck Shinawatra, who was ousted in a coup in May 2014. China canceled an earlier deal to buy 1.2 million tonnes of Thai rice in February 2014 after its anti-corruption agency launched an investigation into the scheme, a move widely cited as a key reason for Yingluck’s ouster.

The sale is also seen as a further boost to Sino-Thai ties, which have seen some gains this year as the two countries celebrate 40 years of bilateral ties. Recent developments – particularly Thailand’s initial decision to award the submarine deal to China and return 109 Uighurs to Chinese authorities – have led to concerns that its generals are becoming too close to China, fearing influence over domestic politics and foreign policy. Despite these advances, important constraints remain in the Sino-Thai relationship.

While Thailand’s deal with China has helped ease its rice burden, it still has a long way to go before it can properly deal with its 14.5-tonne stockpile. The Thai government is aware of the problem and is working to forge similar deals with other countries. For example, the Thai commerce minister mentioned that Iran had expressed interest in buying Thai rice in late August, and Thai government officials would travel to Tehran to try to seal the deal.

Phu Binh

(According to The Diplomat)