Why Is China Buying One Million Tons of Rice from Thailand?

Beijing is helping Thailand ease a large burden.

Why Is China Buying One Million Tons of Rice from Thailand?
Credit: Wikimedia Commons

On August 10, Thailand’s Commerce Minister Gen Chatchai Sarikalya announced that China and Thailand had reached a government-to-government agreement for Beijing to buy one million tons of Thai rice.

The agreement is part of a broader memorandum of understanding (MoU) the two countries reached last December for China to buy two million tons of rice from Thailand (See: “Thailand Turns to China”). According to Chatchai, this particular sale involves Thai jasmine rice and Thai-5 percent broken white rice and would be done using market prices. Negotiations for the sale the other 1 million tons of rice to China under the MoU are expected to begin in September.

The deal is significant because it would allow Thailand – currently the world’s second largest rice exporter – to begin to ease the stockpiles of grain it accumulated under a graft-ridden rice-pledging program under former prime minister Yingluck Shinawatra, who was overthrown in a coup in May 2014. China had canceled an earlier deal to buy 1.2 million tons of Thai rice in February last year after the country’s anti-corruption agency launched a probe into the scheme, which was advanced as a major reason for her ouster.

It will also be read as a further boost for the Sino-Thai relationship, which has seen some gains this year as the two countries commemorate the 40th anniversary of their bilateral ties. As I have written previously, recent developments – particularly Thailand’s initial decisions to award a submarine deal to China and hand over 109 Uyghurs to Chinese authorities – have led to concerns that the generals are moving too close to China, with worrying implications for domestic politics and foreign policy (See: “Is China’s New Submarine Deal With Thailand Now In Peril?”). This is despite the important limits that continue to exist in the Sino-Thai relationship in spite of these advances, which I have explored elsewhere (See for instance: “China, Thailand Eye Deeper Defense Ties”).

While Thailand’s deal with China does help ease its rice burden, still has a long way to go to rid itself of an estimated 14.5 million tons of rice stockpiles. The Thai government is aware of this and is attempting to strike similar deals with other countries as well. For instance, Chatchai mentioned that Iran had expressed interest in buying Thai rice at the end of August, and that Thai government officials would travel to Tehran to try and finalize an agreement.