Chinese tourists tour Pung Tao Gong Chinese Temple in Chiang Mai province, northern Thailand, Jan. 23, 2023. AP-Yonhap
Chinese tourists tour Pung Tao Gong Chinese Temple in Chiang Mai province, northern Thailand, Jan. 23, 2023. AP-Yonhap
A Chinese ratings firm has downgraded Thailand's creditworthiness due to a series of damaging crime scandals denting the country's appeal to tourists and the threat of U.S. tariffs.
The Beijing-based agency, China Chengxin International Credit Rating, said on Thursday that it had downgraded Thailand's sovereign rating from A- to BBB+ after a string of high-profile "cross-border crime incidents."
The lower grade means Thailand's credit risk is now classified as "normal" rather than "low," while its economic and financial positions are rated as "fine" instead of "strong."
"Cross-border crime incidents have exposed the Thai government's long-term deficiencies in crime governance," said the ratings firm, in which Moody's Ratings holds a minority stake.
"If the security crisis continues, it may have a negative impact on the prospects of the tourism industry and the confidence of foreign investors."
China was Thailand's largest source of tourists last year, with about 6.7 million of its citizens visiting the country.
But the January kidnapping of Chinese actor Wang Xing by a human trafficking ring coordinated in Thailand has tarnished the country's image in China, after news of the incident spread across social media ahead of the Lunar New Year travel rush.
Thai holiday bookings by Chinese travelers during the week of Jan. 13-20 were down 15.6 percent compared with the previous week, according to the travel marketing and technology firm China Trading Desk.
The incident also raised worries for some Chinese investors who were considering expanding their businesses into Southeast Asia.
Thai Prime Minister Paetongtarn Shinawatra has made great efforts to change the narrative in recent weeks. She has pledged to crack down on crime, travelled to Beijing and even released an artificial intelligence-generated video encouraging Chinese citizens to visit Thailand.
China Chengxin added in its statement the downgrade was also mainly driven by the sluggish economic recovery since the COVID-19 pandemic, coupled with structural pressure faced by Thailand's exporters and manufacturing sectors.
Chinese actor Wang Xing, right, talks with Thai police officers in Mae Sot district in Thai-Myanmar border in this image provided by the Royal Thai Police on Jan. 7. AP-Yonhap
Chinese actor Wang Xing, right, talks with Thai police officers in Mae Sot district in Thai-Myanmar border in this image provided by the Royal Thai Police on Jan. 7. AP-Yonhap
U.S. tariffs could cause further economic harm. Analysts believe U.S. President Donald Trump, who has already raised duties on Chinese imports by 20 percent, may also slap tariffs on other countries that have large trade surpluses with the United States.
Thailand, a hub for automotive manufacturing in Southeast Asia, ran up a $45.6 billion surplus in trade with the U.S. last year.
Meanwhile, Thailand's Manufacturing Production Index, a measure of industrial output, shrank by 1.79 percentage points last year, largely due to a decline in the auto sector.
"Looking forward to 2025, as the United States plans to impose high tariffs on Thai exports, if relevant tariff policies are implemented and become a long-term trend, it may put further pressure on Thai exports and curb the inflow of foreign direct investment," the agency said.
"Frequent" changes in the Thai government in recent years have also "hindered policy continuity," it added.
On Monday, China Chengxin also downgraded Germany's sovereign credit rating by one notch to AA+, citing the impact of the war in Ukraine and the challenges faced by several core industries.
China Chengxin's updated rating for Thailand approximates ratings assigned by its peers, said Song Seng Wun, an economic adviser at the Singapore-based financial services firm CGS. The other ratings suggest that Thailand is "stable," he added.
"[The] bottom line is a 'still OK' outlook for Thailand," Song said.
Read thefull storyat SCMP.