Thailand's FDI success and its relationship to Chinese inflows

Thailand has benefited from a steady stream of foreign direct investment since 2021. A sector to watch is manufacturing – and China, in particular, has emerged as a key source of capital.

Ahead of Donald Trump's return as US president, we can view this trend as a longer-term response to global trade tensions. Companies – including Chinese ones – began "de-risking" by shifting their supply chains and avoiding single-source hubs. (You can see our exploration of this trend across ASEAN with our post-election story earlier this month.) That's a potential gain for emerging economies, as FDI helps them gain vital production capacity and accumulate know-how.

Our pie charts compare the sources of FDI into Thailand, five years apart. Japan has long been notable for its investment in the Thai electronics sector, but from 2019 to 2024, Greater China increased its share significantly (by 10 percentage points to 26% of total FDI). The US has grown its share from about 6% to 10%, as well. The share of Japan, on the other hand, fell 5 percentage points to 20%.

Our second chart measures FDI as a share of Thai GDP, with each quarterly bar in the chart broken down into sources of that investment. There is a notable pickup in early 2021; that could be linked to the late 2020 signing of the Regional Comprehensive Economic Partnership (RCEP). This trade deal covers much of Asia-Pacific, from China to New Zealand; its enhanced market access has supported Thailand's growing role in global value chains.

Our third chart breaks down the FDI trends by sectors. We've highlighted manufacturing in green to show how its importance has picked up since 2021.

It's a promising trend for the Thai economy, which has had its challenges and been outshined by neighbors like Malaysia recently. (As we have previously written, consumer debts, a sluggish property market and political instability have all been drags.)

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