December 19, 2014 / 10:27 AM / 4 years ago

China, Thailand boost ties with deals for rail and rice

BANGKOK (Reuters) - China will build a rail network in Thailand and buy two million tonnes of its rice in deals agreed on Friday that signal a strengthening of relations as ties with the West remain on ice after a May coup in the Southeast Asia country.

Visiting Chinese Premier Li Keqiang, the most high-profile foreign leader to come to Thailand since the military seized power, also announced China would next year double its imports of Thai agricultural produce, mainly rubber and rice, which the kingdom has been struggling to shift.

The two countries signed two memorandums of understanding (MoU) on the sidelines of a regional summit in Bangkok that will see China construct two dual-track rail lines covering a combined 867 km (542 miles) and buy two million tonnes of rice.

The rice deal could ease pressure on a junta struggling to shift a 17 million ton stockpile amassed under a controversial buying scheme by the government it overthrew, a policy that won electoral support but caused the country losses estimated at $15 billion.

“This cooperation shows the tight friendship of the two nations and will help farmers,” Li told a news conference during the two-day Greater Mekong Subregion (GMS) summit.

Li’s presence in a country now shunned by Western leaders offers reassurance to a junta seeking international and domestic legitimacy.

Some Western nations imposed sanctions and downgraded ties with Thailand in response to the coup, and Beijing’s charm offensive provides a counterbalance to a tougher U.S. stand toward its oldest regional ally. Under the junta, Thailand has stepped up engagement with China at a time when Beijing boosts its influence in Southeast Asia with loans and infrastructure plans expected to further entrench its economic clout in the region.

China has ambitious plans to construct rail links from Kunming through Laos to Thailand and the deal agreed in principle on Friday would include a standard-gauge dual track railway from Thailand’s northeastern Nong Khai to its industrialized eastern seaboard.

“China will be responsible for the construction and development of the rail network and Thailand will take part in preparing the groundwork for construction,” Thai Transport Minister Air Chief Marshal Prajin Junthong told reporters.

Thai Prime Minister Prayuth Chan-ocha, who led the May putsch, said Thailand would reclaim its former position as the world’s number one rice exporter in 2015 and the stockpile, only a tenth of which is of standard quality, would be sold within the next three years.

Additional reporting by Aukkarapon Niyomyat; Writing by Martin Petty; Editing by Robert Birsel

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