Thailand treads delicate path between China and Japan on rail projects

China is "one to two years" ahead of Japan in helping Thailand upgrade its outdated rail network, Thai deputy Prime Minister Pridiyathorn Devakula said in Hong Kong on Thursday.

He denied reports that a Japan-backed project is to be the country's first high-speed rail line, and noted Thailand is a "small country" which has to be friendly to both China and Japan.

"Japan hadn't said that they will do high-speed or medium-speed yet. We always say ‘up to high speed'," he said, noting Japan will do a feasibility study before deciding the speed with Bangkok.

"They are at least one year or two years behind China," Devakula added.

Beijing and Bangkok will meet at the end of this month for the fifth round of discussions on details on jointly developing the 873kilometer Bangkok-Nong Khai medium-speed line which will reach between 160-180 km/h.

Both China and Japan have signed deals with ASEAN's second biggest economy, which sees a pressing need to build a dual-track network to cover 2,470 km. Thailand currently has only 357 km of dual-track rails.

Devakula said it was China's choice for medium-speed. "China got one route. We invite them to do high-speed, but they choose to do medium-speed. Because they want to do cargo transport," he said.

The Chinese Embassy in Bangkok declined to comment on that claim, but said a feasibility study of the project, signed in late 2014, is still under way with both sides hoping to begin construction soon.

The first phase is expected to begin in November although the structure of financing is yet to be finalized.

Devakula noted that funding "will not be an obstacle for this project" because "we can locate funding anywhere."

He avoided the question of whether construction will start on time, saying China "still sticks to" the original plan.

Thailand's Cabinet approved its railway project to be built with Japanese help in May.

The proposed Japanese project would cross Thailand east to west, connecting Bangkok to the border towns nearest to Siem Reap, Cambodia, and Dawei, Myanmar.

Earlier media reports said the 670-km route will be a high-speed line carrying passengers only, using the state-of-the-art Shinkansen system.

"Railways to serve both passengers and cargo are the most influential strategically," Zhou Fangye, an expert on Thailand with the Chinese Academy of Social Sciences said.

China has been considering a 3,000-km rail line from Yunnan province in the southwest, which would pass through Laos, Thailand and Malaysia to reach Singapore.

Though Devakula denied China and Japan are in rail competition in Thailand, Zhou said Bangkok would like to see them in "healthy competition" to maximize its own interest.

"Connectivity and logistics should be the priority of the One Road, One Belt construction," he added.

In addition to public expenditure including infrastructure, tourism is another source of Thailand's growth, according to Devakula, who expects up to 6 million Chinese to visit his country this year.

China is Thailand's largest source of overseas visitors, with 4.6 million visiting in 2014.

Thailand's GDP is expected to grow by 3-4 percent this year, after a dismal 0.7 percent growth in 2014.

Growing consumption and private investment are other key factors for growth, added Devakula, who was in Hong Kong to boost trade and investment.

Invest Hong Kong and the Thailand Board of Investment signed a memorandum of understanding, pledging mutual co-operation on investment promotion exchanges and best practice.

He also spoke of the country's new innovative industries such as medical food, bioplastics and aerospace, and talked warmly of a nationwide broadband rollout which will connect all Thai households by the end of 2017.

"The economy is creeping back," he said.

The Thai deputy prime minister also denied that Bangkok has signed a deal with Beijing to construct a shipping canal through the Kra Isthmus that could allow ships to bypass the Straits of Malacca.

"We won't be that stupid," he said, adding they will build a less than 300-km-long oil pipeline, which is "faster and cheaper".

The planned pipeline, connecting Satun province on the Andaman Sea with Song Khla province on the Gulf of Thailand, will take about three years to complete.

Devaluka said the project will "facilitate oil transport" to east China, Japan, and South Korea.

"The whole thing is we have to convince the NGOs. They are afraid we will build a refinery on the ground of which we have no intention," he said.