The Monetary Policy Committee (MPC) has cautioned that China's worse-than-expected economic slowdown could pose further downside risks to the already struggling Thai economy.
Given that China is the world's second-largest economy and the factory of the world, it comes as no surprise that weaker demand from China has also taken a bite out of the growth of export-oriented countries and those with strong links to it, including Thailand.
The Bangkok Post spoke to some economists for their views on how Thailand would be hurt if China's growth falls below the government target of 7%.
Amonthep Chawla, head of research at CIMB Thai Bank, said if China's annual GDP growth expanded by 6.5%, in the worst-case scenario Thailand's economic growth in 2015 would rise by 2.5%, with shipments declining by 3% to 4%.
"China's slowdown would affect the real economic sectors such as exports and investments, but the slowdown is not a systemic risk similar to the collapse of Lehman Brothers in 2008 because China remains a closed economy and the yuan is not yet a global currency," he said.
CIMBT forecasts base-case growth for China at 6.8% this year, a rate similar to the International Monetary Fund's prediction, while projecting Thailand's base-case GDP expansion at 3.3% and export contraction of 2-3%.
China's economy expanded by 7% for the three months through March, its slowest pace in six years.
Its annual growth rate averaged 9.99% from 2005 to 2014. Even though some still consider a growth rate of 7% as enormous, a string of downbeat economic readings has stoked worries.
The recent tailspins in the Shanghai stock market ramped up fears that it is just the tip of the iceberg as a significant amount of investors' wealth was wiped out and this would prompt them to curb spending. Chinese consumers have become the world's powerhouse of spending on luxury goods, property and tourism.
Thailand's exports to China for the first five months amounted to US$9.55 billion, down 8.2% over the same period last year. Tapioca is Thailand's largest farm product shipped to China, totalling $1.15 billion, followed by rubber at $877 million.
Mr Amonthep said China had considerable influence on Asean economies and Asean's trade volume would fall if China reduced imports because of its economic slowdown.
Finance Minister Sommai Phasee recently said every single percentage point decline in China's GDP growth is equal to 35% of Thailand's GDP.
Despite concerns about China's slower-than-expected economic growth momentum, Thailand could still reap benefits from the US economic recovery, he said.
China's economic slowdown is expected to have a greater impact next year if the Chinese economy expands by 5.5-6%, said Mr Amonthep.
Effects from China's dwindling growth prospects would take a toll on global trade and investment, while an indirect effect on Thailand would be a decline in commodity prices as China is a major consumer of commodities, he said.
Lower commodity prices would further exacerbate Thai farmers' plight besides the ongoing drought, said Mr Amonthep, adding that oil prices could also drop in line with falling commodity prices.
Exports could dip by 5% in 2016 based on China's economy growing by 5.5-6%. However, the effects on Chinese tourist arrivals are not expected to be significant because China is not facing a liquidity crunch, as opposed to what had happened in Russia as a result of Western sanctions, he said.
Nalin Chutchotitham, HSBC's Thailand economist, said China's importance for Thai exports, a key factor in Thailand's economic growth, has risen over the years mainly because 11% of total shipments go to China compared with a figure slightly below 5% in 2001.
Based on data from the second half of 2006 to 2014, HSBC's statistical analysis shows that every one percentage point increase in China's industrial production will raise Thailand's export growth by more than 2.5%, she said.
Despite softer overall growth, China's influence in the immediate region is growing, while the trend of consumption in the West is expected to continue at an anaemic pace, said Frederic Neumann, Hong Kong-based co-head of Asian economic research at HSBC.
"In early 2015, the China-Asean free trade agreement was implemented and the Chinese government is encouraging trade and investment to flow through the 'Maritime Silk Road' and encouraging Chinese firms to invest more in the immediate Asian neighbourhood," he said.