Buying Thai Rice: PRC Now Cares About Corruption?

Yinglucks legacy is a colossal waste of food and money

China is famous for espousing a policy of non-interference in the internal affairs of other countries. This, of course, is in contrast to Western powers who usually demand "good governance" for aid or investment in terms of lessening corruption, promoting democracy and so on. Critics say that in doing so China undermines others' efforts to instill better governance. On the other hand, China says it does not meddle with others' business--especially other developing countries that have grown tired of Western paternalism.

It is thus interesting how China seems to be bowing to pressures regarding the purportedly corrupt practices of the Thai leadership. In previous posts, I have detailed the extravagant waste of money [1, 2] that is the rice-pledging scheme which subsidizes rice producers to the tune of 40-50% over market value. To reduce mountains of rice purchased at above-market rates which now go unused, the current leadership hit on the brilliant idea of selling part of its stockpile to China.

But surprise, surprise--even the Chinese are not honoring previous commitments due to the current investigations into corruption allegations stemming from the so-called rice-pledging scheme:

China has canceled a deal to buy 1.2 million tonnes of Thai rice after Thailand's anti-corruption agency launched investigations into a state rice-buying scheme, the Thai commerce minister said on Tuesday. The cancellation will add to the pressure on Thailand's government, which is struggling to secure funds for the rice scheme at a time when farmers who have not been paid are protesting in the provinces.

"China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China," Niwatthamrong Bunsongphaisan told reporters.

The deal between Thailand and Chinese state enterprise Beidahuang was signed on November 20, for delivery starting in December. The shipment was delayed, however, after Prime Minister Yingluck Shinawatra dissolved parliament in December.

If anything else, the Chinese snub is going to put further financial pressure on this money-losing vote-buying scheme to win the support of rural populations in the North who've voted for the Shinawatras:

The government is desperate to get funds for the scheme because some farmers who have sold grain to the state have been waiting for months for their money. The World Bank has estimated annual losses of 200 billion baht ($6 billion) since it was introduced in 2011. The government has struggled to sell the rice because of its high price at a time when global demand is thin. 

Opponents of the government are angry that taxpayers are footing the bill for a program they call tantamount to vote-buying.

The endgame for Yingluck Shinawatra is drawing even closer, with troubles being added by a most unexpected source--China of all parties suddenly becoming concerned with corruption. Weird. Meaningless elections aside, what will likely happen is court persecution of Yingluck Shinawatra over the rice-pledging scheme (tacitly supported by the military and royalty) leading to her ouster. Farmers complaining about not being paid will only undermine her support further, making her easy prey for her opponents. 

All the same, Thaksinite politics are hardly finished--especially if his sister is ousted through extra-electoral means. The real question is why big brother Thaksin did not dissuade her from embarking on this ruinous rice subsidizing path given his vastly broader political experience. In the ultimate hardball of Thai politics, amateurs like little sister Yingluck get smashed fairly quickly.