BANGKOK, Thailand -- A China-Thailand military air force exercise recently deployed Chinese and Swedish warplanes above this Southeast Asian nation but below their friendly warplanes, Chinese criminals, cheap goods, e-commerce and investment are annoying the close relations between Thailand and China.

Even with Chinese boots in the sky during the Aug. 18 to Aug. 29 Falcon Strike 2024, the U.S. expects its non-NATO treaty alliance with Thailand will remain secure if regional tensions between Washington and Beijing increase.

Bangkok tries for balanced relations with both superpowers, and neutrality when Washington and Beijing sink into confrontations.

For Falcon Strike, "the Chinese People's Liberation Army (PLA) has sent some of its main combat aircraft to Thailand," China's Global Times reported.

The joint air force training exercise, seventh in its annual series, is using refurbished U.S.-built Udorn Royal Thai Air Force Base as its headquarters.

The U.S. Air Force launched bombing raids from the northeast base in the 1960s and 1970s during the Vietnam War.

During Falcon Strike, the PLA Air Force is flying its Y-20 large transport planes -- considered good for airdropping troops behind enemy lines -- plus J-10C and J-10S fighter jets, and the JH-7A fighter bomber, China Central Television (CCTV) reported.

"These warplanes are some of the PLA Air Force's mainstays in air transport, air-to-air combat, and air-to-ground combat," CCTV said.

Thailand was expected to flash its Swedish Saab JAS 39 Gripen fighter jet during the exercise.

Bangkok is considering buying more Swedish warplanes, but weighing the pros and cons of purchasing more U.S.-built Lockheed Martin F-16s instead.

Chinese "special operations forces" are deploying helicopters and likely practicing "aerial assaults on valuable ground targets such as air fields, air defense positions, and command centers during the joint exercise," the Global Times said.

"Falcon Strike 2024 is designed to enhance our collective defense capabilities," said a Royal Thai Air Force spokesman Capt. Somsak Rattaninorn.

"It's about fostering mutual understanding and readiness for any potential threats," he said.

On the ground meanwhile, Thailand is floundering, unable to stop a tsunami flow of inexpensive Chinese-made consumer items which are made in China at much lower costs and deliverable anywhere in Thailand.

Some products are illegal, toxic, shoddy, counterfeit, or made with false ingredients or highly flammable material and not inspected by officials.

The tough competition has forced struggling Thai businesses to shut down.

Some Thais fear their much smaller country is in danger of becoming an "economic colony" of its bigger and richer northern neighbor, China.

"The influx of Chinese goods has affected Thailand's manufacturing sector," said Monetary Policy Committee (MPC) Secretary Piti Disyatat said.

"Countries around the world have been affected by a flood of Chinese products, and many have implemented various measures to address the issue.

"The Central Bank supports the government it is efforts to tackle this challenge," Mr. Piti said according to the Bangkok Post.

"Some entrepreneurs decided to adjust their businesses by temporarily shutting down their factories and turning themselves into the importers of Chinese products," said Federation of Thai Industries (FTI) Chairman Kriengkrai Thiennukul.

The flood of cheaper Chinese goods is hitting hard on the profits and market share of Thailand's manufacturers of steel, aluminum, plastics, ceramics, petrochemicals, and medical products.

China's Ambassador to Thailand Han Zhiqiang bluntly referred to the problems during a recent seminar which otherwise trumpeted the 49th anniversary of diplomatic relations between the two neighbors.

The envoy said:  "As for Chinese investors who invest in Thailand individually, some of whom are also connected to shady businesses, we admit that we see quite a few problems.

"Some may also violate Thai laws. On this issue, the Thai and Chinese authorities should closely cooperate to enforce the law."

Chinese are operating at least 2,400 companies in Thailand, mostly "thriving in the manufacturing and construction sectors," Mr. Han said, but 1,000 of those did not pass Thailand's Board of Investment inspection.

"If the [Thai] government has no new measures to better protect Thailand against Chinese products, more companies are likely to shut down," the Joint Standing Committee Chairman on Commerce, Industry and Banking, Payong Srivanich warned earlier this month.

Inexpensive Chinese imports include household appliances, electronics, furniture, combustion engine vehicle components, integrated circuits, hard drives, clothes and other textiles.

"The closed electronics parts and printed circuit board factories had the highest investment value," worth millions of dollars before their shutdowns, Industry Minister Pimphattra Wichaikul said in June.

Thailand, a mostly agricultural nation, also craves cheaper food grown in China including Chinese fruit, vegetables, and mushrooms, which is shipped fresh in attractive packaging to markets scattered across this country.

Online Chinese goods meanwhile offer steep discounts, snazzy promotions, and door-to-door delivery.

Thais love shopping online and are active internet users.

"There is an influx of imported products online at an abnormally high level," Chai Wacharonke, a government spokesman, said.

"This is severely hitting our local producers, especially SMEs (small and medium enterprises)," Mr. Chai said.

The newest challenge to China-Thailand relations is Temu.

A slick, gigantic, e-commerce site, Temu is a Chinese-based online platform where customers view and pay for a stunning array of items, shipped directly from China and delivered to their address in whatever country is linked to its system.

Goods include group purchases for lower prices and non-branded products that benefit by having no marketing costs but risk enabling contaminated food, vitamins, and medical supplies to seep through to customers.

Temu's new expansion to Thailand in August is expected to start cutting into the profits of online shopping sites well-known among Thais such as Lazada, Shopee, TikTok, and Amazon.

"We can expect more factory closures and a major wave of millions of Chinese products," Thai E-Commerce Association honorary president Pawoot Pongvitayapanu said.

Temu's admirers see it as an easy way for China to offer a massive variety of its domestic goods to worldwide markets at the lowest possible prices.

"Temu has enjoyed more success in the international market than Alibaba's Ali Express due to Temu supporting more local languages and having a larger network ecosystem," the Bangkok Post reported.

Temu's slogan is:  "Shopping Like A Billionaire."

It is owned by U.S.-listed PDD, one of China's most valued e-commerce companies.

China and Thailand exchange a total trade value of $120 billion, China's ambassador said.  That includes China's $35 billion trade surplus.

Tourism is one of the strongest pillars of Thailand's economy. Local media publishes frequent updates about how many Chinese and other nationalities are arriving.

China's ambassador claimed Chinese tourists spent $10 billion marveling at Thailand's tropical beaches, hilltop tribal villages, dazzling cuisine, and extensive shopping options last year.

But even among the happy, selfie-obsessed tourists, financial conflict is upsetting Chinese-Thai relations.

In Pattaya, a somewhat raunchy beach resort close to Bangkok, "several local bus operators are facing severe financial difficulties, with rising costs and continued losses, forcing many to consider selling their businesses," the Pattaya Times reported.

"In response, Chinese companies, both bus manufacturers and operators, began negotiations to acquire these struggling Thai firms as a means of expanding their market into Thailand."

The Chinese entrepreneurs want to end Pattaya's combustion engine buses and instead operate Chinese electric buses to service the beach and expanding city.

Foreign businesses which do not profit Thais are frowned upon and described as "zero-based".

For example, on "zero-based tours" in Thailand, Chinese visitors are shepherded to Chinese-owned hotels, restaurants, entertainment sites, and elsewhere so that most profits repatriate to China and only a trickle reach Thai vendors.

COVID zapped Thailand's tourism industry and devasted many operators and investors.

After the pandemic eased, Thailand again became a popular destination and arrivals increased.

But tourist arrivals from China and several other countries are now only about 50 percent of their total arrivals during pre-COVID years.

Bangkok meanwhile includes a 200-year-old Chinatown which blossomed after establishing warehouses for ships along the Chao Phrya River, but Chinese living in Bangkok now are being drawn into increasingly gnarly China-Thailand affairs.

Today Chinatown's noodle-tangled backstreets are packed with generations of Chinese spawned by refugees, migrant workers, entrepreneurs, families, and others who traveled south to Thailand over the centuries from mostly east coast regions of China.

During the 21st century however, newer arrivals from China are mostly originating from southcentral inland provinces, especially Yunnan and Sichuan.

Unable to squeeze into Chinatown, they established a mini-Chinatown several miles away in Bangkok's non-descript Huai Khwang neighborhood conveniently near the Chinese embassy.

Counting just the Sichuan restaurants now in Bangkok  gives a glimpse of how many of China's inland citizens have moved into Bangkok in recent years.

"You’d be surprised to know there are over 700 Sichuan hotpot [restaurant] establishments in Bangkok alone!” Chinese Ambassador Han said, beaming with pride.

But the new influx of Chinese is making Thais "anxious," according to Khaosod English media, because:

"Most are not migrants. They are not destitute or illiterate unlike the past waves of Chinese from southern China that made up the ancestors of Thai-Chinese today.

"They are fairly educated, with capital to invest, with technology and the might of a new superpower that is China in 2024 behind them.

"They have little desire or inclination to really assimilate. Just like most of the millions of Chinese tourists who constitute the largest group of tourists in Thailand, they use Mandarin, and some expect us to understand," Khaosod English said.

Chinese criminals are also endangering people in Thailand by extorting, kidnapping, and robbing them.

"Bangkok, like other tourist towns in the country, has drawn bad press recently as a result of serious crimes involving foreign nationals, such as Chinese visitors being kidnapped," the Bangkok Post lamented in a recent editorial.

The Thai government became alarmed when a huge Chinese-language billboard appeared in July on a Huai Khwang street offering passports from foreign countries and citizenship for $4,300 to $21,500 payable in Chinese yuan currency. 

The billboard displayed passports from Cambodia, Indonesia, Turkey, and Vanuatu.

Worries swirled that Chinese criminals could buy new identities through the Chinese company and operate in Thailand.

Authorities removed the sign, arrested suspects allegedly fleeing to China, and primly reminded the country that foreign passports are not allowed to be sold in Thailand.

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Richard S. Ehrlich is a Bangkok-based American foreign correspondent reporting from Asia since 1978, and winner of Columbia University's Foreign Correspondents' Award. Excerpts from his two new nonfiction books, "Rituals. Killers. Wars. & Sex. -- Tibet, India, Nepal, Laos, Vietnam, Afghanistan, Sri Lanka & New York" and "Apocalyptic Tribes, Smugglers & Freaks" are available at
https://asia-correspondent.tumblr.com