Even though the weapons technology built by China is so modern, there is a stumbling block in the production of diesel electric submarine engines, where the export market does not yet give confidence in the quality of submarine engines made in China.
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This was confirmed by Thailand which officially postponed indefinitely the procurement project for AIP (Air Independent Propulsion) S26T class (Yuan class) submarines built by the China Shipbuilding and Offshore International Company (CSOC).
In an unexpected announcement, Thai Defense Minister Sutin Klungsang revealed that the Royal Thai Navy had ordered a Chinese-made frigate rather than proceed with the planned acquisition of S26T class submarines, due to the unavailability of German engines as stipulated at the start of the contract. So far it is not known what type or types of frigates Thailand will buy from China.
Quoted from eurasiantimes.com (22/10/2023), however, it is said that the project to purchase the S26T submarine was not immediately canceled. During a visit to Navy Headquarters, Sutin said his country had not abandoned the submarine deal with China, but had postponed it until later "Indefinitely, waiting for their (China's) readiness," said Sutin Klungsang.
“The submarine project was not canceled but postponed for a certain period of time… The project will resume when the country is ready.” Thailand's defense minister did not set a timetable for getting the submarine purchase back on track.
In 2017, a preliminary agreement for the purchase of S26T Yuan class submarines with German MTU-396 diesel engines was drafted. However, problems began to emerge after Germany canceled the deal, citing policy constraints that prevented the planned engines from being incorporated into China's military equipment.
The deal ultimately hit a roadblock as Thai Prime Minister Prayut Chan-o-cha threatened to cancel the agreement if China could not install the German MTU-396 diesel engines specified in the initial purchase agreement.
To prevent the deal from falling through, Beijing offered a local alternative CHD620 engine, made by a Chinese submarine manufacturer, and certified by Germany's MTU. Some heated negotiations followed, with the Chinese delegation relentlessly trying to use their machines.
Thailand is known to reject Chinese-made submarine engines for quality reasons. The Royal Thai Navy also stated that it was sticking to the original terms of the contract, which it felt were non-negotiable.
Historically, the Thai government approved the purchase of three S26T submarines worth US$ 1.05 billion in April 2017. However, due to budget constraints, it only approved the purchase of one submarine worth US$ 403 million, while the other two were postponed. The S26T class submarine was originally scheduled to be delivered in 2024.
The root of the problem of the stalled S26T submarine construction project is because of the embargo, specifically China was hit by an arms embargo from the European Union, in this case, it was Germany who imposed the embargo.
Concretely, the S26T submarine requires three MTU396 diesel engines, which must be purchased from the German company, Motoren und Turbinen Union GmbH, where the three engines will be used to run the submarine's electric generator.
The German government refused to send MTU machines to China. German defense attache to the Kingdom of Thailand, Philipp Doert, in an open letter to The Bangkok Post, confirmed his government's decision to reject the use of German engines for Chinese-built submarines.
“Exports were rejected because they were used for Chinese military/defense industrial goods,” he wrote. He added, “China did not coordinate with Germany before signing the contract with Thailand, and directly offered German MTU engines as part of their products.”
Germany is bound by a European Union arms embargo imposed on China in 1989, particularly after the Tiananmen Square massacre, when Chinese security forces opened fire on unarmed protesters in Beijing. China claims that 200 civilians died in the tragedy.
