The Gulf of Thailand May Be the Next U.S.-China Flashpoint

While geopolitical tensions between China and the United States have soared in the South China Sea and Taiwan Strait, raising serious fears of war, another important body of water in the Indo-Pacific—the Gulf of Thailand—has heretofore remained relatively calm. That may be set to change in the coming years as Beijing embarks on a series of controversial projects that could inflame the region.

On August 5, Cambodian Prime Minister Hun Manet presided over a ceremony to launch the construction of the Funan-Techo Canal project, connecting the landlocked capital, Phnom Penh, to the Gulf of Thailand. If successfully completed, the canal will cut shipping transits through neighboring Vietnam by 70 percent and boost government revenue by $88 million annually to support Cambodia's socio-economic development. At the ceremony, Manet noted “through the construction of the historic canal, we are showing a sense of patriotism and national unity.”

But Cambodian interests clearly are not the only national interests in play. China is funding the $1.7 billion project, and it is set to benefit geostrategically. For the first time, the canal will grant Beijing access to the Gulf of Thailand directly from China. Because the Mekong River originates in China's Tibetan province, Beijing could sail not just commercial ships, but warships, through Myanmar, Thailand, Laos, and Cambodia, and then through the completed Funan-Techo canal and into the Gulf of Thailand. To be sure, there are good reasons to believe Beijing would struggle to navigate the new canal with its military, to include the numerous Chinese damming projects along the Mekong and the likely reduced water level and flow because of them, as well as the need to blast rapids for deeper draft ships.

But none of these challenges are necessarily insurmountable over the longer term. This means that China's maritime forces—whether navy, coast guard, or fishing militia—could leverage their newfound riverine presence to deploy into the region with three key objectives in mind.

First, Beijing might try to blunt Washington's uninhibited access to the Strait of Malacca. China's so-called “Malacca Dilemma” posits that the U.S. military might close off this critical strait connecting the Indian and Pacific oceans, thereby choking Beijing off from resources needed to prosecute conflicts over Taiwan or in the South China Sea.

A second advantage of the canal project is that it would obviate the need for Chinese maritime forces to sail through the South China Sea and around Indochina to access the Gulf of Thailand. This would not only be quicker but would also limit the chances of adversary forces challenging Chinese deployments.

And finally, the canal would allow China to establish a presence on Vietnam's western flank rather than just to its east in the South China Sea. This could literally be a geostrategic gamechanger as it would reduce the value of Cam Ranh Bay naval base on Vietnam's southeast shoreline as well as Hanoi's recently built artificial islands in the South China Sea. It would also force Vietnam to make difficult decisions about the allocation of military resources to address the new potential theater to its west.

To be sure, China is arguably already achieving some of these military objectives. That's because China now deploys navy ships to Cambodia's Ream Naval Base on the Gulf of Thailand. In 2020, Phnom Penh, with no warning, demolished American buildings there, and then contracted with Beijing to rebuild the base. Upon suspicions that China might plan to deploy forces to its second official overseas base in Cambodia (Djibouti was the first in 2017), Beijing and Phnom Penh strenuously denied the allegations, with the latter claiming that doing so would be against the Cambodian constitution which forbids foreign military basing on its soil.

And yet, for months now, Chinese naval ships have been consistently spotted on a portion of the base. One Cambodian resident of the area said “the Chinese navy doesn't want Cambodian workers and navy to go close to its part [of the base],” suggesting that Beijing's operations there are sensitive.

China's involvement in the Funan-Techo Canal and Ream Naval Base are two primary illustrations of how the Gulf of Thailand may be sliding into greater focus within the context of intensifying U.S.-China great power competition. But there may be others as well.

For example, some have argued that Dara Sakor International Airport, which was just completed with Chinese funding, is of potential concern. Dara Sakor is on the Cambodian shoreline and curiously features runways with turning radiuses that could accommodate military-grade aircraft rather than strictly civilian aircraft. To date, however, there are no additional signs of militarization on the airport.

Another longstanding possibility is that China funds the Kra Canal across Thailand's Kra isthmus to connect the Gulf of Thailand and Bay of Bengal. The project is yet to come to fruition, but if or when it does, it could represent yet another way Beijing breaks out of the Malacca Dilemma.

Conjecture aside, what we know today is that China is already active militarily in the Gulf of Thailand, and future projects could offer additional opportunities to become further enmeshed there—offering real geostrategic advantages against the United States and Beijing's neighbors. In the years to come, the United States could counter by militarizing the Gulf of Thailand in its own right, but that would be a mistake. Rather, Washington should look to engage with regional nations, including, most importantly, Thailand as a security ally, but also Malaysia, Singapore, Vietnam as close partners, and even Cambodia itself.

The goal should be to undermine China's growing military position in the Gulf of Thailand and to ensure that what are today ostensibly commercial projects—like the Funan-Techo Canal and Dara Sakor—do not eventually support Chinese military objectives. To be sure, this won't be easy. Most countries are hedging and will seek to avoid appearing as if they are collaborating with the United States against China. And Cambodia is actively collaborating with China. Even Thailand will be tough to engage as Bangkok tends to have a softer view of Chinese activities throughout the Indo-Pacific.

But regional perceptions could rapidly change if Chinese military assets begin patrolling the Gulf of Thailand or otherwise engage in threatening behavior. In the meantime, the United States and its allies and partners should remain vigilant and convey their concerns appropriately.