Executive Summary

This report analyses the conflict between Thailand and Cambodia, highlighting how it can impact Chinese regional interests and represents a growing element of instability in Southeast Asia.

On December 8, 2025, Bangkok attacked Cambodian military positions along the border, violating the ceasefire that both countries had signed on October 26, 2025, at ASEAN headquarters.

This military escalation threatens the balance in Southeast Asia and could affect the strategic interests of the United States and the People’s Republic of China (PRC).

Key Takeaways

1. China considers the conflict between Thailand and Cambodia a risk to its economic and strategic interests in Southeast Asia and the South China Sea (SCS).
2. The United States considers Bangkok an essential partner in containing the PRC’s influence in Southeast Asia and the SCS.
3. The Thailand-Cambodia conflict could destabilise the balance within ASEAN and impact local businesses and investors active in the region.

Background information

On December 8, 2025, Thailand struck Cambodian army positions in Preah Vihear and Oddar Meanchey, claiming that Cambodia had attacked its forces and violated the ceasefire. The Thai strikes killed and injured civilians, forcing both Thai and Cambodian residents to flee the border temporarily. Phnom Penh rejected Bangkok’s accusations.

The escalation follows the brief war between Thailand and Cambodia from 24 to 28 July 2025, during which both sides fought intensely over disputed areas, causing dozens of casualties and displacing over 100,000 people.

On July 28, 2025, Thailand and Cambodia formally ended the conflict with a bilateral peace agreement. On October 26, 2025, the United States and ASEAN brokered a ceasefire in Kuala Lumpur, which required both countries to withdraw heavy weapons from the border, deliver humanitarian aid, and implement ASEAN-led monitoring mechanisms.

Geopolitical Scenario

The conflict between Cambodia and Thailand threatens Southeast Asia’s stability and the People’s Republic of China’s strategic interests considering the countries’ geographic positions and strategic significance. This risk stems from two key factors:

• The Gulf of Siam: This geo-maritime area holds significant importance because it lies near the Straits of Malacca and Sunda, essential passages for the main Sea Lines of Communication across the South China Sea. It also lies close to the military installations that the People’s Liberation Army has built in the Spratly and Paracel archipelagos.
• River network: Thailand and Cambodia share an extensive hydrographic system, with the Mekong River playing a central role in food security, socio-economic stability, and the sustainability of rural and fishing economies throughout the region.

Looking at the economic scenario, both Cambodia and Thailand are strategic partners for the Belt and Road Initiative (BRI) and for infrastructure and industrial investments in Southeast Asia, helping to address the Malacca dilemma.

Cambogia-China relations

By signing the 2019–2023 Action Plan, Cambodia initiated cooperation with Beijing, focusing primarily on building an extensive infrastructure network:

• Energy and transport projects: Cambodia constructed new hydroelectric reservoirs, including Kamchay, Stung Tatay, and Russei Chrum Krom (USD 1.8 billion), and built two coal-fired power plants in Stoeng Hav and Kampot (USD 732 million), alongside developing a national motorway network.
• Transport and trade hubs: Cambodia expanded Siem Reap Airport and the Port Autonome de Sihanoukville, which handles 70% of the country’s foreign trade and connects the Sihanoukville SEZ to international routes. The Sihanoukville SEZ (11 km², 160 textile companies, 20,000 jobs, USD 400 million in 2018) operates as a hub for Chinese investment and technology transfer, while simultaneously increasing Cambodia’s economic dependence on Beijing.

Phnom Penh and Beijing formalised their cooperation through the China–Cambodia Free Trade Agreement, which eliminated tariffs on nearly all tariff lines and promoted growing industrial and commercial integration, strongly favouring Beijing. Sino-Cambodian trade reached USD 15.19 billion in 2024, with Cambodia exporting only USD 1.75 billion to the PRC while importing USD 13.44 billion from China, creating a trade deficit of USD 11.69 billion in Beijing’s favour

The PRC also serves as Phnom Penh’s main creditor. At the end of 2023, Cambodia’s external public debt stood at approximately USD 11.19 billion (≈26.7% of GDP), of which Cambodia owed USD 4.11 billion (36.7%) directly to Beijing.

Thailand–China relations

Thanks to its geographical position and industrial capacity, Thailand is one of the most important countries in Southeast Asia. The 2014–2019 industrial policies, in particular Thailand 4.0, have favoured high-tech sectors, increasing the attractiveness for foreign direct investment from Beijing, particularly in the infrastructure sector:

• Beijing designed the Kunming–Bangkok railway to connect Kunming and Bangkok via the Laos–China railway. The Laos–China segment (Vientiane–Boten / Kunming–Vientiane) cost approximately $5.9 billion and spans 414–427 km. Thailand plans to build the Bangkok–Nong Khai section (609 km) with a budget of US$12.9 billion.
• Developers propose the Kra Canal project, with an estimated cost of US$30 billion, to link the Andaman Sea to the Gulf of Thailand. The project aims to bypass the Strait of Malacca, reduce navigation times by 2–5 days, and save large oil tankers an estimated US$300,000–350,000 per trip. The Strait of Malacca, the world’s main energy chokepoint with approximately 23.7 million barrels of oil per day in 2023 (followed by the Strait of Hormuz with 20.5 million barrels per day), has prompted Bangkok to upgrade key ports and infrastructure. Authorities plan to increase Laem Chabang’s capacity from 7.7 to 18.1 million TEUs by 2025 and expand the Map Ta Phut Industrial Deep Seaport to handle over 43 million tonnes per year.

Infrastructure development can increase both the capacity of Thailand’s Eastern Economic Corridor (EEC), which covers 13,000 km² and hosts high-tech projects, and bilateral trade between Bangkok and Beijing. In 2024, China exported USD 80.62 billion to Thailand, while Thailand exported USD 35.23 billion to China. Chinese exports, concentrated in capital and intermediate goods, support Thai industrial production, while Thailand mainly exports agricultural products and low value-added manufactured goods

Indicators to Monitor

• The evolution of the war between Thailand and Cambodia, focusing on potential escalation and related geo-economic risks, such as reduced traffic through the Strait of Malacca.
• Chinese diplomatic interventions aimed at mediating between Bangkok and Phnom Penh to protect Beijing’s interests in both countries.
• US actions following the White House’s failure to enforce the ceasefire signed on 26 October 2025 in Kuala Lumpur.

Conclusion

The conflict between Thailand and Cambodia exposes the limits of ASEAN mediation and directly threatens Southeast Asia’s stability and the security of the Strait of Malacca, a strategic hub for both the PRC and the United States. Any escalation could disrupt regional and global supply chains, damage land and sea logistics networks, slow BRI-related economic corridors, and increase the vulnerability of ports, critical infrastructure, and transit hubs, with potential repercussions on international trade.

Since 2013, China has considered Cambodia and Thailand essential pillars for the BRI and for the Lancang–Mekong Cooperation, which Beijing launched in 2016 to promote economic development and sustainable management of the Mekong basin. The PRC has also increased military cooperation with Bangkok and Phnom Penh. In 2025, the Golden Dragon joint exercises with Cambodia, held at the China–Cambodia Joint Support and Training Centre at Ream naval base, involved Type-056A corvettes, amphibious landing ships, helicopters, and integrated sea-air operations, demonstrating China’s growing naval presence in the Gulf of Thailand.

In recent years, China has strengthened military cooperation with Thailand through joint exercises and advanced weapons sales. The Falcon Strike 2025 and Blue Strike 2025 exercises enhanced Thai forces’ interoperability and operational familiarity with Chinese military platforms. At the same time, Thailand acquired sophisticated weaponry from Beijing, including the S26T diesel-electric submarine, an export variant of the Yuan class.

Despite the ASEAN’s failed ceasefire, the White House regards Thailand as a key economic and security partner in Southeast Asia. In 2024, US–Thailand trade reached $88.3 billion, up 13.6% from 2023, with US exports totalling $17.9 billion and Thai imports $63.3 billion, creating a goods trade deficit of $45.5 billion. Trade in services reached $7.1 billion, with a modest deficit of $140 million, reflecting strong exchanges in both goods and services.

Beyond trade, Washington maintains close military cooperation with Bangkok through regular exercises such as Cobra Gold, which improve the readiness of both armed forces. Overall, Thailand’s economic and defence partnerships make it a central US partner in promoting a rules-based regional order, containing Chinese influence, and protecting key trade routes.