A report claiming that China and Thailand have signed an agreement concerning plans to build a major canal project has been denied.

The Chinese government was not involved in any research or cooperation about building the Kra Isthmus Canal in Thailand, and no official statement has been made by the government relating to the project so far, the Chinese embassy in Bangkok said on Tuesday. The denial came after the widely circulated report said Chinese and Thai officials had signed a memorandum of understanding in Guangzhou, Guangdong province.

The report said the 100-kilometer canal would link the South China Sea and the Andaman Sea through the Malay Peninsula in southern Thailand. The route would provide an alternative to the Strait of Malacca, a key shipping lane for world trade.

The waterway would be 1,200 km shorter than the current route, the report added, and the project would take 10 years to complete and involve investment of at least $28 billion.

"We noticed the widely quoted report, but as far as we know, the Chinese government and related agencies were not involved with any research or cooperation over building the canal," said Yin Haihong, a spokeswoman for the Chinese embassy in Thailand.

Debate over proposals to dig a canal across the Kra Isthmus has raged for centuries, as France first put forward the idea to King Narai (1633-1688). People still have strong views about the idea, both for and against.

Pakdee Tanapura, deputy director of the economic section at the Thai-Chinese Cultural and Economic Association and a member of the National Committee for the Study of the Kra Canal Project, said the waterway could form part of the 21st Century Maritime Silk Road in the south of Thailand, according to a February report in The Nation, an English-language newspaper in Thailand.

Pakdee said the canal could ease the increasing congestion in the Strait of Malacca, reduce global shipping times and boost Thailand and other economies in the region through job creation and increased investment, while easing unrest in the south by narrowing economic disparity.

However, there are major concerns about possible damage to the environment caused by the construction of the canal, as well as by pollution produced by vessels using the waterway, said Huang Bin, head of the Chinese Department at the Kasikorn Research Center in Bangkok.

"Major projects like the Kra Canal should be approved by the Council of Ministers of Thailand, "Huang said." If the project involves a large amount of foreign investment, it should be approved by the Thai Parliament.

"But the canal was not even included in the government's eight-year infrastructure plan. The project is unlikely to start in the near future."

Xu Liping, a senior researcher specializing in Southeast Asian affairs at the Chinese Academy of Social Sciences, said digging the Kra Canal could benefit not only China, but also other East Asian countries such as Japan.

Xu said a private Thai company began a feasibility study a decade ago, but the project faces challenges. If it goes ahead, it will have a major impact on the region.

"Singapore would be less important for the United States, since the Strait of Malacca would no longer be the only passage connecting the Indian Ocean and the South China Sea," he added.

"More consensus is needed among countries before the project finally kicks off."

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