China has cancelled a deal to buy more than a million tonnes of rice from Thailand due to a probe into the Thai government's subsidies for rice growers.
Thai Commerce Minister Niwattumrong Boonsongpaisan said on Tuesday a Chinese state company terminated a contract to buy 1.2 million tonnes of rice.
He said the company was afraid it would run into problems due to an investigation by Thailand's National Anti-Corruption Commission.
The rice scheme is a flagship policy of Prime Minister Yingluck Shinawatra's embattled caretaker government.
Critics say the policy of buying rice from growers at above market prices has accumulated losses of at least $US4.46 billion ($A5.11 billion) and has been dogged by corruption.
Thousands of farmers have blocked main roads in the provinces to demand overdue payments from the government.
