The idea has been around for at least 10 years, but the Bangkok Post cited Prayuth as saying that the Chinese government had not proposed a plan to start work on it.
The Thai premier was responding to a report by a Chinese state broadcaster that China was mulling a proposal from Thailand to construct a waterway from the Gulf of Thailand to the Andaman Sea.
In June, South Korea floated the idea of a "rail canal" on the route to load ships on to trains in a bid to slash voyage lengths.
The $4.8bn project would cut 2,000km off routes through the Strait of Malacca, according to the Korea Railroad Research Institute (KRRI).
The "dry canal" would be cheaper than building a conventional waterway, which has been estimated at $7.1bn.
