An army-led coup toppled Thailand's elected government in May last year, after months of street protests. The coup was widely condemned by Western nations, which downgraded diplomatic ties with Thailand, but the military rulers claimed to have support from China following the move.
Since then, Thailand - a traditional ally of the United States - has sought to improve ties with neighbours. It has also stepped up engagement with China, as Beijing increases its influence in the region with a raft of loans and aid for infrastructure.
Defence Minister Prawit Wongsuwon said the submarine purchase formed part of a bigger Thai defence budget for 2016, which is worth 207 billion baht (US$6.1 billion) - an increase of 7 per cent from 2015.
"The Thai navy's committee, consisting of 17 people, has decided which submarines it will choose," Prawit told reporters.
"We did so after looking at submarines of various countries and found China's to be the best value. We had to look at the price, quality and other aspects."
Prawit did not say when the submarines might be delivered, however, as the plan will now go to the cabinet for approval.
THAILAND'S APPROVAL MAKES STRATEGIC SENSE
China is the world's third largest arms exporter, according to think tank the Stockholm International Peace Research Institute, but little is known about its exports as it does not publish data on such sales.
Officials said Thailand's quest for submarines makes strategic sense and could help it ensure freedom of navigation in the Gulf of Thailand if territorial disputes in the South China Sea spiral out of control.
China claims most of the potentially energy-rich South China Sea, through which US$5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.
Thailand's purchase helps it catch up with neighbours, such as Indonesia, Singapore and Vietnam, who have bought submarines.
Each submarine will cost 12 billion baht (US$355.23 million), said Prawit, but he declined to comment on reporters' queries about any advantages to Thailand from buying Chinese submarines.
The submarine acquisition plan is not new. Thailand has never had submarines and has tried, since the 1990s, to ink deals with several countries, including South Korea and Germany.
Thailand's defense spending, which typically increases after a coup, grew 5 per cent this year from 2014.
The People's Liberation Army Navy Type 039A Yuan-class submarine designated as S20 for export variant.