Rough seas overturned two boats carrying more than 130 tourists in the Andaman Sea off southern Thailand on Thursday evening, and at least seven people were missing, police said.
The vessel was returning to Phuket from the island of Koh Racha when it sank after being hit by five-metre (15ft) high waves in a storm.
"A command centre has been set up at Chalong Bay pier".
Last year 9.8 million Chinese tourists visited Thailand, with five million more arriving between January and May this year.
According to Phuket governor Noraphat Plodthong, a Chinese tourist is confirmed dead from the incident which occurred at 5.45 pm.
The Phoenix was carrying 105 passengers, the majority Chinese tourists, when it hit trouble, sparking a rescue attempt that took place late into the night.
The pair, who were on their honeymoon, were on different decks as the boat started to list, but both managed to escape.
Police are investigating the incident, the Phuket Marine Police said, adding that the boat was properly registered and had not been overloaded at the time of the accident.
"The 12 bodies are on the way to Vachira Phuket Hospital for identification", a statement from the Public Health Ministry in Bangkok said.
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As seas calmed, divers worked yesterday to transport bodies of the dead, including a child, as the search efforts continued.
Governor Norraphat said that the main focus of the ongoing rescue operation is an 10 kilometres radius of where Phoenix sunk and that a search by air and sea will continue until all the missing people are found.
The Pheonix boat was pummelled by huge waves as high winds whipped up the sea off the popular island of Phuket.
The kingdom is already in the global spotlight for a dramatic rescue mission in the north of the country, after 12 boys and their soccer coach were trapped in a cave complex.
The government of the eastern Chinese city of Haining in Zhejiang province also said on its official microblog account that it received a distress alert sent by phone text message from the head of the Haining Haipai Furniture.
On July 6, helicopters from the 4th Army will join the search, he said.
Chinese tourists make up the biggest foreign visitors to Thailand, with numbers surging in recent years due to the increasing popularity of Thailand's islands.
Thai television broadcast images of dozens of divers, some carrying scuba gear, searching for missing passengers and crew at the scene, while more rescuers waited on standby at a pier nearby.