Few studies on the legacies of the Chinese Civil War have examined its effects on state consolidation in the borderland area between China and mainland South-East Asia. This paper empirically examines the impact of the intrusion of the defeated Kuomingtang (KMT) into the borderland area between China, Burma and Thailand. In the People's Republic of China (PRC), the presence of the US-supported KMT across its Yunnan border increased the new communist government's threat perceptions. In response, Beijing used a carrot-and-stick approach towards consolidating its control by co-opting local elites while ruthlessly eliminating any opposition deemed to be in collusion with the KMT. In the case of Burma, the KMT presence posed a significant challenge to Burmese national territorial integrity and effectively led to the fragmentation of the Burmese Shan State. Finally, in Thailand, Bangkok collaborated with the Americans in support of the KMT to solidify its alliance relations. Later, Thailand used the KMT as a buffer force for its own border defence purposes against a perceived communist infiltration from the north. This paper contextualizes the spill-over effects of the Chinese Civil War in terms of the literature on how external threats can potentially facilitate state consolidation.