Chinese President Xi Jinping’s government is pushing ahead with the Funan Techo Canal in Cambodia, a $1.2 billion infrastructure project that’s one of China’s increasing investments in the country bordering Thailand, Laos and Vietnam.
The 152-kilometer (94-mile) waterway would link Cambodia’s factory belt to the Gulf of Thailand, lengthening an export route from one of Southeast Asia’s poorest economies and creating jobs and opportunity along the way.
Aside from the construction required, there’s also a finicky diplomatic balancing act to perform. Cambodia’s government is attempting to balance good relations with China and the US, but it’s the latter that has created fears of the nation becoming a client state due to its dependence on Chinese financing. Diplomats indicate that it will be increasingly more difficult to sustain the balance in the coming years.
Cambodia has long depended so much on China, which has spent far more on roads, bridges and factories than the US has. Yet since taking office in 2023, Prime Minister Hun Manet — a son of his father, who is also a West Point alumnus — has also welcomed visits by high-ranking US military officials and expressed a desire for more even-handed diplomacy.
China now holds a third of the country’s debt, and two-way commerce last year reached a record high of $15 billion, according to official statistics.
General merchandise trade with America, meanwhile, climbed to around $13 billion in 2024, which was an increase of 9.2% from last year, according to Washington Bureau of Economic Analysis figures.
America’s activity in Cambodia over recent decades has been linked to USAID economic development activity. Late last month, the Trump administration withdrew from two projects involving assistance with child literacy and child nutrition. A major bridge for US influence was closed, and a door was soon opened for China to move in with nearly the same support.
President Donald Trump’s decision to pull foreign aid followed the US’s imposition of a 49% tariff on Cambodia — close to the maximum of all the targeted countries. The highest of all his so-called reciprocal tariffs were delayed until early July so bilateral talks could take their course, but such hardline tactics risk pushing Cambodia further into China’s sphere of influence.
