Cambodia is seeking China’s financial support as Chinese President Xi Jinping visits Phnom Penh amid growing economic pressure from US tariffs.

Xi met with Prime Minister Hun Manet and Senate Chairman Hun Sen on April 17, 2025, during a regional tour aimed at strengthening trade ties. The leaders discussed future cooperation, especially in infrastructure.

Cambodia is hoping for backing on its US$1.7 billion Funan Techo Canal project, though China’s financial role remains unclear.

Phnom Penh recently reduced its expected Chinese funding from 100% to 49%.

China is Cambodia’s largest trading partner and creditor, holding over a third of its US$11 billion foreign debt.

However, Beijing did not issue new loans to Cambodia last year due to domestic economic challenges.

🔗 Source: Al Jazeera

🧠 Food for thought

1️⃣ The economic balancing act of nations caught in US-China rivalry

Cambodia exemplifies the complex position of smaller economies navigating between competing superpowers amid escalating trade tensions.

Nearly half of Cambodia’s garment and footwear businesses exporting to the US are Chinese-owned, creating a unique vulnerability as US tariffs (temporarily paused until July) threaten with rates as high as 49% 1.

This dependency is reflected in Cambodia’s economic structure, where 90% of clothing factories are now Chinese-owned, yet the US remains its largest export market, demonstrating how supply chains have become battlegrounds in great power competition 2.

Cambodia’s situation mirrors challenges faced by other Southeast Asian nations like Vietnam and Malaysia, who must delicately navigate economic relationships with both powers to avoid being forced to choose sides.

The country’s growing reliance on China for investment ($1.37 billion in 2023, nearly 50% of total foreign investment) while depending on American consumers for export revenue creates strong incentives to maintain neutrality despite close ties to Beijing 3.

2️⃣ Infrastructure investment as strategic policy tool beyond economic value

The $1.7 billion Funan Techo Canal represents more than just economic development. It embodies how infrastructure projects serve as instruments of geopolitical influence.