On Aug. 5, Cambodia kicked off construction on a highly controversial canal funded by the Chinese Communist Party (CCP) that aims to link the capital Phnom Penh to the sea. Despite environmental concerns and potential diplomatic strain with neighboring Vietnam, the Cambodian government has committed to building the project “no matter the cost.”
The $1.7 billion, 180-kilometer (111-mile) Funan Techo canal is designed to connect Phnom Penh with Kep province on Cambodia’s south coast, providing access to the Gulf of Thailand. This 100-meter (328 feet)-wide and 5.4-meter (17.7 feet)-deep canal is expected to reduce shipping costs to Cambodia’s only deep-sea port in Sihanoukville and lessen dependence on Vietnamese ports.
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Strategic and economic implications
But the canal project underscores China’s significant influence in Cambodian politics and economy. The potential environmental impact on the Mekong River, which sustains millions across six countries through its fish and agricultural resources, remains a major concern.
“There is a concern that most of the Cambodian exports might be diverted from the current route, crossing the Vietnamese border to Vietnamese ports and moving away from that to Cambodian ports,” said Nguyen Khac Giang, an analyst with Singapore’s ISEAS-Yusof Ishak Institute
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However, Vietnam has been cautious in voicing these concerns publicly, given the “complex historical legacy” between the two nations. Despite strong bilateral ties, Vietnam is wary of appearing to infringe on Cambodia’s sovereignty.
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Political motivation
The infrastructure project is also seen as a strategic move by Cambodia’s ruling elite to bolster support for Hun Manet, who recently succeeded his father, Hun Sen, after his 38-year tenure to take over as the country’s prime minister. The government declared the canal groundbreaking day — which coincided with Hun Sen’s birthday, a public holiday — in hopes of encouraging nationwide participation in the celebration.
Thousands of Cambodians, donned in t-shirts featuring photos of Hun Sen and Hun Manet, gathered at the canal site adorned with Cambodian flags and billboards extolling the canal’s economic benefits. Hun Manet emphasized the project’s significance, stating it would enhance “national prestige, the territorial integrity and the development of Cambodia.”
“We will build this canal, no matter the cost,” he declared, stressing that the project, though jointly built by Chinese and Cambodian companies, would maintain a 51 percent Cambodian majority share to ensure control remains within the country.
Deputy Prime Minister Sun Chanthol also confirmed that the Chinese state-owned China Road and Bridge Corporation secured the construction contract.
Environmental and regional worries
Despite assurances from the Cambodian government, the U.S.-based nonprofit Stimson Center has warned of “significant transboundary impacts on water availability and agricultural production in Vietnam’s Mekong Delta,” a critical rice-growing region.
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“The way Cambodia’s government has communicated its intents to build the canal is creating diplomatic friction with its neighbor Vietnam,” the Stimson Center report read, adding, “Regional tensions and environmental impacts of the project will be reduced if Cambodia follows the letter of the 1995 Mekong Agreement.”
In response to these concerns, Vietnam requested more transparency and collaboration with Cambodia and the Mekong River Commission in April to assess the project’s potential environmental impact. “We have asked Cambodia to collaborate closely with Vietnam and the Mekong River Commission in sharing information and assessing the project’s impacts on water resources and ecosystem in the Mekong Delta region,” a Vietnamese official stated at the time.
Expanding Sino influence
Cambodia’s deepening ties with China are evident in the numerous Chinese-funded projects scattered across the country, including hotels, casinos, airports, and roads financed by Chinese state banks. Nearly 40 percent of Cambodia’s over $11 billion in foreign debt is owed to China, highlighting the significant influence China wields over the country.
In June 2022, Cambodia and China initiated a naval port expansion project at the Ream Naval Base, raising concerns from the U.S. and other Western nations about a potential Chinese military outpost on the Gulf of Thailand. Despite reports suggesting Hun Sen granted China the right to establish a military base at Ream in 2019, he has consistently denied these claims, citing Cambodia’s constitutional prohibition against foreign military facilities.
Meanwhile, U.S. diplomats have repeatedly raised concerns with the Cambodian government over an increased Chinese military presence there — especially after Beijing became involved with the construction of an undisclosed base there in 2016. State-owned China Metallurgical Group Corporation announced in June 2016 that it had signed a cooperation framework agreement with the Cambodian defense department for a “port expansion project” of an unnamed naval military base.
