Cambodia Seeks Increased Financial Support from China Amid US Tariff Concerns

As President Xi Jinping arrives in Phnom Penh on Thursday, Cambodia hopes to solidify its economic partnership with China, seeking increased financial support to mitigate the impact of high US tariffs, Al Jazeera reports.

Xi’s visit is part of a Southeast Asia tour, including Vietnam and Malaysia, aimed at strengthening regional trade ties.

During the visit, Xi is scheduled to meet with King Norodom Sihamoni, Prime Minister Hun Manet, and Senate President Hun Sen.

“We expect more cooperation including on infrastructure development,” said Meas Soksensan, a spokesman for the Cambodian Ministry of Economy and Finance, indicating the country’s hopes for financial backing for the ambitious Funan Techo Canal project, estimated to cost $1.7 billion.

China has invested billions in Cambodia, becoming its largest creditor and supporting projects like roads and airports.

Cambodia, a major exporter of clothing and footwear to the US, faces a tariff rate of 49 percent on these goods, before most duties were paused until July, with many of these companies being owned by Chinese business owners, further underlining the economic ties.

In an article published in Cambodian media, Xi urged Cambodia to resist “hegemonism” and “protectionism,” echoing messages he conveyed in Vietnam and Malaysia. China is Cambodia’s largest trading partner and investment source, accounting for over a third of the country’s $11 billion foreign debt, according to the International Monetary Fund.

While China has made no firm public commitment to financing the canal project, Phnom Penh has shifted its position on Chinese involvement, reducing it from 100% to 49% of the total costs.

According to Cambodian official data, China signed no new loans to Cambodia last year, a contrast to previous years with substantial lending. This decrease aligns with China’s broader reduction in overseas investments due to domestic economic challenges and concerns about project success.

Despite these financial trends, Prime Minister Hun Manet emphasized the shared interests between the two countries “based on the principles of respect for sovereignty, equality, and noninterference in internal affairs,” highlighting China’s “pivotal role” in Cambodia’s socioeconomic development.