Cambodia Seeks China’s Financial Backing as Xi Visits Amid U.S. Tariff Tensions

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Xi Jinping meets Cambodia’s PM Hun Manet at Peace Palace, Phnom Penh – April 17, 2025 [AKP/Reuters]

PHNOM PENH – April 17, 2025 (WE) — Chinese President Xi Jinping arrived in Cambodia today as part of a three-nation Southeast Asia tour. His goal is to strengthen regional alliances and secure trade partnerships amid rising tensions with the United States. The visit, marked by grand military honors and key meetings, highlights Beijing‘s strategy to deepen ties with close allies like Cambodia as Washington ramps up tariffs on key exports.

Xi’s regional tour, which includes Vietnam, Malaysia, and now Cambodia, occurs amid renewed hostilities in the ongoing U.S.-China trade war. Tariffs are being used as both economic tools and instruments of geopolitical influence.

“We expect more cooperation, especially on infrastructure development,” said Meas Soksensan, spokesperson for Cambodia’s Ministry of Economy and Finance.

Xi’s High-Profile Arrival in Phnom Penh

On Thursday morning, Xi Jinping touched down in Phnom Penh, where he was welcomed in a military ceremony by King Norodom Sihamoni and greeted by Cambodian Prime Minister Hun Manet and his father, Hun Sen, the longtime former leader and now Senate Chairman.

In a rare show of public diplomacy, both Manet and Sen posted pictures on their social media accounts showing their warm meeting with Xi. Although no official agreements were immediately revealed, analysts see this visit as a pivotal moment in China–Cambodia relations.

“This visit marks a new milestone in the bilateral relationship,” said Chheang Vannarith, a policy analyst and lecturer.

Cambodia’s Dependence on China – and Washington

The stakes are particularly high for Cambodia, a country balancing deep-rooted ties with Beijing against increasing dependence on exports to the United States, especially in the garment sector. About half of Cambodia’s garment and footwear exporters—industries vital to its economy—are Chinese-owned.

However, these businesses are facing major disruptions. In recent months, the U.S. slapped a 49% tariff on Cambodian-made goods, one of the highest globally. Although this tariff has been temporarily suspended until July, it has left Phnom Penh scrambling to secure new trade lifelines.

“[Cambodia] will try to negotiate that [tariff rate] down,” noted Al Jazeera’s Katrina Yu, reporting from Beijing. “Xi Jinping wants to remind them that, here we are friends, and we don’t want you to cut any deals at Beijing’s expense.”

A Strategic Infrastructure Gamble: The Funan Techo Canal

At the heart of Cambodia’s agenda is a request for Chinese funding for the Funan Techo Canal, a proposed 180-kilometer waterway that would link the capital to the Gulf of Thailand. The project, estimated at $1.7 billion, is the country’s most ambitious infrastructure development in years.

Initially, Phnom Penh suggested that China might fund the canal entirely. But recent revisions indicate that Beijing may cover only 49% of the cost, as reported in Cambodian media.

“This project would reduce reliance on Vietnamese ports and give Cambodia greater logistical autonomy,” said Srey Chanthy, an independent economist based in Phnom Penh. “But its financial viability remains in question without solid external backing.”

China’s Investment Pullback: A Sign of Caution?

Despite Cambodia’s strategic importance, China has yet to announce any new loan deals or financial packages during Xi Jinping’s visit.

Records from the Cambodian Ministry of Economy and Finance show that Beijing issued no new loans to Phnom Penh in 2024.

This marks a sharp shift from earlier years when hundreds of millions were invested in roads, airports, and power grids.

The hesitation mirrors a broader pattern. Chinese overseas investments have slowed due to domestic pressures and failed international projects.

Another reason is China’s growing debt burden from existing global loans.

According to the International Monetary Fund (IMF), more than one-third of Cambodia’s $11 billion foreign debt is owed to China.

That makes China the country’s largest single creditor.

Xi’s Anti-Western Messaging: “Oppose Hegemonism”

In a public letter published in Cambodian newspapers, Xi Jinping urged Southeast Asian nations to reject Western “hegemonism” and protectionism. He repeated the message during recent visits to Vietnam and Malaysia.

This statement is widely seen as a response to growing U.S. trade pressure, particularly from the Trump administration, which has targeted China’s supply chains and tried to shift them away from American markets.

“The Trump administration is very clearly trying to isolate Beijing,” said Al Jazeera’s Yu. “And Beijing’s response is to extend its arms to its Asian neighbors.”

Cambodia’s Strategic Shift: Export Diversification

Faced with stiff U.S. tariffs, Cambodia is pivoting its export strategy to reduce reliance on American markets. Prime Minister Hun Manet’s administration is reportedly working to boost trade with China, where Cambodian goods like mangoes, bananas, and milled rice have started making inroads.

“Cambodia is trying to diversify its export products and export markets,” said Vannarith. “China is emerging to be another key destination for Cambodian exports.”

A recent report by The Phnom Penh Post indicated that Cambodia’s exports to China rose by nearly 20% in 2024, while U.S.-bound exports declined by 8% over the same period.

The “Ironclad” Friendship: Military and Economic Ties

Xi’s visit also reaffirms what both governments often describe as an “ironclad friendship.” Beyond trade and infrastructure, military cooperation between the two countries remains strong.

Cambodia recently allowed Chinese troops to take part in joint military drills at the Ream Naval Base, a site that has drawn scrutiny from Western observers due to concerns about Chinese military expansion in the region.

According to Global Times, a Chinese state-backed media outlet, “China’s military support is a cornerstone of bilateral trust.”

Will Xi Commit to the Canal?

Despite warm rhetoric, the absence of a firm financial commitment to the Funan Techo Canal project has raised questions. Cambodian officials had hinted for months that China would provide full funding for the megaproject. Now, they appear to be lowering expectations.

“We’re still in discussions,” said a senior Cambodian official on condition of anonymity. “But we are optimistic that President Xi will show goodwill in the near future.”

A New Chapter or Political Theater?

As Xi’s plane departs Phnom Penh, analysts are left wondering whether the visit marked a substantive shift in China-Cambodia relations or was largely symbolic diplomacy aimed at countering the U.S.’s growing economic pressure.

“Symbolism matters in geopolitics,” said David Hutt, a Southeast Asia expert with the Asia Times. “Even if no deals are signed today, the clear message is that China remains Cambodia’s most important ally.”

Xi’s trip comes at a time when Cambodia’s economy is recovering from the pandemic, but remains fragile due to global headwinds and tariff threats.

Final Thoughts: Can Cambodia Balance Superpowers?

The geopolitical balancing act is not new for Cambodia, which has long navigated East-West rivalries to gain economic benefits. But this time, the stakes are higher.

More than a third of Cambodia’s debt is owed to China. Around half of its major exporters are owned by Chinese nationals. This makes Cambodia’s economic independence increasingly tied to how it manages its relationships with Beijing and Washington.

U.S. tariffs now threaten Cambodia’s most valuable exports. At the same time, Chinese investments have become more cautious. As a result, Cambodia faces a critical question: Can it gain more autonomy, or will it deepen its dependence on Beijing?

That question remains unanswered—especially until Beijing makes a firm financial commitment to major projects like the Funan Techo Canal.