China and Cambodia Sign Canal Deal to Boost Trade

China and Cambodia have solidified their commitment to fostering secure and reliable supply chains and enhancing cooperation in transportation infrastructure. This announcement follows the signing of a key agreement between the two nations, marking a significant step in their partnership.

As part of the agreement, Cambodia will embark on the construction of a major canal, expected to play a pivotal role in revitalizing its economy. However, the scope and investment in the project have been scaled down, with the canal’s estimated cost now set at $1.16 billion and its length reduced to 151.6 km, down from the initial $1.7 billion and 180 km estimate.

These developments were finalized following Chinese President Xi Jinping’s three-nation tour across Southeast Asia, which included stops in Vietnam and Malaysia. This trip is part of China’s broader strategy to strengthen economic and trade ties with neighboring countries amidst an ongoing trade dispute with the United States.

The Funan Techo Integrated Water Conservancy Project, a cornerstone of this agreement, will be carried out with a public-private partnership model. Cambodian investors will hold a majority stake of 51%, while Chinese investors will own 49%.

Additionally, the two countries have pledged to enhance law enforcement collaboration, particularly in combating illegal online gambling and telecom fraud. Cambodia has also acted to deport several “Chinese criminals” to China, including individuals from Taiwan, a move that has stirred tensions with Taipei but been welcomed by Beijing.

The agreement also includes the establishment of ministerial-level dialogues between the foreign and defense ministers of both nations to strengthen strategic collaboration.