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China Exim Bank, a Chinese state policy lender, signed a loan agreement worth almost $1 billion with a joint venture of Cambodian and Chinese companies to finance Cambodia’s flagship Funan Techo Canal, Deputy Prime Minister Sun Chanthol said on Wednesday.
The loan, signed at an investment forum in Xiamen, China, follows a $200 million loan from China that Chanthol, who also serves as First Vice Chairman of the Council for the Development of Cambodia (CDC), announced in July. Together, the two loans bring financing from Chinese state banks to the project’s entire estimated $1.2 billion cost.
The 180-km canal will connect the Mekong River to the Gulf of Thailand, reducing Cambodia’s reliance on shipping routes through neighboring Vietnam. The project has faced criticism over its displacement of residents along the route and its environmental impact, as well as questions over the extent of Beijing’s influence.
Since groundbreaking in 2024, the Cambodian government has said the project is 51% owned by Cambodian investors through a joint venture involving Overseas Cambodia Investment Corporation (OCIC), Phnom Penh Autonomous Port and Sihanoukville Autonomous Port. The remaining 49% is held by China Road and Bridge Corporation (CRBC), a subsidiary of state-owned China Communications Construction Company. OCIC is controlled by politically connected tycoon Pung Kheav Se and was also the lead developer behind Cambodia’s new $1.5 billion Techo International Airport.
The new financing has put renewed focus on the significance of Cambodia’s ownership stake.
Ou Virak, president of Phnom Penh-based think tank Future Forum, said the 51% Cambodian ownership remains important for the government to present the canal as a national project and deflect potential criticism that Cambodia is compromising its sovereignty to China.
“Can Cambodia or Cambodian companies own 51% of the canal and still borrow most of the money from China? Legally, the answer is yes,” he said. “But due to debt burdens, China will retain a lot of influence on decisions on the canal and probably on Cambodia as a whole.”
Heng Suthy, spokesperson for the Funan Techo Canal project, and Meas Soksensan, spokesperson for the Ministry of Economy and Finance, declined to comment.
Other analysts remained bullish on Cambodia’s decision-making for the project.
Ky Sereyvath, economist at the Royal Academy of Cambodia, said the financing loan “does not mean China is directly paying to build the canal.”
“The owner of the loan money is Cambodia,” he said. “Cambodia is fully responsible for this canal and will repay the principal along with interest back to China [China Exim Bank] once operations begin.”
Sereyvath said that the canal could strengthen Cambodia’s economy, particularly by improving the transportation of freight and goods.
The new loan comes as Cambodia’s total public debt stands at $13.3 billion as of the first quarter of 2026, of which $4 billion is owed to China, according to the Ministry of Economy and Finance.
Virak said the debt could carry geopolitical risks, particularly the potential costs Cambodia could face from taking on additional debt from China while simultaneously straining relations with its long-term ally and neighbor, Vietnam, who has expressed concerns over the canal’s water use and its impact on downstream communities in Vietnam’s Mekong Delta region.
“It could potentially be significantly beneficial to communities along the canal for water access and rising property values. But it could also divide communities on either side of the canal and negatively impact traditional villages and culture, like burials,” he said.
“At this stage, I have not seen a comprehensive cost and benefit analysis being publicly released.”
As financing moves ahead, some residents in the canal’s slated path remain uncertain. Dim Mech, a resident along the canal’s first section, said that he still has not received any updates, particularly regarding compensation.
“Residents in my village have not yet received compensation,” he said. “I heard on the news that authorities plan to bring machinery to the site during the low-water season. People are afraid – why are they sending machinery when compensation hasn’t been paid?”
