Chinese President Xi Jinping wrapped up a five-day, three-nation Southeast Asia tour on Friday with 37 new agreements inked in Phnom Penh. 

The accords, covering multiple sectors, lacked fresh loans or grants and saw no confirmation – or specifics – of funding for a flagship canal project clouded by uncertainty over China’s backing.

Xi’s arrival in Cambodia, like his stops in Vietnam and Malaysia days earlier, coincided with the U.S. administration’s escalating protectionist policies and “reciprocal” tariffs, with China and Cambodia hit hardest in the region – though Cambodia received a 90-day reprieve.

The stop in Phnom Penh, Xi’s first in nearly a decade, also marked the 50th anniversary of the genocidal Khmer Rouge’s takeover, a regime once backed by Beijing. But history aside, the meeting underscored what both sides call an “iron-clad” friendship, with Cambodia among China’s closest partners in Southeast Asia.

Still, the absence of firm financial pledges signals China’s more cautious posture under its Belt and Road Initiative. That leaves Cambodia promoting ambitious development plans with uncertain backing – a vulnerability analysts say could expose the country to both financial strain and strategic risk amid deepening U.S.-China rivalry.

Beijing Backs Plans, Not Payments

More than Malaysia but falling short of Vietnam, the 37 cooperative agreements signed during Xi’s Phnom Penh stop aim to deepen partnerships in sectors such as investment, trade, education, finance, and tourism. In addition to state-level commitments, several public-private and business-to-business deals were signed, referencing major projects like the Funan Techo Canal, a 900 MW LPG power plant in Koh Kong, and an undisclosed railway project.

​​Despite the breadth of cooperation agreements, no explicit grants or loans were announced to fund major infrastructure projects. That includes the Funan Techo Canal, a planned $1.7 billion waterway connecting the Mekong River near Phnom Penh to the Gulf of Thailand, redirecting flows from the rice-rich Mekong Delta and reducing reliance on Vietnamese ports.

Previously, Beijing, which is Cambodia’s largest creditor, made no public funding pledge for the canal, while Phnom Penh has shifted its line on Chinese support from covering 100% to 49% of the project’s costs.

The closest signal of direct backing came on April 18, the final day of Xi’s state visit, when the chairman of state-owned China Communications Construction Company told Prime Minister Hun Manet the firm was committed to “successfully building the canal according to the set plan.”

The day before, five official documents were signed between Chinese state-owned construction firms and the Cambodian government regarding the canal, according to the Council for the Development of Cambodia (CDC). These included unspecified private sector agreements, details of which were not made public.

Hoeurn Somnieng, deputy secretary-general of the CDC, declined to comment on the project’s financing, saying the canal is a public-private investment led by the companies under their own terms, before referring questions to the Ministry of Economy.

Spokespeople for the Ministry of Economy and the Chinese Embassy did not immediately respond to requests for comment.

Somnieng said legal and technical teams are “working smoothly” to address impacts and finalize demarcations, with the partners committed to staying on schedule. Construction will proceed in phases, aligned with Cambodia’s dry season from December to June, he mentioned.

Lim Tong Eng, a resident along the canal’s route who is set to be displaced, said he has received no information on relocation, compensation, or construction timelines.

When asked whether China had offered any loans or grants, Cambodian government spokesperson Pen Bona declined to comment.

BRI Optics, Strategic Limits

Sophal Ear, a Cambodian political analyst and associate professor at Arizona State University, said the Funan Techo Canal carries significant symbolic and strategic weight. 

Despite strong verbal support from China, he added that the project remains controversial, raising concerns over debt sustainability, environmental degradation, and regional tensions – particularly with Vietnam.

“After years of aggressive BRI lending, China has grown wary of being seen as a financier of white elephant projects, especially amid global criticism of debt traps,” he said. “If Beijing is hesitating on confirming its financial commitment, it may be calculating the risks, both economic and geopolitical.”  

He added that the ambiguity leaves Phnom Penh in a tough spot – pushing a bold vision without clear funding. It also signals a shift in China’s BRI strategy, from generous lending to more cautious, conditional support.

Meanwhile, Beijing also reaffirmed its support for the further development of the Sihanoukville Special Economic Zone and promised to encourage more capable Chinese enterprises to invest in Cambodia.

Ear noted that Chinese investment in Cambodia is largely concentrated in construction, casinos, and garment-related infrastructure, offering little long-term resilience. True partnership, he said, would mean joint investment in education, healthcare, and innovation – areas China has largely overlooked. Xi’s visit underscores Cambodia’s strategic value to Beijing, but also highlights the lopsidedness of the relationship. 

“The optics may suggest partnership, but the structure looks more like dependency,” he said. 

The One-China Trade-Offs

In its official statement on the agreements signed during Xi’s visit, the Cambodian government reaffirmed its support for the “one-China” policy, declaring Taiwan an inalienable part of China and opposing what it called “foreign interference” in China’s internal affairs, citing Xinjiang, Hong Kong, Xizang and Taiwan.

The language echoes that of Cambodia’s ruling party, which has long used “foreign interference” to deflect international criticism.

Notably, Cambodia deported 179 Taiwanese nationals to China days before the Chinese delegation arrived, following their arrest in a raid on an online scam center in Phnom Penh – a move it said was in line with the one-China policy. 

While Taipei condemned the deportations and sought to liaise with Cambodian authorities, Beijing praised the move. CamboJA News was unable to confirm whether any of the detainees were screened for human trafficking, a known risk in the illicit industry.

According to the statement, China also “praised” Cambodia’s efforts to crack down on cybercrime and trafficking, pledging deeper law enforcement cooperation.

Still, Beijing has continued to press Phnom Penh to take tougher action, including at a multilateral meeting earlier this year and after a major Thai-led sting on scam centers in Myanmar.

Cambodia has pledged to crack down, but watchdogs say enforcement has fallen short.

While not mentioned directly in any of the signed MoUs, Xi, in an open letter published by local media on the day of his arrival, called for stronger cooperation to prevent “color revolutions” through closer security ties.

“‘Color revolutions’ is a euphemism for grassroots democratic movements or public protest,” said Ear. “By aligning itself with China’s internal security logic, Cambodia risks importing a model of governance that prioritizes regime survival over political freedom or human dignity.”

He added that Xi’s visit underscores Beijing’s push to consolidate influence in Southeast Asia as tensions with Washington escalate.

Still, Cambodia is looking for more than diplomatic optics.

“Cambodia wants more from China to empower its economic engine. But economically, China appears also to be tremendously inward looking,” said Aun Chhengpor, a research fellow at the NGO Future Forum, a Phnom-Penh based think tank.

Chhengpor added that Cambodia is walking a tightrope – seeking vital political and economic support from Beijing while also aiming for favorable tariff negotiations with the U.S..

The day before Xi touched down in Phnom Penh, Cambodian officials met virtually with the U.S. Trade Representative to discuss strengthening trade ties, following a letter from PM Manet to U.S. President Donald Trump. Both sides committed to open dialogue and agreed to continue negotiations.

Both Ear and Chhengpor argue Cambodia should adopt a more balanced diplomatic approach, like other nations in the region navigating the U.S.-China rivalry.

“From the Ream Naval Base upgrades to unwavering support for China on global issues, Cambodia’s alignment is clear,” said Ear, referring to the newly inaugurated port, which some critics see as a de facto Chinese navy depot. Notably, it wasn’t mentioned during Xi’s visit.

In the short term, Cambodia may need to recalibrate its diplomatic stance, particularly as it negotiates a 49% tariff rate with the U.S. and the fallout from its aid cuts.

Looking ahead, Cambodia should aim to maintain strategic autonomy, avoiding overdependence on China or the U.S., and pursuing aggressive diversification of economic and trade ties with other middle and small powers, Chhengpor said.