Will the China-Backed Canal Reduce Cambodia’s Reliance on Vietnam?

For decades, Cambodia has regarded Vietnam with a wary eye, an undercurrent of suspicion flowing through its society. Across the country’s diverse social fabric, a significant portion of the population nurses a deep-seated animosity toward its eastern neighbor, blaming Vietnam for a host of domestic troubles. This long-standing resentment has crystallized into a widely held belief that the Vietnamese are not only untrustworthy but capable of malevolent deeds.

The friction between the two nations is not confined to old grievances; it festers in the present. Border disputes linger unresolved, and the presence of Vietnamese immigrants within Cambodia’s borders stirs anxieties of a more existential nature. Some Cambodians fear that these immigrants could become pawns in a broader Vietnamese strategy to exert dominance over the country. This rising tide of anti-Vietnamese sentiment is fed by a variety of factors – both historical and contemporary – and has recently manifested in protests across Phnom Penh. These demonstrations are but the latest iteration of a familiar political strategy, wherein leaders, sensing an opportunity, stoke fears of foreign encroachment to rally popular support.

Despite this animosity, Cambodia’s political and economic structures remain deeply intertwined with Vietnam, especially in trade and business. The Mekong River, Cambodia’s lifeline and vital for agriculture and the transportation of goods and people, flows into Vietnam and eventually opens to the sea, making Cambodia dependent on Vietnamese ports for maritime access. This reliance gives Vietnam significant leverage in its dealings with Cambodia. Although Cambodia has its own coastline and ports, the challenging terrain makes the Mekong River a more practical route for transporting goods and facilitating commerce.

Reducing this dependence has long been a goal for Cambodian policymakers. In pursuit of this objective, the government has proposed a costly project to reroute the Mekong River to the Cambodian coast via a canal. However, securing funding for such a massive undertaking has proven challenging. The only nation willing to assist Cambodia is China, known for financing projects in countries with limited capacity for repayment. China has expressed interest in the canal project, even considering the potential disruptions it may cause to Vietnamese ports – an intriguing dilemma, especially given China’s close relationship with Vietnam.

The canal, commonly known as the Funan Techno Canal and officially named the Tonle Bassac Navigation Road and Logistics System Project, will span 180 km. The project aims to connect Phnom Penh with Cambodia’s only deep-sea port in Sihanoukville and the newly developed port in Kampot. The plan includes the construction of three dams with sluices and eleven bridges. The estimated completion date is 2028, with a projected cost of $1.7 billion, entirely funded by the China Road and Bridge Corporation. The canal will be developed under a build-operate-transfer (BOT) contract, with hopes of reducing reliance on Vietnamese ports, particularly Cai Mep. Unsurprisingly, Vietnam has raised environmental concerns regarding the project, but Cambodia is determined to move forward. The canal’s groundbreaking ceremony took place on August 5, 2024.

The canal offers enormous opportunities for Cambodia by providing crucial access to the sea, which is essential for economic growth. With this project, Cambodian businesses will gain direct access to maritime routes, significantly reducing costs. The areas surrounding the canal are expected to experience a surge in investment, leading to further infrastructure development that will undoubtedly boost the economy. Cambodia is already a favored partner of China, and reports indicate that developing infrastructure will create more investment opportunities in the country, signaling a potential influx of foreign capital.

Politically, the leaders who have brought this project to fruition are likely to be celebrated as heroes, particularly for fulfilling a generational demand to reduce Cambodia’s dependence on Vietnam. President Hun Sen, whose administration has championed this ambitious initiative, envisions it as a cornerstone of his legacy – not as a leader besmirched by corruption, but as the architect of a transformative achievement for Cambodia. The canal is also anticipated to alter the region’s geopolitical landscape, fostering a greater separation between Cambodia and Vietnam. In a recent speech, Prime Minister Hun Manet underscored that the canal – his father’s brainchild – will not only boost the economy but also enhance Cambodia’s independence, promote trade, industry, and agriculture, and ensure efficient water management.

However, this project also carries significant risks. The massive investment from China, coupled with interest rates that Cambodia may struggle to repay, could further bind the country to Chinese influence. This dependence on Chinese policies and products might lead to a challenging economic situation, with Cambodia potentially falling into a debt trap similar to those experienced by Sri Lanka and Pakistan. Consequently, much of the revenue generated by the project may ultimately flow back to China.

Projects involving transboundary rivers are often mired in disputes, driven by conflicting national interests. While the canal promises substantial benefits for Cambodia, it simultaneously poses risks for Vietnam, likely exacerbating tensions between the two countries. As a partner to both, China may find itself in the delicate position of mediating the issue, seeking to navigate the complexities without drawing in external parties. Yet, it is evident that this canal has the potential to alter the political and economic dynamics of the region.