China-Indochina Strategic Projects

Chinese investments have become a cornerstone of Cambodia’s economic transformation, focusing on infrastructure and energy development. Recent years have seen the completion of major Chinese-backed projects in Cambodia, including hydropower reservoirs, coal plants, highways, and Techo International Airport. These projects are vital to Cambodia's growth while deepening China's strategic influence in the region.

One of the most ambitious initiatives is the Funan Techo canal, a USD 1.7 billion Chinese-funded project set to commence by the end of 2024. The canal will stretch 180 kilometers, connecting Phnom Penh to Kep in the Gulf of Thailand. The canal is expected to improve Cambodia’s connectivity, positioning it as a key logistics hub in Southeast Asia. This infrastructure development will also reduce Cambodia’s reliance on Vietnam, through which roughly 33 per cent of its foreign trade flows. These projects underscore Cambodia’s significance as a Chinese ally in Indochina, further embedding the country in China’s broader regional ambitions.

Meanwhile, China's relationship with Vietnam continues to thrive, particularly after a landmark visit by Chinese President Xi Jinping in December 2023, marking the 74th anniversary of bilateral diplomatic ties. The visit led to the signing of 36 cooperation agreements, strengthening trade and investment ties. China has long been Vietnam's largest trading partner, while Vietnam ranks as China’s top partner within ASEAN and fourth globally. In 2023, China invested nearly USD 4 billion in over 600 projects in Vietnam, covering critical sectors like automotive, energy, textiles, and transport. China’s cumulative investments in Vietnam exceed USD 27 billion across 4,161 projects, cementing Vietnam’s strategic role in China’s ASEAN diplomacy.