China’s growing presence in Cambodia has become one of the most talked-about developments in Southeast Asia over the past two decades. From billion-dollar infrastructure projects and booming real estate developments to deep political ties and strategic cooperation, China is now Cambodia’s largest investor, biggest trading partner, and most influential foreign ally.
But why does China invest so much in Cambodia?
What does Beijing gain from this relationship—and what does it mean for Cambodia’s economy, sovereignty, and future?
This article provides an in-depth, balanced, and well-researched explanation of the economic, geopolitical, strategic, and historical reasons behind China’s heavy investment in Cambodia. It also explores the benefits, risks, controversies, and long-term implications of this partnership for both countries.
China–Cambodia Relations: A Brief Historical Overview
China and Cambodia share diplomatic ties that stretch back more than half a century. Formal relations were established in 1958, and since then, the two countries have maintained a largely uninterrupted partnership, even during periods of political upheaval in Cambodia.
Cold War Era and Early Cooperation
- China supported Cambodia during the Cold War, including backing Prince Norodom Sihanouk.
- Despite Cambodia’s turbulent history during the Khmer Rouge era, China maintained influence through political and economic support.
- After Cambodia’s civil conflict ended in the 1990s, China quickly positioned itself as a key reconstruction partner.
Post-1997 Shift Toward China
Following political tensions with Western countries after the 1997 Cambodian coup, China significantly increased its engagement:
- Offered aid without political conditions
- Invested in infrastructure and development
- Strengthened military and diplomatic cooperation
This laid the foundation for what is now described as an “ironclad friendship” between the two nations.
China Is Cambodia’s Largest Investor and Aid Provider
One of the clearest answers to why China invests so heavily in Cambodia lies in the numbers.
According to data from the Cambodian Ministry of Economy and Finance, China accounts for over 40% of Cambodia’s total foreign direct investment (FDI), far surpassing any other country. China is also Cambodia’s largest provider of concessional loans and development aid.
READ MORE: China’s $3.6 Billion FDI Surge in 2025
Key Investment Areas
Chinese investment in Cambodia spans multiple sectors:
- Infrastructure (roads, bridges, expressways)
- Energy (hydropower dams, coal plants, solar projects)
- Real estate & construction
- Manufacturing & Special Economic Zones (SEZs)
- Tourism & hospitality
- Agriculture & mining
This broad investment strategy reflects both economic opportunity and strategic calculation.
1. Strategic Geopolitical Importance of Cambodia
Cambodia’s Location in Southeast Asia
Cambodia occupies a strategically valuable position in mainland Southeast Asia, bordering:
- Thailand
- Vietnam
- Laos
It also has direct access to the Gulf of Thailand, linking it to key maritime routes connected to the South China Sea.
For China, Cambodia provides:
- A land and maritime gateway into ASEAN
- Strategic depth beyond the South China Sea
- Alternative trade and logistics routes
Influence Within ASEAN
Cambodia is a member of the Association of Southeast Asian Nations (ASEAN), a regional bloc of 11 countries that operates on consensus.
Cambodia has repeatedly:
- Supported China’s positions on the South China Sea
- Blocked ASEAN statements critical of China
- Opposed international efforts seen as hostile to Beijing
For China, investing in Cambodia helps secure a reliable diplomatic ally inside ASEAN, amplifying Beijing’s regional influence.
2. Political Alignment and Diplomatic Loyalty
One of the most important reasons China invests so much in Cambodia is political trust and alignment.
Non-Interference Policy
Unlike Western countries, China follows a policy of non-interference in domestic affairs, meaning:
- No political reform requirements
- No human rights conditionality
- No governance benchmarks tied to aid
This approach resonates strongly with Cambodia’s leadership.
Cambodia’s Consistent Support for China
Cambodia has consistently backed China on:
- Taiwan
- Hong Kong
- Xinjiang
- South China Sea disputes
In return, China provides:
- Financial aid
- Political backing
- International diplomatic support
This mutual loyalty makes Cambodia one of China’s most dependable partners in Southeast Asia.
3. Belt and Road Initiative (BRI): Cambodia as a Key Partner
What Is the Belt and Road Initiative?
Launched in 2013, China’s Belt and Road Initiative (BRI) is a global infrastructure and connectivity strategy aimed at:
- Expanding trade routes
- Exporting Chinese industrial capacity
- Strengthening geopolitical influence
Cambodia is one of the most enthusiastic BRI participants in Southeast Asia.
Major BRI Projects in Cambodia
Some of the most prominent China-backed projects include:
Phnom Penh–Sihanoukville Expressway
- Cambodia’s first expressway
- Cost: Approximately US$2 billion
- Built and financed by Chinese state-owned enterprises
- Cuts travel time by more than half
Bridges and National Roads
- Over 3,000 kilometers of roads
- Major bridges across the Mekong and Tonle Sap rivers
Sihanoukville Port Expansion
- Enhancing Cambodia’s maritime trade capacity
- Supporting China’s regional logistics network
For China, these projects:
- Increase regional connectivity
- Strengthen supply chains
- Expand Chinese construction firms overseas
4. Economic Opportunities for Chinese Companies
Low Labor Costs and Young Workforce
Cambodia offers:
- Competitive wages
- A young, growing workforce
- Rapid urbanization
This makes it attractive for Chinese manufacturers seeking to relocate labor-intensive industries from China due to rising domestic wages.
Favorable Investment Climate
Cambodia provides:
- Tax incentives
- Dollarized economy (USD widely used)
- Minimal restrictions on foreign ownership
- Special Economic Zones tailored for foreign investors
Chinese firms benefit from ease of entry and high profit potential.
5. Special Economic Zones (SEZs): Manufacturing Hubs
Sihanoukville Special Economic Zone
The Sihanoukville SEZ, developed with Chinese investment, is one of the most successful SEZs in Cambodia.
- Hosts over 170 companies
- Employs tens of thousands of Cambodians
- Focuses on garment, electronics, and light manufacturing
For China:
- SEZs act as offshore production bases
- Help diversify supply chains
- Reduce exposure to trade tensions
6. Energy Security and Natural Resources
Hydropower Dams
Chinese companies have financed and built major dams such as:
- Lower Sesan 2 Dam
- Kamchay Hydropower Dam
These projects:
- Supply a significant portion of Cambodia’s electricity
- Reduce dependence on imported energy
For China:
- Secure long-term energy partnerships
- Expand influence in critical infrastructure
Mining and Agriculture
Chinese firms are also active in:
- Mining concessions
- Rubber plantations
- Agro-industrial processing
These investments support China’s resource security while contributing to Cambodia’s export economy.
7. Sihanoukville: A Case Study of Chinese Investment
Perhaps nowhere is China’s influence more visible than in Sihanoukville.
Transformation of a Coastal City
Once a quiet seaside town, Sihanoukville has become:
- A hub for Chinese real estate development
- A center for casinos and tourism
- A focal point of controversy
Economic Impact
Benefits:
- Job creation
- Infrastructure upgrades
- Increased tax revenue
Challenges:
- Rising property prices
- Social tensions
- Environmental strain
Sihanoukville illustrates both the opportunities and downsides of rapid, foreign-led development.
8. Military and Security Cooperation
China and Cambodia have expanded military ties through:
- Joint military exercises
- Equipment donations
- Training programs
The upgrade of Ream Naval Base with Chinese assistance has sparked speculation about potential Chinese military access.
While both governments deny exclusive Chinese use, the project highlights:
- China’s interest in regional security presence
- Cambodia’s strategic value beyond economics
9. How Cambodia Benefits from Chinese Investment
From Cambodia’s perspective, Chinese investment delivers tangible gains:
- Rapid infrastructure development
- Economic growth and job creation
- Increased trade and tourism
- Access to affordable financing
For a developing country with limited domestic capital, China offers speed, scale, and certainty.
10. Risks and Criticisms of Heavy Chinese Investment
Despite the benefits, critics raise legitimate concerns.
Debt Sustainability
China is Cambodia’s largest bilateral creditor. While debt levels remain manageable according to the IMF, long-term risks exist if projects fail to generate expected returns.
Economic Dependency
Overreliance on a single partner may:
- Reduce policy flexibility
- Increase political leverage for China
- Crowd out other foreign investors
Environmental and Social Impact
Some Chinese-funded projects face criticism over:
- Environmental damage
- Displacement of communities
- Transparency issues
11. Cambodia’s Balancing Act: China and the West
Despite its closeness with China, Cambodia continues to:
- Trade with the EU and US
- Engage with Japan and South Korea
- Participate in multilateral institutions
In recent years, Cambodia has shown signs of diversifying partnerships, though China remains its most influential ally.
12. Future Outlook: Why China’s Investment Will Likely Continue
Several factors suggest China’s investment in Cambodia will remain strong:
- Continued Belt and Road expansion
- Deep political alignment
- Cambodia’s development needs
- Regional competition for influence
While the relationship may evolve, China’s strategic interest in Cambodia is long-term, not temporary.
Conclusion: Why China Invests So Much in Cambodia
China invests so heavily in Cambodia because the relationship delivers mutual strategic value.
For China, Cambodia offers:
- Geopolitical influence in ASEAN
- Strategic location in Southeast Asia
- Loyal diplomatic support
- Economic opportunities for Chinese companies
For Cambodia, China provides:
- Capital for development
- Infrastructure at unprecedented speed
- Political backing without conditions
While challenges and risks exist, the China–Cambodia partnership remains one of the most significant bilateral relationships in the region—and a defining feature of Southeast Asia’s geopolitical landscape.
READ MORE: China Investment in Cambodia: Scale, Key Sectors, and What It Means
References & Sources
- World Bank – Cambodia Overview
https://www.worldbank.org/en/country/cambodia - International Monetary Fund (IMF) – Cambodia Country Reports
https://www.imf.org/en/Countries/KHM - Asian Development Bank – Cambodia and the BRI
https://www.adb.org/countries/cambodia/main - Reuters – China–Cambodia Relations Analysis
https://www.reuters.com - CSIS – China’s Influence in Southeast Asia
https://www.csis.org - Lowy Institute – Southeast Asia and China
https://www.lowyinstitute.org - Cambodian Ministry of Economy and Finance
https://www.mef.gov.kh - Nikkei Asia – Chinese Investment in Cambodia
https://asia.nikkei.com