Why CCFTA Marks a Turning Point for Cambodia’s Export Economy
In 2024, trade between Cambodia and China soared to a record high of US $15.19 billion, with Cambodian exports to China hitting US $1.75 billion, up 18.4% compared to the previous year.
At the heart of this surge lies the Cambodia–China Free Trade Agreement (CCFTA), which came into force on January 1, 2022. Under CCFTA, approximately 98% of Cambodia’s export tariff lines to China enjoy zero or preferential tariffs.
For local manufacturers — from agro-processors to garment factories — CCFTA offers more than just reduced taxes: it signals deeper integration into China’s market and regional supply chains. This article explores how CCFTA works, which sectors benefit most, what data shows so far, and how Cambodian exporters can maximize the opportunity — while being realistic about the challenges.
1. What Is CCFTA? Key Provisions and Tariff Advantages for Cambodia
The Agreement at a Glance
- The CCFTA was signed on October 12, 2020 and entered into force on January 1, 2022.
- Under the agreement, 98% of Cambodia’s export tariff lines to China are eligible for duty-free or preferential access.
- On the reverse side, China reportedly exempts about 90% of its export tariff lines to Cambodia.
Scope Beyond Tariffs
The CCFTA is more than a tariff-reduction pact. It covers trade in goods, services, investment, and cooperation across sectors such as agriculture, manufacturing, e-commerce, and technology.
It also sets origin rules — for many products, a minimum regional value content is required to qualify for preferential tariffs.
Why This Matters for Exporters
- Zero tariffs dramatically improve price competitiveness of Cambodian products in China.
- Preferential access opens China — the largest consumer market globally — to Cambodian manufacturers.
- The broad coverage of goods & services under CCFTA encourages diversification beyond traditional sectors.
In short: CCFTA transforms what was once a sporadic trade channel into a stable, preferential pathway for Cambodian exporters.
2. Cambodia–China Trade Growth After CCFTA: The Data Behind the Surge
2024: A Record-Breaking Year
- In 2024, total Cambodia–China trade reached US $15.19 billion, up 23.8% from 2023.
- Cambodian exports to China were valued at US $1.75 billion, rising 18.4%.
- Imports from China hit US $13.44 billion, up 24.6%.
- The bilateral trade with China accounted for nearly 30% of Cambodia’s total trade volume for 2024.
These figures validate early optimism around CCFTA: preferential access + strong trade relations have translated into measurable export growth.
Continued Momentum in 2025
- In the first 5 months of 2024 (Jan–May), bilateral trade reached US $5.99 billion — up 18% from the same period in 2023.
- Observers attribute this to the combined effect of CCFTA and the broader Regional Comprehensive Economic Partnership (RCEP), both in effect since 2022.
- According to Chinese customs data, the first quarter of 2025 saw a 13.1% year-on-year increase in Cambodia–China trade.
Bottom line: the data — both pre- and post-CCFTA — suggests a lasting structural shift, not a short-term spike.
3. Sectors That Benefit Most from CCFTA: Agriculture, Processing & Light Manufacturing
CCFTA’s benefits are not evenly distributed. Some sectors stand to gain far more than others.
A. Agricultural Exports — From Raw to High-Demand Commodities
Under CCFTA, Cambodian agricultural exports enjoy tariff-free or reduced-entry into China.
Key products gaining traction include:
- Rice, cassava, cassava starch, pepper
- Fruits: mango, banana, longan, tropical fruits
- Fishery and aquatic products (pending phytosanitary compliance)
In 2023, Cambodia successfully exported pepper, edible aquatic animals, coconut, and other fresh products to China under newly approved protocols.
This creates high potential for agribusinesses and farmers — provided they can meet China’s quality and safety standards.
B. Agro-processing & Value-Added Goods
Processed or semi-processed goods typically attract higher margins than raw commodities. Under CCFTA:
- Cassava starch, prepared foods, processed fruits/nuts, other agro-industrial products qualify under tariff exemptions.
- This presents an opportunity for Cambodian firms to upgrade from raw exports to value-added processing — increasing profit margins and competitiveness.
C. Light Manufacturing, Garments, and Assembly Industries
CCFTA doesn’t just benefit agriculture. Light manufacturing — especially garments, footwear, furniture and simple electronics — also benefits:
- Many of these goods are within tariff-exempt categories under CCFTA.
- Cambodia’s import of Chinese machinery, fabrics, and raw materials has surged, enabling factories to upscale operations and export finished goods back to China or other markets.
- Chinese FDI and modern equipment are combining with preferential tariff access to raise Cambodia’s profile as a manufacturing hub.
Together, these sectoral shifts paint a diversified export economy — moving beyond traditional commodities into processing and manufacturing.
4. How CCFTA Strengthens Cambodia’s Role in Regional and Global Supply Chains
Integration with RCEP — Regional Supply-Chain Access
The overlapping benefits of CCFTA and RCEP create powerful synergies. Experts note that as Cambodia upgrades its manufacturing capacity, it can play a more significant role in regional value chains.
For foreign investors — particularly from China — Cambodia becomes an attractive base for:
- Light manufacturing and assembly targeting both Chinese and global markets
- Agro-processing for export — with access to raw material imports from China and preferential tariffs to China and other RCEP markets
This dual integration — bilateral (CCFTA) and regional (RCEP) — reduces trade friction and enhances supply-chain efficiency.
Investment Inflows and Manufacturing Upgrades
Chinese investors remain Cambodia’s largest FDI source, especially in manufacturing, agriculture, and processing sectors.
Factories are importing modern automated machinery and raw materials from China, upgrading production quality, reducing costs, and aligning output with export market demands.
Over time, Cambodia could evolve from being mainly a raw-material exporter to becoming a full-fledged regional manufacturing hub producing value-added goods for multiple markets.
5. Operational Advantages for Cambodian Exporters Under CCFTA
CCFTA isn’t just a theoretical treaty — it delivers real, operational benefits for Cambodian exporters and manufacturers.
• Lower Tariff Costs → Increased Competitiveness
With up to 98% of export lines tariff-free, Cambodian exports gain a significant price advantage compared to non-FTA competitors.
For processed goods or agro-products, this cost saving can translate into tighter profit margins, which can be reinvested in scaling operations or quality control.
• Easier Access to Raw Materials & Machinery
Imports from China — including fabrics, inputs, machinery, and raw materials — are relatively cheaper or more accessible under CCFTA and improved Sino-Cambodian trade practices.
This helps factories — especially in garments, assembly, agro-processing — to modernize operations, improve output, and meet export standards.
• Diversified Market Access & Reduced Export Risk
Exporters are no longer bound to traditional western markets (e.g., U.S., EU). With CCFTA, they can tap into China’s massive consumer market. Combined with RCEP, Cambodia’s export reach extends to many Asia-Pacific markets.
• Government & Policy Support
Cambodian authorities have actively promoted CCFTA as a growth engine. According to official statements, CCFTA — alongside other trade agreements — plays a pivotal role in foreign investment, manufacturing growth, and agricultural export expansion.
These advantages make CCFTA not just a trade agreement but a strategic lever for Cambodia’s long-term industrialization and export diversification.
6. Challenges Cambodian Exporters Must Navigate to Fully Leverage CCFTA
While CCFTA creates strong tailwinds, there are significant headwinds and risks — especially for smaller exporters, agribusinesses, and those with limited capacity.
🔸 Logistics & Infrastructure Constraints
For agricultural exporters — especially those dealing in perishable goods such as fruits, seafood, and fresh produce — infrastructure is a bottleneck. In early 2022, total exports to China fell by about 6.9% during the first five months after CCFTA came into force, partly due to a shortage of cold-chain facilities (e.g., refrigerators), which made it difficult to store and transport fresh produce.
🔸 Compliance with Quality, Phytosanitary Standards, and Rules of Origin
To benefit from zero tariffs, exporters must satisfy origin rules and product standards. For agricultural and processed goods, China demands strict quality and safety compliance, which may strain small producers lacking certification capacity.
Even under CCFTA, many high-value goods (machinery, vehicles) may still be tariffed differently or phased out over time.
🔸 Trade Imbalance & Over-reliance on Imports from China
While exports to China have risen, imports from China remain high — often raw materials and finished goods needed for domestic industry. This leads to a growing trade deficit with China, raising questions about long-term sustainability.
Moreover, heavy reliance on imported inputs means that Cambodian manufacturing remains dependent on China’s supply — reducing the benefits of local value-addition and potentially undermining domestic upstream industries.
🔸 Institutional and Capacity Gaps Among SMEs
Small and medium-sized enterprises may lack capacity to scale, comply with export standards, or invest in processing/packaging infrastructure. Without investment and technical support, many risk being left out of CCFTA’s benefits.
🔸 Market Risks and Demand Volatility
Dependence on a single large market — China — exposes exporters to demand fluctuations, changing regulations, or political/geo-economic shifts. Over time, over-concentration on China could limit diversification.
In sum: CCFTA offers a powerful opportunity — but realizing its full potential requires investment, infrastructure, compliance, and strategic diversification.
7. Practical Steps for Cambodian Manufacturers & Exporters to Maximize CCFTA Opportunities
For Cambodian businesses keen to leverage CCFTA, the path forward involves both strategic planning and operational readiness. Here’s a roadmap:
- Invest in value addition and processing
- Shift from raw commodity exports to processed or packaged goods (e.g., processed cassava, dried fruits, canned/preserved produce, garment manufacturing, furniture).
- This improves margins and makes products more competitive in the Chinese market.
- Ensure compliance with phytosanitary, quality, and origin standards
- Adopt Good Agricultural Practices (GAP) and Good Manufacturing Practices (GMP).
- Secure necessary certifications and documentation for rules of origin under CCFTA.
- Upgrade infrastructure and supply-chain capacities
- For agricultural exporters: invest in cold-chain logistics (refrigeration, cold storage, temperature-controlled transport).
- For manufacturers: use imported machinery and raw materials to produce higher-quality, export-ready goods.
- Seek strategic partnerships with Chinese buyers or investors
- Engage Chinese importers, distributors, or supply-chain partners for offtake agreements.
- Take advantage of increasing Chinese FDI in Cambodia to build capacity and export channels.
- Diversify export markets beyond China
- While leveraging CCFTA, also explore other trade agreements (e.g., under RCEP) to reduce market concentration risk.
- Develop products suited for global markets (e.g., EU, US) to balance exposure.
- Leverage government support and trade facilitation schemes
- Monitor export incentives, subsidies, or programs offered by Cambodian authorities.
- Stay updated on new phytosanitary protocols and bilateral trade policies (e.g., latest fruit export protocols to China, as of 2025).
By following this roadmap, Cambodian exporters — from agribusiness to light manufacturing — stand to gain significantly from CCFTA’s preferential access and growing trade momentum.
8. Why CCFTA Represents a Long-Term Competitive Advantage for Cambodia
Putting data, policy, and market dynamics together, it becomes clear: CCFTA isn’t just a short-term trade boost — it’s a strategic lever for Cambodia’s long-term export growth and industrialization.
- Structural trade integration — With nearly 30% of Cambodia’s total trade now linked to China (as of 2024), Cambodia gains stable market access in one of the world’s largest consumer economies.
- Diversified export base — From raw agriculture to processed goods, manufacturing, and even light industry — CCFTA broadens the export basket and reduces reliance on a few commodities or markets.
- Attraction of foreign investment and upgrading of production — Chinese FDI, access to inputs and machinery, and favorable trade conditions make Cambodia an attractive manufacturing hub.
- Synergy with regional trade frameworks (like RCEP) — This gives Cambodian manufacturers a dual advantage: strong bilateral access to China and regional integration across Asia-Pacific trade networks.
- Potential for sustainable economic development — If Cambodian firms invest in compliance, quality, and value addition, CCFTA could help increase incomes, create jobs, and transform sectors like agriculture and manufacturing.
In short: CCFTA allows Cambodia to shift from being just a raw-commodity exporter to becoming a competitive participant in regional and global supply chains.
9. Conclusion & Call to Action
The Cambodia–China Free Trade Agreement (CCFTA) is not just another trade pact — it is a structural opportunity for Cambodian exporters and manufacturers. The rapid rise in trade volumes between the two countries, coupled with tariff-free access for nearly all export lines, offers a real path to growth. But the benefits will only materialize fully if Cambodian businesses invest: in infrastructure, quality standards, processing capabilities, and diversified strategies.
If you are a Cambodian manufacturer, exporter, agribusiness, or investor — now is the time to act.
- Assess your product lines: can you move from raw commodities to processed or value-added goods?
- Review your compliance readiness: paperwork, origin certificates, quality standards.
- Explore partnerships with Chinese importers or investors.
- Invest in logistics and supply-chain capacity — cold-chains, processing, packaging.
By doing so, you won’t just benefit from CCFTA’s tariff reductions — you’ll position your business for sustained growth, deeper integration into regional supply chains, and long-term resilie
References
- Cambodia–China bilateral trade hit record high in 2024. Phnom Penh Post, 14 January 2025. Phnom Penh Post
- Cambodia–China FTA brings growth. KhmerSME / Cambodian Ministry of Commerce press release. KHMER SME
- Cambodia Economic Update – June 2022. World Bank. World Bank
- Cambodia–China trade continues strong growth in first five months of 2024. Xinhua via ChinaDaily / LMCChina report. Invest in China
- China–Cambodia trade hits record high Q1 2025. Global Times, April 2025. Global Times
- China–Cambodia economic and trade cooperation yields fruitful results in 2023. MOFCOM report. cb.mofcom.gov.cn
- International trade up 20%, surpasses $25 B in first 5 months 2025. Phnom Penh Post, June 2025. Phnom Penh Post
- “Exports to China tumble after trade deal” — Cambodianess, June 2022. Cambodianess