PRC funding in doubt for Cambodian canal, other promised projects
FORUM Staff
Cambodian Deputy Prime Minister Sun Chanthol said in May 2024 that a People’s Republic of China (PRC)-owned company would “totally” fund the Funan Techo canal. Phnom Penh touted the project linking the Mekong River to the Gulf of Thailand as an economic game changer.
By August, Cambodian leader Hun Manet said at the project’s groundbreaking that the PRC would cover 49% of the canal costs. The same day, his father and former prime minister, Hun Sen, appealed on Facebook for Japan to invest in the canal.
Others familiar with the project told Reuters news agency months later that Beijing had not committed any money to the project, which is estimated to cost $1.7 billion, or about 4% of Cambodia’s gross domestic product.
Cambodian and PRC officials responded by saying that the nations’ ties are advancing and that multiple projects are ongoing.
Beijing’s waning commitment risks sinking the venture as questions persist about the price tag, environmental impact and viability, experts told Reuters.
The PRC’s foreign investments are declining as its economy weakens. Even in Cambodia, considered a strategic partner, Beijing has backed away from promises such as contributing $1 billion to a new Phnom Penh airport.
“That disengagement came as an expressway built by CRBC [the state-owned China Road and Bridge Corp.] connecting Phnom Penh to the coastal city of Sihanoukville remained under-utilized by Cambodian motorists and truck drivers who to avoid tolls prefer the crowded but free old road,” Reuters reported.
Meanwhile, the PRC is unlikely to follow through with pledges it made to Syria through its One Belt, One Road (OBOR) infrastructure scheme. Chinese Communist Party General Secretary Xi Jinping promised the now-deposed Syrian dictator Bashar Assad that the investments would rebuild the war-torn state. With the fall of Assad’s regime in late 2024, however, Syria can’t rely on Beijing to play a leading role in its recovery, the DefTech Times news website reported.
In Nepal, projects with Chinese financing also have been problematic. For instance, Beijing refused for nine years to release promised aid to upgrade the Araniko Highway. Nepal had to fund improvements to the highway that connects Kathmandu with the Nepal-China border.
Before the nations’ leaders agreed to an OBOR framework in late 2024, Beijing insisted the deal include possible loans. Nepali lawmakers have said the country can’t afford to borrow from the PRC, particularly when Beijing’s interest rates are higher than those of other creditors.
Debt owed to the PRC has weakened economies in such countries as Ghana, Pakistan, Sri Lanka and Zambia, with governments defaulting on loans or at risk of doing so. The predatory lending practices can force nations to concede control over strategic assets or accept the PRC’s influence over its domestic or foreign policies, analysts say.
More than a dozen countries have defaulted on their debt since 2022, The New York Times newspaper reported. As institutions including the World Bank and International Monetary Fund work with lenders to restructure debt, Beijing is notoriously reluctant to adjust its terms.
United States Treasury Secretary Janet Yellen has called for accelerating debt relief and described the PRC’s financial processes as opaque, according to the newspaper. She also suggested creating new sources of credit for “high-ambition countries” interested in clean energy projects.
