Economy: China's economic influence in Cambodia

Economic relations between China and Cambodia are characterised by strong and growing trade ties, substantial Chinese investment and strategic cooperation based on diplomatic agreements and development initiatives.

Hun Sen and his son Hun Manet meet with Chinese President Xi Jinping during a visit to China. Photo SPTM

China is Cambodia's largest trading partner and foreign investor. Bilateral trade has grown rapidly, reaching nearly $14 billion in 2024, an increase of 24% over the previous year. Cambodia exports agricultural products such as rice, bananas and pepper to China, benefiting from preferential tariffs under agreements such as the China-Cambodia Free Trade Agreement (CCFTA) and the Regional Comprehensive Economic Partnership (RCEP). At the same time, Cambodia imports a wide range of products from China, including raw fabrics essential to its textile industry, which is largely owned by Chinese companies (around 90% of Cambodia's garment factories are owned by Chinese companies), highlighting the Kingdom's integration into the global production chain thanks to Chinese capital.

Chinese investment in Cambodia has surged, with China accounting for nearly half of all foreign direct investment (FDI) in 2024, with a total of approximately $6.9 billion approved. Chinese capital has transformed Cambodia's industrial landscape, with more than half of the country's factories owned by Chinese companies and investments covering infrastructure, energy, agriculture and tourism. Notable projects include the Kampong Speu Special Economic Zone (SEZ), which is expected to house 300 factories and create significant employment opportunities.

China has also funded major infrastructure projects such as roads, bridges and a deep-water port, contributing to socio-economic development.

This relationship is further strengthened by strategic partnerships and multilateral agreements. Since establishing diplomatic relations in 1958, China and Cambodia have elevated their cooperation to a comprehensive strategic partnership. The Belt and Road Initiative (BRI) plays a key role in this collaboration, with China financing around 70% of road and bridge development in Cambodia. The RCEP trade bloc and the CCFTA have facilitated tariff reductions and simplified customs procedures, improving market access and investment opportunities for both countries.

Despite these advantages, Cambodia has a significant trade deficit with China, importing much more than it exports. However, the Cambodian government considers China's vast market and investments to be essential to its ambition to transition from a least developed country to a middle-income country by 2030 and then to a high-income country by 2050.