Cambodia and China sign controversial $1.2 billion canal deal

Cambodia has recently made a significant advancement in its infrastructure by signing a $1.2 billion deal with China to finance a large canal project known as the Funan Techo Canal. This project aims to enhance trade efficiency by connecting a branch of the Mekong River, located near Phnom Penh, to a port on the Gulf of Thailand. The agreement was finalized during the state visit of Chinese President Xi Jinping to Cambodia, further solidifying the close ties between the two nations. Construction of the canal, which spans 151.6 kilometers (94 miles), initially began last year. However, work was halted shortly after the groundbreaking ceremony on August 5, with no clear reasons disclosed at that time. Cambodian Prime Minister Hun Manet expressed resolute commitment to the project, stating that it would proceed regardless of costs involved, as it represents national prestige and development for Cambodia. The Funan Techo Canal is structured as a public-private partnership, with Cambodian investors holding a majority stake of 51%, while Chinese investors own 49%. The canal is designed to allow vessels with a capacity of up to 3,000 deadweight tons and will include critical infrastructure such as navigation and logistics facilities. Wang Tongzhou, chairman of China Communications Construction Company, emphasized the canal's potential as an inland waterway to drive Cambodia’s economic growth and reduce logistics costs significantly. Despite its promised economic benefits, the project has faced criticism from environmental advocates. Concerns have been raised regarding the canal’s potential to disrupt the natural flood patterns of the Mekong River, which could exacerbate drought conditions and degrade the nutrient-rich silt vital for rice production in Vietnam's Mekong Delta region. This area is crucial not only for local communities but also for global rice exports. In response to these environmental worries, the signing announcement pointed to a thorough Environmental Impact Assessment completed by 48 specialists, deeming the project to have minimal environmental impact. The Cambodian government has pledged to minimize resettlement issues and follow responsible consultation processes, indicating a willingness to address the challenges brought forth by such a significant infrastructure project.