China's Loan Standoff: Impact on Cambodia's Infrastructure Future

China, Cambodia's leading creditor, signed no new loans to the nation last year, affecting ongoing infrastructure projects. With China accounting for over a third of Cambodia's debt, future projects remain uncertain, though discussions for new ventures continue. Chinese disbursements for agreed loans also slowed significantly.

In a surprising turn of events, China, Cambodia's largest creditor, signed no new loans with the Southeast Asian nation last year, according to Cambodia's finance ministry data. This could potentially impact infrastructure development, a sector heavily reliant on Chinese funding.

With outstanding loans amounting to roughly $4 billion, China constitutes more than a third of Cambodia's debt portfolio. This financial tie, equivalent to one-tenth of Cambodia's GDP, has historically fueled projects like roads, airports, and power lines. However, recent years have seen a decline in new agreements, with $302 million worth in 2023 compared to $567 million in 2022.

Despite the slowdown, both nations continue discussions over new projects, including a $1.7 billion canal. In response to the emerging funding gap, Chinese foreign ministry reiterated its commitment to Cambodia's development, even as it scales back overseas investments. The Cambodian finance ministry remains optimistic, expressing confidence that new deals will soon materialize.

(With inputs from agencies.)