Vietnam News

The Funan Techo Canal : The China-Vietnam Nexus

China’s Funan Techo Canal project in Cambodia threatens Vietnam’s sovereignty and economy by strengthening Beijing’s regional influence through strategic infrastructure.

China’s latest Belt and Road Initiative (BRI) project in Cambodia—the Funan Techo Canal (FTC)—is altering Southeast Asia’s strategic landscape. With implications that reach beyond its borders, Beijing’s investment in this canal threatens to undermine Vietnam’s sovereignty just as tensions escalate over competing territorial claims in the South China Sea.

The FTC, starting at Phnom Penh and stretching 180 kilometers to the Gulf of Thailand, is projected to be between 80 to 100 meters wide and about 5.4 meters deep, according to the Mekong River Commission. Its completion, expected by 2028, marks a significant economic shift for Cambodia. Presently, Cambodian exports depend on Vietnamese ports along the Mekong River, where they are subject to customs levies. The canal will free Cambodia from this dependency, boosting its economic independence and enabling a more competitive export sector. Yet, this advantage comes at a cost for Vietnam, which may see both its economic influence and environmental stability undermined.

The diversion of water from the Mekong River into the FTC poses a grave threat to Vietnam’s Mekong Delta. This agriculturally rich region, responsible for 12% of Vietnam’s GDP, supports vast rice production that sustains millions both within and beyond the country. The delta’s one-million-hectare floodplains, vital to Vietnam’s food security, are at risk of being effectively halved by the canal’s construction. Consequently, environmental degradation could trigger an economic decline in Vietnam’s agrarian sector, forcing Hanoi to redirect resources toward recovery rather than bolstering its control over the Spratly and Paracel Islands.

Beijing’s approach in this scenario recalls its “String of Pearls” strategy—a network of strategic footholds designed to exert influence through infrastructure and investment. In Cambodia, the FTC strengthens China’s presence at Vietnam’s doorstep, presenting Hanoi with a multifaceted challenge. Vietnam has responded by intensifying its activities in the Spratly and Paracel Islands—two archipelagos located in a critical part of the South China Sea that holds significant resources and controls proximity to the globally crucial Strait of Malacca.

According to the World Economic Forum, around 30% of the world’s traded goods pass through this strait. Vietnam’s expanded infrastructure projects in these contested islands reflect its determination to defend its sovereignty. In August 2024, Vietnamese foreign affairs ministry spokesperson Pham Thu Hang reiterated, “Vietnam once again affirms its sovereignty over the Hoang Sa and Truong Sa archipelagos in accordance with international law,” referencing the Paracel and Spratly Islands.

Meanwhile, experts warn that the FTC may grant Beijing greater leverage over Cambodia’s policies, with implications for Vietnam’s security. Juki Trinh, a prominent researcher, has cautioned that the canal’s completion could facilitate China’s military presence in the region. While Cambodia has maintained a respectable record of debt repayment to China, concerns over Beijing’s debt-trap diplomacy persist. Critics highlight the financing structure of the FTC—$1.7 billion funded by a 51-49% joint venture between Cambodian companies and the China Road and Bridge Corporation (CRBC), a state-owned enterprise. This arrangement exemplifies how Beijing’s economic investments are intertwined with its geopolitical ambitions.

For China, the canal represents a strategic opportunity regardless of its ultimate outcome. Should the project succeed, Vietnam’s agricultural economy would be destabilized, forcing Hanoi to focus on economic recovery at the expense of its South China Sea initiatives. Alternatively, if the project falters, Cambodia could find itself in a cycle of debt dependency, granting Beijing further influence and potential territorial stakes near Vietnam’s border. In either scenario, Beijing stands to gain while Hanoi faces strategic setbacks.

China’s intentions with its BRI projects continue to draw scrutiny from regional powers like India, which has voiced concerns about their true purpose. While these initiatives are publicly framed as efforts to enhance connectivity, their funding structures often reveal deeper geopolitical aims. The Funan Techo Canal exemplifies this duality, serving as both an infrastructure project and a tool for strategic advantage.

Ultimately, the canal’s construction underscores how the balance of power in Southeast Asia is increasingly shaped by economic competition as much as by military force. For Vietnam, the looming threat posed by the FTC highlights a critical challenge: safeguarding its sovereignty against an expanding Chinese presence in the region.

By Mugdha Joshi – International Policy Digest – February 4, 2025

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