How Cambodia Can Maintain Strategic Trust with China

Cambodia faces a daunting foreign policy test. As structural competition between the US and China intensifies, the space in which Phnom Penh can manoeuvre is shrinking.

China is Cambodia’s biggest trading partner and top source of foreign direct investment.  Cambodia has tried to diversify its economic relations and has expanded ties with other partners, including the US. This gives Cambodia more options with broader economic diplomacy. But China may see some Cambodian steps towards Washington as signs of a gradual shift toward the US.

The US has been Cambodia’s main export market. Cambodian exports to the US topped USD7 billion in the first half of 2026, a 29.8 per cent increase over the previous corresponding period.  The security element of the Cambodia-US relationship is growing, with the lifting of the US arms embargo in November 2025 and the resumption of the joint Angkor Sentinel military exercises in 2027.

In October 2025, Cambodia announced a decision to sign the US-initiated Agreement on Reciprocal Trade. This was followed by its decision to join President Donald Trump’s Board of Peace as a founding member in January 2026. Together, this has raised questions in Beijing about the trajectory of Phnom Penh’s foreign policy.

Cambodia’s close ties with China are driven by broad strategic interests. China’s trade with Cambodia exceeded USD11 billion in the first half of 2026, a 25.4 per cent increase over the previous corresponding period. China accounted for 73 per cent of Cambodia’s USD5.2 billion Foreign Direct Investment (FDI) inflows in 2025. It plays an increasingly important role in defence and security cooperation with a vision to build an Asian security model featuring common security.

For Cambodia, maintaining strategic trust with China while implementing strategic and economic diversification is critical. So far, Cambodia has implemented two important measures.

First, Cambodia has sought to maintain direct political communication.

In June, Hun Sen — the President of the Cambodian People’s Party and Senate President — visited Beijing. A month later, Prime Minister Hun Manet made the same trip. The two visits also showed continuity between successive generations of Cambodian leadership.

Cambodia’s leadership transition in 2023 generated a degree of strategic uncertainty in Beijing. Hun Manet’s education in the West shapes his worldview. Some analysts argue that Cambodia’s foreign policy orientation might gradually shift from alignment with China to a hedging posture. As a result, sensitive issues in the relationship need to be explained clearly and early.

China moved early to address this uncertainty. After Cambodia’s 2023 General Election, Foreign Minister Wang Yi visited Phnom Penh and stressed the need to strengthen strategic trust and deepen the two countries’ comprehensive strategic partnership.

Some analysts argue that Cambodia’s foreign policy orientation might gradually shift from alignment with China to a hedging posture. As a result, sensitive issues in the relationship need to be explained clearly and early.

Second, Cambodia is taking serious action against online scams — a key concern for Beijing.

For several years, China pressed Cambodia to act against online fraud, illegal gambling, trafficking and money laundering. Many Chinese citizens were victims of such operations. The arrest and extradition of Prince Group chairman Chen Zhi in January 2026 marked an important step in the effort to combat online scams. It was followed by a series of arrests of alleged Chinese ringleaders linked to transnational cyberfraud networks.

China has supported Cambodia through information sharing, equipment and law-enforcement cooperation. China also supports Cambodia’s plan to host an international conference on combatting online scams in late September this year. 

During the bilateral meeting with Hun Manet, Xi Jinping stressed that “the two sides should work together to crack down on cross-border crimes such as counterfeiting, smuggling, online gambling and telecom fraud”. Such efforts have helped deepen strategic trust between the two countries.

Such efforts, however, do not eradicate the need for Cambodia to improve communication.

First, Phnom Penh needs to explain its economic diversification in clear terms.

Cambodia depends on China and the US in different ways. China provides investment, machinery, construction and industrial inputs. The US buys substantial amounts of Cambodia’s exports, especially garments, footwear, and travel goods. This creates a structural challenge for Cambodia.

The US–Cambodia Agreement on Reciprocal Trade underscores this tension. With clauses on forced labour rules of origin, the US reciprocal trade deals aim to constrain China to varying degrees.

For Cambodia, the agreement protects access to the American market and protects jobs and export earnings. This comes at a price: the conditions imposed by the US, such as labour standards, export controls and economic security alignment.

For China, some parts of the agreement could affect Chinese firms operating in Cambodia, given that it seeks to address unfair trade policies of third parties, cooperation on export controls and evasion of duties.

Chinese factories may face tighter checks about the sources of their inputs and the amount of value-added in products manufactured in Cambodia. As a result, China could see these measures as an attempt to limit China’s use of Cambodia as a production base for exports to the US. China has demanded that Cambodia clarify the trade agreement and properly address its concerns. As it stands, Cambodia has not effectively handled China’s concerns.

Second, Cambodia needs to avoid the appearance of exclusive alignment.

Cambodia’s decision to join the Board of Peace has raised questions in China. Beijing declined to join the initiative and stressed the importance of maintaining the UN-centred international order.

Cambodia could have communicated its decision to join the Board of Peace to China in advance. This would have helped to minimise the risk of strategic misperception. At the same time, Cambodia could have made clear that its participation was not intended to undermine China’s broader interests or challenge existing multilateral frameworks such as the UN.

The key issue is consistency. Cambodia should avoid giving the impression that its participation in one platform is directed against another country. In such a fast-changing geopolitical landscape, even minor moves can provoke outsized reactions and suspicion.

Looking Ahead

Cambodia cannot avoid diplomatic and economic pressures stemming from major power competition, but it can mitigate the risks through clear and effective strategic communication and engagement.

China will remain Cambodia’s most important strategic and economic partner. Sustaining this relationship will require careful management, mutual political and strategic trust, and continued efforts to ensure that cooperation delivers tangible benefits for both peoples.

2026/252