“The Cambodian people – along with people in neighbouring countries and the broader region – would benefit from transparency on any major undertaking with potential implications for regional water management, agricultural sustainability, and security,” Wesley Holzer, public diplomacy officer at the US embassy in Phnom Penh, wrote in response to questions from Bloomberg regarding the project.

Former Cambodian prime minister Hun Sen claims the canal would only be used to boost economic activity.

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Touted as Cambodia’s first inland river dredging project, the Techo Funan Canal will take around four years to complete and will boast a total length just 16km (10 miles) shorter than that of the Suez Canal. Like many infrastructure projects, it could potentially be used for military purposes and is drawing similar concerns from neighbour Vietnam.

Vietnamese academics worry that the project could support the transport of military ships from the Gulf of Thailand where Washington believes China is building its first overseas base in the Indo-Pacific region – and is also concerned about the canal’s environmental impact, including that it will direct water away from the Mekong river.

“We urge authorities to coordinate closely with the Mekong River Commission to provide additional project details and to participate fully in any appropriate environmental impact studies to help the MRC and member countries fully understand, assess, and prepare for any possible impacts of the project,” Holzer said.

China’s Ministry of Foreign Affairs did not immediately respond to a request for comment.

The controversial project comes as Prime Minister Hun Manet has deepened already close ties with Beijing since taking the reins from his father less than a year ago.

Cambodia’s relationship with the US remains rocky, with considerable strain over a range of issues including human rights, press freedom and the suppression of political opposition.

Washington has repeatedly expressed concern over what it sees as the growing influence of China’s military in the country, including the Beijing-supported redevelopment of the Ream naval base, something US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink raised with officials during a visit earlier this year.

Military experts say the canal “will create the necessary depth, enough for military ships to travel from the Gulf of Thailand, or from the Ream base, deep into the interior,” Vietnam’s state-controlled People’s Public Security Political Academy published on its website last month, citing external research.

“The Funan Techo Canal is not simply a socio-economic development project but also has great military value and has a strong impact on the defence and security situation of the entire region.”

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Hun Sen, who is now president of Cambodia’s senate, on Tuesday dismissed unspecified “slanderous reports about the presence of Chinese troops at the Ream,” from “non-friends” who he said are now twisting the real use of the canal.

“Why would Cambodia bring Chinese troops into its country, which violates the constitution? And why would China bring its troops to Cambodia, which is contrary to the principle of respect for Cambodia’s independence?” he wrote in a post on X (formerly Twitter).

“This vital infrastructure facilitates agricultural activities by providing water for crop cultivation, is good for water management during the rainy season, and increases freshwater fish production, among other benefits.”