[3] The main economic activities in Phonsavan are based on governmental administration, mining by Chinese and Australian companies, tourism, and the work of non-governmental organizations clearing unexploded ordnance (UXO).

Subsequent invasions by Haw marauders and splinter groups of ex-Taiping Rebellion revolutionaries from southern China plundered Luang Prabang and Xiangkhouang in the 1870s, and desecrated and destroyed the temples of the Phuan region.

The Franco-Siamese treaties of the 1890s placed Xiangkhouang under colonial rule as part of French Indochina until shortly after World War II.

[4][5] During the Laotian Civil War, Xiangkhouang was the scene of extensive ground battles and intense aerial bombardment due to its strategic importance.

Phonsavan was built after the fighting ended in 1975 to replace the former provincial capital, Muang Khoun (old Xiang Khouang), which was destroyed by wartime bombing and only partially rebuilt since.