Patrick Devillers, 52, was detained in Phnom Penh this month for committing unspecified offences in China, Cambodian police said on Tuesday.
"In Cambodia, he did not commit any wrongdoing," the interior ministry spokesman Khieu Sopheak said. "If there is no clear evidence, he will be freed."
Cambodian officials said China was seeking extradition although the Chinese foreign ministry refused to confirm or deny such a request had been made.
France had warned Cambodia yesterday not to take any action without a clear legal basis.
"We have asked the Cambodian authorities for clarifications on the motives for his arrest," Bernard Valero, a French foreign ministry spokesman, said. "We have made clear that we will be watchful that no legal action of any kind be brought against him unless its legal basis has been clearly established."
The arrest was believed to be linked to Mr Devillers' close ties with Mr Bo and his wife, Gu Kailai, central figures in China's biggest political scandal in decades.
Mr Bo, the former leader of the south-western Chinese city of Chongqing, is being investigated for corruption, while Mrs Gu has been detained for suspected involvement in the murder of the British businessman Neil Heywood last year.
Neighbours and friends in Phnom Penh said yesterday that Mr Devillers had not been seen much in recent weeks.
"He was probably keeping a low profile because he saw the storm coming," said an acquaintance who did not wish to be named.
"I strongly doubt whether that storm is justified," he said. "I see Patrick as a subtle, almost poetic, creative person who found himself caught in a Chinese tangle because of his enthusiasm."
A security guard who works at a furniture store opposite Mr Devillers' house described seeing two vehicles carrying five police officers and two foreigners drive up to the property about two weeks ago.
"I saw that they took him away," the guard said, adding that Mr Devillers was not handcuffed. "That was the last time I saw him."
Mr Devillers' connection to the Bo family drama remains unclear but in an interview with French daily Le Monde last month, he denied allegations of any wrongdoing.
His elderly father, Michel Devillers, told the British newspaper The Daily Telegraph at his home in France that his son's arrest had come as a shock.
"I spoke to my son 10 days ago and he appeared perfectly calm," he was quoted as saying. "He had no idea he was in danger of being arrested, as he had intended to come to France for a trip over the summer. My aim is to have him repatriated to France. I will be speaking with a French consular contact in Cambodia tomorrow and I intend to fly to Cambodia as soon as possible."
The French embassy said Mr Devillers was receiving consular assistance and France was seeking "clarification" over the reason for his arrest.
In Beijing, Hong Lei, the Chinese foreign ministry spokesman, told reporters he had "no information on this case" when repeatedly asked about the arrest of Mr Devillers.
Mr Hong refused to say whether the extradition of Mr Devillers was brought up during a visit to Cambodia last week by top Chinese leader He Guoqiang, who heads the ruling Communist Party's internal disciplinary section and reportedly is heading up the investigation into Mr Bo.
China and Cambodia signed an extradition treaty in 2000 that covers "all crimes committed on Chinese territory" and apparently includes foreign nationals.