Cambodia-China Relations in the New Decade

The world is embarking in a new decade and one topic scholars around the world discuss is the future of China and its relations to other countries. China’s influence in Cambodia has drastically increased over the last two decades, in particular when it comes to FDI and military cooperation, and has led to tensions with the USA but also to resentments towards China in Cambodia. Seeing this trend and asking the question what kind of challenges might reveal over the next decade is the main question of the short opinion piece.

 The relations between Cambodia and China date back at least to the 13th century, and diplomatic relations between the two countries were officially established on July 19, 1958. China’s geopolitical interest in Cambodia changed significantly with the end of the Cold War. It retains considerable influence, including through close links with former King Norodom Sihanouk, many senior members of Cambodian Government and the ethnic Chinese community in Cambodia. There are regular high level exchanges between the two countries. China provides substantial bilateral aid, and economic links continued to grow.

 Cambodia and China enjoy very strong political relations and military cooperation. In 2006, the two countries agreed to raise their bilateral relations to a comprehensive partnership of cooperation and upgraded to a comprehensive strategic partnership in 2010. Moreover, the two countries also signed “Action Plan 2019-2023 on Building China-Cambodia Community of Shared Future” in April 2019. Under this action plan, the two countries committed to undertake 31 measures in the five domains of politics, security, economics, people-to-people relations, and multilateral cooperation. However, their relations may have been overshadowed by development agenda. Since the introduction of Belt and Road Initiative (BRI) in late 2013, China has played influential role in Cambodia in which development agenda has been used as a tool.  

 

Cambodia has fully and actively participated in China’s BRI due to the fact that economic development opportunities generated from the initiative are believed to be tremendous. Tangibly, by the end of 2017, more than 2,000 km of roads, seven large bridges, and a new container terminal at the Phnom Penh Autonomous Port had been constructed with support from China. New international airport in Siem Reap, Dara Sakor International Airport in Koh Kong province, and international airport in Kandal province projects amounted nearly USD 3 billion totally have been approved. More interestingly, the USD 2 billion Phnom Penh-Sihanoukville Expressway Project has been constructed by China’s state-owned China Communications Construction Company. In energy sector, more than USD 7.5 billion in hydropower plants and about USD 4 billion in coal power plants have been invested while some 30 agricultural and agro-industrial projects; 21 of them are also in operation.

 China also invested in constructing the Sihanoukville Special Economic Zone (SSEZ) which has attracted more than 100 companies from China and other countries with a total investment of more than USD 3 billion as of 2017 and created nearly 20,000 jobs for the local community. The SSEZ plans to have 300 factories by 2020. Moreover, Chinese investment in the textiles and clothing industries also contributes significantly to Cambodia’s socio-economic development by creating job opportunities for almost one million Cambodian workers.

 According to statistics released by the Council for the Development of Cambodia (CDC), of the cumulative foreign direct investment (FDI) approved in the period of 1994-2019, the largest share was from China (21.81 percent), which in the early years was the source of extensive investment in the field of infrastructure, energy, resource development including rubber, and tourism. In 2019, investment approval recorded USD 9.40 billion among which China invested USD 2.75 billion. China also vowed to push bilateral trade to USD 10 billion by 2023 and encouraged more Chinese investment flow to Cambodia.

 By 2017, Cambodia had received approximately USD 4.2 billion in Official Development Assistance (ODA) from China in the form of grants and soft loans. This ODA has targeted physical infrastructure, agriculture, health and education. China is also the main source of Cambodia’s public external debt. By the end of 2017, Cambodia’s public external debt was of USD 9.6 billion in which around 42 percent is owed to China. China also pledged USD 600 million in grant to Cambodia from 2019 to 2021.

 In terms of tourism sector, 15 airline companies are operating regularly between Cambodia and China. Nine months of 2019, Cambodia received 1,864,956 Chinese tourists, and is expected to exceed 2 million by 2020. However, due COVID-19, number of Chinese tourists in the first two months of 2020 has dramatically decreased.

 In educational sector, from 2004 to 2017, China offered more than 1,000 scholarships to Cambodian students to pursue their education in China, and more than 700 fellowships for short-term training. Several other exchange programmes have been conducted in the areas of culture, government officials, media, youth, and academics with the funding support of Chinese government.

 

On 5 February 2020, Cambodian PM Hun Sen made a surprise and overnight-planned visit to China’s Beijing amid the coronavirus outbreak in the country. In fact, PM Hun Sen originally wanted to visit Wuhan, the now-quarantined epicenter of the novel strain of coronavirus. PM Hun Sen told Chinese President Xi Jinping that he had decided to make a special visit to China with an aim to showcase Cambodia’s support to China in fighting the outbreak of the epidemic.  President Xi told PM Hun Sen in their meeting that a friend in need is a friend indeed as the Cambodian people stand with the Chinese people at this special moment. At the meeting, both sides agreed to continue high-level exchanges into 2020 and to uplift China-Cambodia relations to new heights.

 With these special relations with China, Cambodia has been seen being overly dependent on China politically and economically, and Cambodia’s diplomatic relations with other world powers and blocks becoming unclear, especially with the US and EU. South China Sea issue has been always one of the top agendas of ASEAN summit and related meetings and Cambodia has also been accused of kowtowing to China since 2012 as a joint communiqué was not issued when it chaired ASEAN for the second time. In addition, Cambodia has been accused to have signed a secret pact with China by allowing China exclusive use of its naval base. The report was released by some Western media and diplomats. The US officials always express their concerns over foreign military presence in Cambodia referring to China’s. However, the Cambodian government has always denied the allegation and denounced it as fake news and baseless.

 China’s investments and ODA have contributed greatly in Cambodia’s development and shares in GDP, however, there are some risks and concerns that Cambodia should take into serious consideration in its relationship with China to ensure winning outcomes over the long term. The quality, accountability, transparency and sustainability of the Chinese investments and infrastructure development projects, debt that Cambodia owed to China, the lack of social and environment impact assessment and safeguard measures of Chinese investment projects, and Cambodia economic dependency on China, are among outstanding risks and concerns that have been raised by some civil society groups and non-governmental organizations (NGOs), and let to resentment toward China in Cambodia. However, the Cambodian government always asserts that all Chinese investments and infrastructure development projects have been made in transparent, open and inclusive manner, and Chinese debt is manageable.

 In sum, Cambodia and China enjoy strong political, security and economic relations, and they may continue to grow in years to come. Under BRI, China is now Cambodia’s most important strategic and economic partners in terms of trade, investment and ODA. However, BRI projects in Cambodia may turn opportunities to challenges and risks if the Cambodian government does not take into serious consideration in it. Therefore, Cambodia has to strengthen its institutional capacity, governance, leadership, and human capital as well as improve and develop all necessary legal frameworks and policies, and strictly re-enforce them in implementing BRI projects. Cambodia and China have to promote transparency and openness to ensure fair bidding, responsible conducts, and benefit sharing in investment projects as well as project quality, accountability and sustainability, and transfer of technology and knowledge from Chinese companies to local companies.

 Moreover, one big challenge of the next decade in their relations remains the solutions of South China Sea dispute. The Cambodian government has always supported China’s opposition to multilateral negotiations regarding this territorial dispute and called on the concerned States to continue using the ASEAN-China mechanism for the full implementation of the Declaration on the Conduct of Parties in the South China Sea (DOC) and ASEAN and China to further work together to realize the Code of Conduct in the South China Sea (COC). However, Cambodia is still seen by other countries being in favor of China. In this context, Cambodia should continuously strive to balance its bilateral relations and foreign policy objectives towards other countries, including the US, in order to diversify its strategic and economic partners; for the sake of its own security, sovereignty, and prosperity.

 by Dr. Kin Phea, Director General of the International Relations Institute of Cambodia

 

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