Chinese investments modernizing Cambodia, says scholar

By Riyaz ul Khaliq

ANKARA (AA) – The US is demonstrating that it is not interested in Southeast Asia's economic growth and political stability but rather in trying to "contain China," said a political scientist.

"The US, as an extra-regional power, sees Cambodia and other ASEAN nations as 'strategic assets' in its desire to maintain military influence in the region and to contain China," Digby Wren, a visiting international relations scholar from Deakin University Australia at Sichuan Normal University in China, told Anadolu Agency.

It is in this view that the US is attempting to leverage Cambodia against China, given the significance of the Southeast Asian nation regarding the multi-billion-dollar Belt and Road Initiative (BRI).

Washington has accused Cambodia of hosting a Chinese military base, which Phnom Penh has rejected, while rights groups have criticized Chinese investments in the Southeast Asian country. The government of Prime Minister Hun Sen has said it is developing Cambodia "with a clear and well-studied strategy."

Observers believe Chinese investments in the Southeast Asian nation are helping Cambodia to "grow and modernize."

Cambodia is a member state of the 10-member Association of Southeast Asian Nations (ASEAN) – a regional bloc for economic integration.

The following are edited excerpts from the interview.

Anadolu Agency (AA): How and where can we trace Cambodia-China relations?

Digby Wren (DW): The bilateral relationship between Cambodia and China can be traced back to as early as the 12th century when the Chinese Emperor Temur sent an envoy to the Khmer Kingdom, known as Cambodia today. However, the diplomatic relationship began in 1955, when King [Norodom] Sihanouk, then president of Cambodia, met Chinese Premier Zhou Enlai at the Bandung Conference.

China-Cambodia ties improved quickly, and by 2000, Chinese President Jiang Zemin had visited Cambodia and provided a large amount of aid, followed by several other top Chinese leaders in the following years.

In the early 2000s, China adopted its 'Going Outʼ strategy, encouraging Chinese enterprises to expand, and since 2004, overseas investment by Chinese enterprises has increased exponentially and Cambodia under Hun Sen has benefited greatly from its good relations with China.

AA: What is the economic and military status of the bilateral relations between the two countries?

DW: Cambodia's ties with China have strengthened remarkably since 2000, and for the last ten years, Cambodia has seen an economic boom, with growth averaging 9%-10% year-on-year.

Chinese investment, especially through the BRI, has been a blessing for Cambodia. Phnom Penh is modernizing quickly and has the air of a new Bangkok or even Singapore. The port city of Sihanoukville has been transformed from a sleepy backpacker town and low-grade transport hub into a sparkling brand new city, and that was within five years.

With highways, rail and industrial parks, Special Economic Zones and Free Trade Zones surrounding the port, one can see how the economy of Cambodia is transforming. In terms of military ties, there is little to say. Cambodia maintains a 'no foreign base' policy, and so there are no foreign military bases.

The US is unhappy about the 'ironclad' brotherhood arrangement, but with their history in the region, there is little political sympathy and they have limited influence in the country. In fact, last year, a small US naval complex in Ream [next to Sihanoukville] was dismantled. Cooperation and technical assistance with China continues, but it is low-key, as the focus is on political stability and economic development.

Despite the COVID-19 pandemic, 2020 Cambodia-China trade decreased only about 5% to $8.118 billion compared with 2019. The decrease was attributed to a slowdown of raw materials for the kingdom's garment factories because of lockdowns or virus-preventive measures imposed to contain COVID-19.

However, Cambodia's exports grew to $1.086 billion, a year-on-year increase of 8.1%. The kingdom's imports from China were valued at $7.031 billion, a contraction of 6.9% compared with 2019 figures.

In the first four months of 2021, bilateral trade between Cambodia and China increased by almost 20% to $3 billion. However, exports to China increased by 42% to about $425 million, while imports increased by a more modest 16.7% to $2.58 billion – resulting in a trade deficit of $2.156 billion.

AA: What are the main items of trade?

DW: As rising incomes coincide with higher consumption, China has become increasingly dependent on foreign food imports. Cambodia is a sustainable source of agricultural products for the Chinese market and the agriculture sector receives the most foreign direct investments from China.

Almost 65% of Cambodians rely on the agriculture, fisheries and forestry sectors for their livelihoods, with agriculture accounting for about 20% of Cambodia's gross domestic product.

Exports include milled rice, mangoes and cassava, and a new deal with China will allow for the export of fresh mangoes to the mainland.

Work is also underway to develop similar arrangements for birdʼs nests, coconuts, longan and dragon fruit. All in all, China is a very large and growing market for fresh fruit, and Cambodia has potential with durian, cherries and bananas as well.

AA: What has been the cooperation between the two countries at multilateral forums?

DW: Cambodia has been a stalwart supporter of China, and critics might call that 'bandwagoning.' But in reality, within ASEAN, which is China's number one trade partner, Cambodia has supported China's stance on the Code of Conduct (CoC) which is progressing towards phase two, and a real and equitable distribution of joint exploitation of resources and to limit extra-regional [US] interference.

The CoC relates to the South China Sea, which has witnessed many long-running disputes. The CoC is expected to be a regional framework establishing rules and standards for regional peace and stability.

Similarly, the US and other powers have tried to constrain Cambodia for alleged human rights abuses and political freedoms. But, as usual, these allegations and motions within multilaterals are being used to coerce cooperation and allow a weakening of political stability, improve 'conditional' access for US and European corporations under strict regulatory rights, control standards and ensure legal, financial and accounting services are also US or European owned.

AA: How does Cambodia balance its relations with China and the Western capitals?

DW: Cambodia is definitely a developing nation, and its partnership with China has allowed it to move from near the very bottom from a least developed economy to an emerging economy. Poverty alleviation, infrastructure development and modernization of telecommunications and transport, hospitals, schools and government services have been remarkable.

The machinations of the US and, to a lesser degree, the EU are seen as harmful, not just by the political elite but increasingly by the people. Thus, Cambodia is opening and reforming gradually as its economy gains traction and its exports and foreign reserves increase. The US, and to a lesser degree the EU, are struggling to invest in the nation's growth.

China, Japan, Korea and Malaysia are making strong investments in the country. At the end of the day, economic development must be suited to 'local' conditions, and both the US and EU are not adjusting to that reality.

AA: The US has claimed that China has a military base in Cambodia. Is it so? Why is the US so doubtful, and what are the causes behind it?

DW: Cambodia, like any sovereign nation, has full control over its military bases, including REAM Naval Base on its southern coast. But there is no formal or legal agreement between Cambodia and the US for inspections of Cambodian military facilities and no obligation whatsoever.

That being said, following the recent visit to Cambodia of US Deputy Secretary of State Wendy Sherman, she requested that the Cambodian government authorize the visit of US military attaches to REAM Naval Base.

The visit was agreed to by Prime Minister Hun Sen, who also suggested that they should be accompanied by journalists in order to ensure transparency.

There is a long and dark history with the US military in Cambodia, and the US, as an extra-regional power, sees Cambodia and other ASEAN nations as 'strategic assets' in its desire to maintain military influence in the region. The visit came after the US expressed "serious concerns" about China's military presence and the construction of facilities at the base.