China’s Dominance and Money Slowly Devouring Cambodia

Since 1996 Cambodia’s Prime Minister Hun Sen’s and the Chinese Communist Party have grown only stronger. Political interdependencies have emerged alongside the influx of Chinese investments, businesses and economic migrants.

The majority of Cambodia’s garment factories, which account for more than three quarters of total exports, are owned and managed by Chinese. China is the biggest investor in Cambodia, adding nearly US$5.3 billion to the economy between 2013 and 2017.

Officials hope that annual bilateral trade between the two countries will reach US$10 billion in 2023.

In all, with Chinese investors, traders, service entrepreneurs, factory managers, tourists, diplomats, teachers, journalists and subcontractors flocking to Cambodia. China’s influence over economic and political affairs in Cambodia is undisputed.

Cambodia has seen a huge influx of Chinese investment, workers and tourists in recent years. Many in Cambodia are increasingly worried about the negative impact it is having.

Chinese casinos, hotels and factories in Cambodia

Sihanoukville, a once-sleepy beach town, symbolizes the transformation brought about by Chinese investment in Cambodia. The town of around 160,000 inhabitants has been completely transformed by Chinese casinos, hotels and factories in recent years.

Many Chinese firms have set up factories in the town. The main attraction for business is the Sihanoukville Special Economic Zone (SSEZ). A China-Cambodia tax-free economic zone. Chinese companies also run the majority of the over 100 factories in the zone.

A Chinese construction company is also building a four-lane highway to connect Sihanoukville to Cambodia’s capital, Phnom Penh.
China has so far funded construction of seven hydropower dams. The dams are collectively capable of generating half of Cambodia’s entire electricity needs. It has also built about 3,000 kilometers of highways and numerous bridges in Cambodia.

All these investments have turned China into Cambodia’s closest ally

Although Chinese investments have significantly contributed to Cambodia’s economic growth. The benefits of Chinese money have not been widely shared with the local population. It appears to have benefited privileged sections of Cambodian society. Those who own land or operate businesses that cater to Chinese nationals.

And instead of hiring local workers, many Chinese businesses tend to import them from China. This above all fuels resentment among Cambodians.

Chinese companies prefer Chinese workers because they find it easier to work with them. They also share the same language and work ethic, say observers. A report published by Cambodia’s Interior Ministry stated that over 250,000 Chinese nationals currently reside in the country. This is over 60% of all foreign residents in Cambodia.

Now some Cambodian officials admit that not all is well with the influx of Chinese immigrants.

Cambodia has high reliance on China

In recent years, Cambodia has increasingly turned toward China for financial and diplomatic assistance. Above all as Phnom Penh faced increased Western pressure over the state of human rights in the country.

The European Union earlier this year began the process of withdrawing Cambodia’s preferential access to the bloc. Under the Everything But Arms (EBA) scheme. The European Commission said that “serious and systemic violation” of human rights principles meant Cambodia may cease to benefit from this scheme.

Meanwhile, trade between Cambodia and China has risen rapidly in recent years. Amounting to $6 billion in 2017. Chinese exports to Cambodia account for 87% of that figure.

Cambodian Prime Minister Hun Sen said China wants to see bilateral commerce increase to $10 billion by 2023.

According to the Ministry of Tourism in Cambodia, about 2 million Chinese tourists visited Cambodia in 2018. Up 70% from a year earlier.

Source: DW, SCMP