Cambodia’s close ties with China not hard to decipher

Much has been made of Cambodia’s embrace of China. This is especially true after the Belt Road Initiative (BRI) began. Cambodia is viewed as one of China’s closest allies in South-east Asia, with strong government-to-government relations, and is perceived by many as China’s “vassal state” or “ever-loyal satrap”.

Cambodian subservience to China, to most analysts, is not in doubt. Nevertheless, there are self-interests at play here. Cambodia is flanked by Thailand and Vietnam, and makes its political calculations accordingly.

The size and economic development of these two neighbours, not to mention memories of historical conflict, are more influential to Cambodia’s decision to embrace China than anything else. The figures underline the stark contrast.

Vietnam to the east, with a population of 95 million, has seen its gross domestic product (GDP) expand 5.1 per cent year-on-year in the first quarter of this year. The country’s GDP per capita is US$2,200 (S$3,000).

To the west, Thailand, with a population of 68 million, has a per capita GDP of US$5,900.

Stuck in the middle is Cambodia, with a comparatively paltry 16 million population and a GDP per capita of US$1,300.

To ensure that the gulf between Cambodia and her neighbours does not continue to widen, making the country more vulnerable to threats to its sovereignty, Prime Minister Hun Sen and the Cambodia People’s Party (CPP) have made the political calculation to develop as quickly as possible.

Their solution is to embrace China. Unlike Myanmar, Laos or Vietnam, Cambodia does not share borders with China, thus affording it a sense of geographical and psychological distance.

Whether this distance is illusory remains to be seen. This political calculation coincides with the BRI rhetoric that began in late 2013.

China’s broad and ambiguous vision of cooperation and development has enabled Hun Sen and the ruling party to enjoy Chinese patronage while keeping pace with her immediate neighbours.

China and Cambodia are not natural bedfellows. After all, China’s support of the bloody Khmer Rouge regime left lingering suspicions among the older generation today. However, China’s attraction has grown in response to the inflexibility of organisations such as the Asian Development Bank (ADB) and the hesitancy of traditional investor countries like Japan and Korea.

ADB is inflexible in two ways. For one, it is too dependent on its funding partner-countries, which tend to impose various restrictions. ADB loans often come with onerous targets and goals.

For example, projects have to meet social development targets and goals such as job creation, urban development, skills training, gender equality, and so on, in order to qualify for loans. Local business and developers are often unable to meet them.

And although Japanese and Korean investments are not falling significantly, they are more focused on real estate and retail development, and thus fail to address the key developmental concerns of Cambodia.

In the meantime, Chinese banks and developers have been able to meet Cambodia’s foremost developmental concerns. The country’s high energy costs have reached prohibitive levels for businesses. Unless cheaper energy is found, the country will lose its attractiveness despite its relatively cheap labour and land.

To remedy this, China has invested heavily in the construction of hydropower dams in Cambodia. There are six such dams, and a seventh is under construction.

According to Cambodian ministry officials, “with the exception of the US$781 million 400MW Lower Sesan 2 project on the Se San River in northeastern Cambodia, Chinese companies have provided 100 per cent of the financing for all hydropower projects in Cambodia”.

Cambodia also suffers from poor connectivity. Physical networks such as roads, bridges and highways need to spread quickly across the country in order to shave off travel time and transport cost. It has been estimated that Cambodia needs at least US$9 billion for 850km of roads and highways by 2020.

China has responded to this need by agreeing to almost US$2 billion in concessional loans. In addition, there are six bridges in Cambodia financed by China, to the tune of US$200 million. A seventh bridge, across the Tonle Bassac river, is due for completion later this year, at a cost of $20 million.

Finally, Washington’s engagement with Phnom Penh has been marked by inconsistency, and Beijing has been quick to take advantage. For example, when the 10-year United States ban on development assistance to Cambodia ended in February 2007, the US was Cambodia’s largest trading partner.

However, this assistance decreased when tensions flared at the Cambodian-Thailand border over the Preah Vihear temple, a 900-year-old Hindu temple along the Cambodian-Thai border. When this happened, Chinese aid increased proportionately.

Human rights, democracy and freedom of speech, similarly, have been ideological obstacles for stronger bilateral relations between Cambodia and the US. The Cambodians are not optimistic that the present Trump administration will usher in warmer ties.

The asymmetrical relationship that Cambodia has with China does call for some careful management domestically. With Chinese presence increasing in almost all sectors of Cambodian life, it has been imperative for the government to ensure anti-Chinese sentiments from the ground do not rise beyond acceptable levels. It does this in several ways.

Manipulating anti-Vietnamese sentiments has been a traditional and effective ploy. This will continue. Anti-Vietnamese sentiments stem from complex historical factors. The French decision to employ Vietnamese as administrators and favoured labourers in colonised Cambodia, and the decision to hand over swathes of Cambodia to Vietnamese rule have nurtured ill-will towards Vietnam.

Today, however, anti-Vietnam sentiments are directed towards Vietnamese immigrants, many of whom are believed to be illegal even though a significant number may just be stateless and entitled to Khmer citizenship.

There is no political incentive for the opposition Cambodia National Rescue Party to quell or play down anti-Vietnamese sentiments, although the ruling CPP tries to keep such sentiments in check.

Cambodians in general are pro-China, and it is Vietnam that is consistently decried as the country’s biggest threat. As such, China and her BRI projects emerge as a much-needed bulwark against Cambodia’s encroaching neighbour.

Secondly, the Cambodian government rightly asserts that China gives Cambodia what it needs.

Unlike the army of international organisations that harp on human rights and democracy, or international banks that worry about credit ratings, Chinese capital flows directly into areas that need it most, as mentioned above.

This clear matching of Chinese capital with local developmental needs is acknowledged across the country, whether enthusiastically or reluctantly.

Thirdly, the government has made the shrewd decision to allow the mainstream press to occasionally report on the exploitation of Cambodian workers by Chinese factories or the flouting of local regulations by Chinese businessmen. In this way it is able to publicly demonstrate its “neutrality” towards China. News reports of Chinese factory managers absconding to China leaving Cambodian workers without pay are not uncommon.

This is, of course, an awkward balancing act that may backfire.

In 2012, at the conclusion of the 45th Asean Foreign Ministers Meeting in Phnom Penh, Cambodia refused to include any mention of the South China Sea in the joint communique. This resulted in the failure of Asean to issue a joint communique for the first time in its history.

Not surprisingly, Cambodia again blocked any Asean mention of the Permanent Court of Arbitration’s ruling on the South China Sea in July last year. And at the Asean foreign ministers’ meeting in Manila earlier this month, Cambodia reportedly blocked Vietnam’s attempts to take a stronger stance against China’s reclamation activities in the South China Sea.

It appears that championing Beijing’s interests in Asean is one of the conditions put on Cambodia for Chinese loans and investments.

Neither side bothers with the charade anymore. Said a Chinese scholar: “Today, when debating the South China Sea issue in Asean meetings, Cambodian officials and scholars are widely considered as representatives of the national interests of China, though they mostly reiterate previous Asean statements on the South China Sea.”

Cambodian disenchantment with Asean also plays a part in all this. Cambodian scholars believe that the South China Sea issue is neither an Asean issue, and nor does the regional body possess the mechanisms to resolve disputes.

This stance is, in part, shaped by their disappointment with Asean’s limitations during the dispute with Thailand over the Preah Vihear temple in recent years. Asean’s failure to prevent violent clashes during the dispute and the eventual submission of the decision to the international courts acted as a reminder of the reality that Asean does not possess a mechanism for conflict resolution.

According to the rationale of Cambodian observers, if Asean cannot address a dispute between two member states, it is certainly not the platform to deal with China over the South China Sea, where there are multiple parties involved. As one expert puts it: “Asean has failed Cambodia.”

Although Cambodians prefer a Japanese or a Korean presence, most, particularly the ruling elites, welcome Chinese investments. They are, however, wary of the ramifications. In addition to exploitation and corruption, poor-quality products and shoddy workmanship add to the litany of complaints from locals.

Another consequence of Chinese presence is the strengthening of the military. Because the Cambodian military has access to the political elite and decision-makers, Chinese entrepreneurs have found it expedient to head straight to the military to bypass the bureaucratic process.

Conversely, the local authorities and culture are benefitting from the Chinese presence. Governors and representatives are making it a point to be seen with Chinese businessmen, officials and ambassadors. Many locals are also highlighting their Chinese ancestry.

Mandarin is one of the most popular foreign languages for students. Chinese schools are also growing, sparking fears that Cambodia’s own weaker national education system may be overwhelmed or neglected in the longer term.

ABOUT THE AUTHOR:

Dr Terence Chong is Senior Fellow and Deputy Director of ISEAS-Yusof Ishak Institute. This is adapted from a longer piece in ISEAS Perspective.