China’s Influence in Cambodia: How China's Influence in Cambodia impacts to ASEAN members?

 

Historically speaking, China is one of the oldest friends of Cambodia. China started relationship with Cambodia when Chinese diplomat came to visit Angkor City in 1298 (Zhou 2007). From time to time, China’s foreign policy towards Cambodia has changed. China gave its assistance to King Norodom Sihanouk while he was in power in the 1960s. Then, China kept giving aid to Cambodia during Khmer Rouge leadership from 1975 – 1979 when Pol Pot was a leader. During Khmer Rouge regime, 1.7 million people died of starvation, overworked, diseases and execution.

On 7 January 1979, Khmer Rouge regime was collapsed when Vietnamese army came to occupy Cambodia and installed a new government, Heng Samrin government. Then Khmer Rouge army shifted to the northwest of Cambodia along Thai border. China still kept supporting the Khmer Rouge with weapons, military training till 1990.

In 1993, the election was held in Cambodia after the Paris Peace Agreement. The government of Cambodia was formed by two parties, FUNCINPEC was led by Prince Norodom Ranariddh, son of King Sihanouk, the first prime minister, and Cambodia People’s Party (CPP) was led by Hun Sen, the second prime minister. Up to 1996, China provided aid to Prince Ranariddh, but later China withdrew because Prince Ranariddh was close to Taiwan.

In 1997, Hun Sen ousted Prince Ranariddh from power by military coup, and many top ranking officials of FUNCINPEC’s party were killed. Although international community had condemned Cambodia led military coup government, led by Hun Sen, China, increasingly, provided huge financial aid to Cambodia. From that time, both countries have strengthened bilateral relations, and top delegations of Cambodia and China have spent mutual visits very frequently.

Currently, China’s investment in Cambodia has remarkably increased. In 2011, there were more than 247, 197 Chinese tourists visited Cambodia. Moreover, China is the third biggest tourism market after Vietnam and South Korea (Ministry of Tourism quoted in TTR Weekly 2012).

There are, based on the Chinese Association in Cambodia, some 500,000 Chinese and Chinese-Cambodians living in Cambodia (Radio Free Asia 2012a). Chinese ethnic minorities are one of the largest among the others. More importantly, these people play a paramount role in Cambodian business and in politics.

What are the real motivations behind increased Chinese aid and involvement in Cambodia since 1997 coup? Most importantly, does China have a well-calculated strategy to convince Cambodia to support it in the UN representative legitimacy? Will Cambodia swing towards China and forget Vietnam? This paper attempts to answer these questions?

China’s involvement in Cambodia is an important part of its involvement in ASEAN. What has been pervading on this issue is the concerns that China’s growing influence in the ASEAN will pose a strategic threat to the region, South China Sea, and the US. In the case of Chinese relations with Cambodia, the current concerns – political, strategic and economic – mainly originated from the alleged immediate surge of Chinese aid to Cambodia after 1997 coup onward. For the reason, this article pays special attention to the analysis of Chinese aid to Cambodia.

Putting Chinese Aid in Perspective

The 1997 coup in Cambodia has been pushing forces for closer Cambodia – China relations. In 1997 coup, Beijing, immediately, recognized Cambodia’s acting government while USA and the international community, seriously imposed sanctions against the coup led by Hun Sen.

Recently, China has played a foreign role in Cambodia. Once, Prime Minister Hun Sen said that Cambodia’s economics has been gradually grown because of the huge of Chinese investment and Chinese financial support (China Daily 2012a). This part shows that China plays a very crucial role as the foreign investor, trading partner, financial aid and military support in Cambodia and discusses the controversy and differences of characteristics of such assistance and investment.

The inflows of Foreign Direct Investment have been considered as the main factor for socio-economic development and emancipation in Cambodia. Many foreign investments from China, South Korea, the United States, Malaysia and Thailand have been appeared in Cambodia since the Paris Peace Agreement in 1993, which brought about the stability and peace in the country. However, according to Gareth Evan, the former foreign minister of Australia, stated that although after Paris Peace Accord which brought about the stability, peace and withdrawal of Vietnamese troops, the freedom of speech has been seen limited and grave violation of human right has not been solved.

More importantly, the reason why FDI is increasing because there are lots of natural resources which Cambodia has not explored yet, and the labor work force is cheap. The investment project agreement increased steadily up to USD 640 million in 1994 to 2005, and USD 5.3 billion from 2006 to 2010 (CDC 2012). The highest decision-making organ of the government for private and public sector investment), by September 2011 China’s boost FDI had reached USD 8.8 billion, which made China the most substantial investor in Cambodia.[1]  Apart from China, the other largest investments Cambodia are South Korea (USD 4 billion), Malaysia (USD 2.6 billion), the United Kingdom (USD 2.3 billion) and the United States (USD 1.2 billion) (Council for the Development of Cambodia 2012). There are about 23 Chinese companies, exploring mine resource, five are establishing hydro-power dams and many other are investing in garment factory (People’s Daily online 2011b). 

Since the ASEAN - China Free trade Agreement[2] has been established and came into force in 2010, China became the largest trade investment partner in the region. China’s Trade with ASEAN, in notice, increased up to USD 232 billion from 2000 to 2010 (ASEAN 2012).  China’s trade has significantly grown, and China, in particular, imports the garment raw materials, machinery, motor-cycles, cars, foodstuffs, electronics, furniture, medicines and cosmetics, which is known as Cambodia – China trade, increased three times from USD 791 million in 2009 to USD 2.5 billion in 2011 (ASEAN-China Centre 2012). Besides, Cambodia, significantly, exports agricultural products, rubber, fishery, timber and textiles to China, which are less, approximately USD 184 million USD by the end of 2011 (ASEAN-China Centre). The other top investment trading partners of Cambodia are Thailand and the USA; nonetheless, China promised to invest two times in trade in Cambodia, which will overtake Thailand and the USA with USD 5 billion by 2017 (People Online 2012).

Apart from the close economic relationship, Cambodia has also a very cordial military cooperation. China has tightened Chinese – Cambodia military cooperation since the end 1990s. Kindly, China has given military aid to Cambodia in different forms. In December 199, for instance, China gave construction materials cost USD 1.5 million for Cambodian armed forces (Marks 2000). In September to October 2006, China promised to give the assistance to train Cambodian army, and repair the military facilities, and provided six patrol boats to against drug and human trafficking (IntellAsia 2005). Moreover, in April 2010, China announced, a new aid package including 257 new military cars, 500,000 uniforms, and 100 million CNY (USD 15 million) while Cambodian Prime Minister Hun Sen and Chinese President Hu Jintao were at the opening of the World Expo in Shanghai (Radio Free Asia 2010). Cambodia and China, in May 2012, signed a Military cooperation agreement, and China agreed to give 120 million CNY (USD 20 million) to Cambodia to construct military hospitals and military training schools for the Royal Cambodian Military Armed Forces. Furthermore, China promised to keep on training Cambodian military armed forces in China (Radio Free Asia 2012c).

In short, Cambodia and China are very cordial in the region. The close relationship between Cambodia and China, recently, has reached to the peak in many sectors of cooperation. Once, the Chinese Ambassador to Cambodia, Pan Guangxue addressed, “China and Cambodia will always be good neighbours, close friends, trusted partners and dear brothers” (The Phnom Penh Post 2011). The dramatic increase of China’s pledged aid to Cambodia has pushed the sensitive discussions. What are the interests for China in a small country like Cambodia?  

Understanding China’s policy towards Cambodia: Chinese Interests

Chinese policy towards Cambodia reflects China’s proclaimed principle of non-interference in a country’s political system. Cambodia is just one of many instances. A good comparison is China’s policy towards Africa. Chinese activity in Africa is increasing at an exponential rate (Ian Taylor 2006: 937). In the 1950s and 1960s, China started having good diplomatic relations with African countries. Beijing, in the first ten year of China’s opening in 1978, focused on strengthening its ties with developed countries and its neighbours. China started to build good relationship with developing countries (African countries) when, Denis M. Tull’s (2006: 460) words, ‘developing countries were effectively elevated to a “cornerstone” of Chinese foreign policy in an effort to build coalitions to shield Beijing from Western criticism’. Furthermore, Beijing’s policy towards Africa is ‘created to secure natural resources, consumer market, and its positon as leader of the developing countries’ (Eisenman 2007: 29). Another important factor has been Beijing’s diplomatic rivalry with Taipei. China’s aid to African countries ‘does not hinge on conditionality pertaining to specific political objectives or standards’, such as human rights and political democratization. The ‘notable exception’ is that the countries must recognize that Beijing is the only legitimate representative of China and Taiwan is a part of China (Tull 2006: 463).

It is true that the influence of China abroad is, partly, because of the “Go Global” policy, but China’s agenda is about more than investment, pursuing product diversification, improving the level and quality of the projects, expanding financial channels, and promoting brand recognition of Chinese companies. An analysis of the domestic socioeconomic and political situation in China suggests that China’s influence growth overseas is dependent on four main reasons: to secure natural resources, particularly oil and food, to expand its export market to sustain growth, to spread its cultural values, and to tighten friendship and cooperation with world leaders using the public diplomacy and charm offensive to get support for its transition to superpower status. What is about China’s growth in Cambodia? What does Cambodia have to give to China?

Cambodia is, in politics, China’s ally. Once, Hun Sen stated that Cambodia has become one of ASEAN’s strictest adherents of the “One China” policy and a vocal supporter of China’s 2005 anti-secession law[3] that Hun Sen describes as “highly necessary to the cause of China’s national reunification” (People’s Daily Online 2005). Moreover, China always counts on Cambodia’s full cooperation in dealing with its political resistance. Cambodia, upon Beijing’s request in December 2009, decided to deport 20 ethnic Uyghur [4] asylum-seekers to China despite the criticism from the international community (BBC 2009). In April 2012, President Hu Jintao pledged millions of dollars of aid and loans when he visited Cambodia right before the ASEAN summit, chaired by Cambodia. In return, China requested that the South China Sea dispute not be discussed during the meeting. It is believed that Cambodia’s membership in ASEAN is important for China to engage Cambodia in shaping regional actors to serve the interests of China.

China has benefited its economic development from Cambodia as well. In return for its aid, Cambodia’s government has satisfied and facilitated Chinese investment. Chinese FDI fixed asset approval increased dramatically from just USD 105 million in 1998 to a staggering USD 4.375 billion in 2008 (CDC 2010). Using Cambodia’s “Most Favoured Nation”, “Generalized System of Preference” and “Anything but Arms” status, Chinese garment factories were able to bypass quotas and tariffs imposed by the US and the EU and export their products to the world market. In relevance, Cambodia has less natural resources than Africa or Central Asia, but Cambodia exists an estimated 400 million barrels of crude oil and three trillion cubic feet of gas (EIC 2008). Moreover, Cambodia gives mineral resources, which is one of the few remaining underexplored areas in the world, and lots of agricultural lands. China is able to, having invested in these sectors, stable access to vital resources for its domestic increase. 50 percent of the land concessions, according to the report by the Cambodian Centre for Human Rights (CCHR), granted since 1994 (4.6 million hectares) are in the hands of 107 Chinese companies (The Phnom Penh Post 2012b). Having mentioned earlier, an estimated Chinese companies are exploring mineral resources (People’s Daily Online 2011b), five are constructing hydropower dams (People’s Daily Online 2011b), and 66 are investing in agro-business industry (Hicks et al. 2009). There is no exact information how many Chinese companies are investing in Cambodia’s oil but 2007 the China National Offshore Oil Corporation (CNOOC) reportedly won the right to drill in Cambodia’s offshore Block F, with 7,026.7 square kilometres (Xinhuanet 2011c).

Cambodia is seen as a farming field. As earlier mentioned, China is exploring external food sources to sustain its food security. With its good climate and because not more than 30 per cent of its total potential land is recently cultivated, Cambodia is pledging China’s agricultural outsourcing (Yu and Diao 2011). Some signs of China interests of the agricultural products have been seen in Cambodia. For example, the China National Food Industry Group, in August 2011, signed an agreement with the Cambodian agricultural firm Ly Ye Rubber Company to import one million tons of cassava. The Guangzhou branch of the China Grain Reserves Cooperation (Sinograin), in the same month, agreed to buy up to 200,000 tons of milled rice per year from Cambodia as well (Hinhuanet 2011a). Having invested in the agriculture, China can secure the natural resources to feed its own population.

Cambodia is, strategically, located in a unique geographical location vital for China to tighten its own security in Southeast Asia. The growth of Chinese exports and insatiable demand for energy have pushed its “string-of-pearls” strategy, a strategic move, engaging a series of nodes of military and economic power throughout the region, often through gaining increased access to airfields and ports. Cambodian port of Sihanouk Province, situated in the central mainland Southeast Asia, is a priceless “pearl” among China’s “string of pearl”. Remarkably, China has already funded the renovation of the docking facilities at Ream and the port of Sihanouk Province. These ports give an excellent base for projecting maritime power into the Gulf of Thailand and the Straits of Malacca. Therefore, China considers Cambodia as strategically important to be influential in Southeast Asia and to counterbalance the power of the US. Moreover, Cambodian airfields build up for China’s lack of in-flight refueling capacity for warplanes giving maritime air cover. Such bases would protect China’s interests, and would drive a wedge both within ASEAN and between ASEAN and the United States (US Major Paul Marks in his article in the US Army War College Quarterly 200).

Understanding China’s policy towards Cambodia: the South China Sea factor

On the top of these interests has been Beijing’s diplomatic rivalry in the South China Sea Dispute with Vietnam, the Philippines, Brunei and etc. Moreover, after the collapse of Pol Pot Regime, Cambodia’s new government was installed by Vietnam. The new government under Heng Samrin, installed by Vietnam, was not recognized by the ASEAN members, China and the international community. However, India under Indira Gandhi leadership, claimed to recognize Heng Samrin’s People’s Republic of Kampuchea (PRK) on 7 July 1980 (Chakraborti T. 1978-81: 76). Since Cambodia has been recognized, the government of Cambodia has strengthened the ties with Vietnam. However, civil war was going on till 1989 when there was the intervention of UNTAC to lead Cambodia to have a Paris Peace Accord in 1991. In the 1993, Cambodia started to have the election, and there were two elected parties, FUNCINPEC’s Party led by Prince Norodom Ranariddh and Cambodia People’s Party (CPP) led by Hun Sen. Then the new government was formed by the coalition between the two parties. Norodom Ranariddh was the first prime minister and Hun Sen was the second prime minister. Noticeably, in 1997, Prince Ranariddh was overthrown by Hun Sen before the 1998 election came. Since that time, CCP became the won party, and Hun Sen has come to power up to the present. Under CCP leadership, Cambodia and Vietnam diplomatic relations are very cordial because with the assistance of Vietnam which could oust the Khmer Rouge Regime and then install the new government which Vietnam is back. Therefore, Cambodia under Hun Sen has been viewed by Cambodian people that Cambodia has a very cold diplomatic relation. This has brought some discussions about Cambodia role stance in the region engaging with the South China Sea Disputes, especially the conflict between Vietnam and China.

Exactly, China is re-emerging as a prominent foreign player in Cambodia, for Cambodia’s geographical, natural and cultural landscapes are conducive to China’s rise in the region, the latter country has utilized its soft power (diplomatic, economic and cultural) to strengthen its engagement in the former country. China’s potential growth deepens rooted in Cambodian society nowadays. Cambodia, in term of politics, is one of China’s oldest and closest allies. Economically, China is Cambodia’s top foreign investor, a substantive donor, and a trading partner. In term of culture, Chinese values are deeply rooted in Cambodia’s way of life.

Therefore, China’s dominance in Cambodia has played very important role in socio-economic development. In the case of Cambodia and China, two opposing views have been raised: one believes that Chinese investment contributes to Cambodia’s economic development and poverty reduction. The investment in the garment industry has, for example, increased the exports and generated local employment (Ouch, Saing and Phann 2011), and investment in hydropower can potentially provide electricity to some 78 per cent of the population who currently do not have accessed to reliable electricity (UNDP 2010).

The other group, nevertheless, argues that China’s unquestioning approach to how its aid and investment money is used has exacerbated corruption, undermined the governance and human rights, and destroyed Cambodia’s natural resources and environment. Chinese investment, for instance, has been repeatedly criticized for its lack for transparency, its human right violation and the environmental deterioration it has worked.

Anyway, the government of Cambodia has warmly welcomed China’s engagement. Cambodia Deputy Prime Minister Sok An told Chinese Ambassador Zhang Jinfeng, “the more investments and tourists from China, the greater the contributions will be to Cambodian economic growth” (People’s Daily Online 2010). Cambodia, moreover, the Minister of Cambodia’s Public Works and Transport, Tram Iv Tek, said that the following at the signing ceremony of the infrastructure development Memorandum of Understanding (MoU): “so far, China has built three bridges and 1,500-km-long roads for Cambodia, worth nearly USD one billion. The Cambodian people and government will not forget China’s help” (Hinhua 2010). Premier Hun Sen called China “Cambodia’s most trusted friend”. He openly appreciated Chinese aid, saying that it comes with no strings attached, unlike aid form the US and the West, which often comes with stringent structural adjustment and reform requirements. China’s large amount of “unconditional” aid and inflow of the investment growth are deviated Cambodia from dependence on the West, but experts warn that too much dependence on any single country is not healthy for Cambodia. “China will play an even more crucial role but we still need traditional donors,” said Chan Sophal, president of the Cambodian Economic Association, in an interview. If Cambodia’s government is to rely solely on China There are concerns about the loss of independence and autonomy in decision-making. How could China impact Cambodia’s actions and decisions, particularly in term of diplomatic and political issues. Cambodia was ridiculously criticized for its unjust chairmanship of the 2012 ASEAN Summit in July in respective with the South China Sea dispute. Cambodia, by the meeting delegates, was described as “the worst chair” and said China effectively bought Cambodia’s loyalty (Reuters 2012). Regarding to the 2012 ASEAN Summit, Cambodia was losing its face as a chair with unjust decision-making. The Philippines, Vietnam, Malaysia and Brunei contest parts of the resource-rich South China Sea area with China during the summit (BBC 13 July 2012).

The Philippines and Vietnam want Asean to resist Beijing's insistence that the disputes be handled on a bilateral level only. Asean officials said the two countries wanted the joint statement to include references to their territorial disputes with China (BBC 2012). Shamefully, the Philippines has accused Cambodia, a close ally of China, of blocking any mention of the dispute. But Cambodian Foreign Minister Hor Namhong said that all Asean members were responsible for the failure to issue a statement. "I requested that we issue the joint communique without mention of the South China Sea dispute ... but some member countries repeatedly insisted to put the issue of the Scarborough Shoal," he said. "I have told my colleagues that the meeting of the Asean foreign ministers is not a court, a place to give a verdict about the dispute."China and the Philippines had a maritime stand-off in the Scaborough Shoal in April, with China denying reports it was preparing for war at the height of tensions in May. Both sides accused the other of trespassing on territorial waters. Vietnam was also angered by a recent call from China for oil exploration in a disputed territory.

The fallout affected relations between Cambodia and its fellow ASEAN member states, most notably the Philippines. The Cambodian Ambassador to Manila was recalled after making a controversial comment on the Philippines and Vietnam, following the failure of ASEAN member states to agree on the wording of the joint communiqué relating to conflicting claims between the Philippines and China over the Scarborough Shoal.

The reason Cambodia was singled out was its growing economic dependence on China. Over the past decade, China has given billions of dollars in aid, loans and investments to Cambodia, making it the country’s largest investor. Cambodian leaders have consistently supported China on a number of issues including the ‘One China’ policy.

It remains doubtful whether the 2012 Foreign Ministers’ Meeting would have ended any differently if another ASEAN member country was the Chair instead. Of course, Cambodia should have handled this matter in a more effective way and found a solution acceptable to all stakeholders. The failure to issue the joint communiqué greatly damaged the country’s image.

Cambodia is expected to act similarly regarding the South China Sea maritime disputes. It strongly supports a de-escalation of conflict to avoid endangering peace and disrupting trade activities in the region and beyond. The recent clashes between China, the Philippines and Vietnam pose a serious security concern.

What Cambodia and other ASEAN member states should do is to push ahead with creating channels for dialogue. ASEAN is rightly assisting the claimants in developing the Code of Conduct on the South China Sea maritime disputes, the most promising route towards a peaceful resolution. All claimants should refrain from taking any unilateral actions that might undermine this process.

Will Cambodia swing towards China and leave out Vietnam?

In terms of economics, Cambodia, a tiny and poor country, needs largely to depend on China. As mentioned above, China has invested a lot of money in Cambodia, especially since the 1997 coup till now. Moreover, China has given large amount of unconditional aid to Cambodia in order to develop its economic. It is mentioned above, when Cambodia was a chair of the ASEAN Summit in 2012, Cambodia was considered as the worst chair ever seen engaging with the South China Sea Disputes with the members of some ASEAN countries. Before the ASEAN Summit, China’s president came to Cambodia and pledge large amount of aid to Cambodia. It was likely shown that China came to charm Cambodia in advance. To response to China’s aid, Cambodia was suggested not to raise the agenda about the South China Sea Disputes in during the summit, which many countries got angry with Cambodia, especially the Philippines.

Critically, although China’s aid greatly influence in Cambodia, Cambodia cannot leave out Vietnam, the Chinese opponent on South China Sea Dispute. As earlier mentioned, after the collapse of Pol Pot Regime in July 7 1979, the new government of Cambodia was installed by Vietnam, Hun Sen is now still in power. Hun Sen has been a prime minister for decades till now. He looks forward to being close to China because he needs china’s aid. However, he will never leave out Vietnam because Vietnam has brought him into power. And noticeably, Hun Sen used to say during PRK’s period that “the problem’s happening in Cambodia because of China”. Generally speaking, the policy can be changed if the new party comes to power.

Conclusion

Cambodia relies on China economically, while China needs Cambodia politically and strategically. Cambodia and China will continue to be good friends at least until there is new government in either country. However, it is of great importance that the two countries work together to ensure that their relationship result in the great success. Among other things, serious actions have to be taken to enhance the management of investment and aid. Aid delivered over long periods to nations with weak institutions has the potential to undermine good governance and to reduce local ownership, accountability and democratic decision-making, and it does very little to promote economic growth (Graham and O’Hanlon 1997; Easterly 2003; Tangri and Mwenda 2006). And politically, Cambodia, under the present government, having Hun Sen as a leader, is really greatly influenced by Vietnam. Hence, Cambodia cannot swing towards China and forget Vietnam.  

References:

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<www.aseansec.org/stat/Table1.pdf> (18 June 2012).

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[1] There are reasons to believe that Chinese investment in Cambodia might have been misreported. Comparing the investment figures from different sources, the author finds a huge discrepancy. He nevertheless acknowledges that China is one of Cambodia’s major foreign investors.

[2] The ASEAN–China Free Trade Area is the largest free trade area in the world in terms of population, and third-largest in terms of nominal GDP (behind the European Union and the North American Free Trade Area). Under the FTA accord, the

average tariff on goods from ASEAN countries to China is reduced to 0.1 per cent from 9.8 per cent.

[3] Ratified on 14 March 2005, the law formalizes the long-standing policy of the People’s Republic of China to use “non-peaceful means” against the “Taiwan independence movement” in the event of a declaration of Taiwan independence.

[4] Uyghurs are members of a Turkic-speaking ethnic minority living mostly in western China. The 20 Uyghurs were seeking refuge in Cambodia after fleeing persecution in a crackdown that followed riots in which the Chinese government reported that at least 197 people were killed.

About the author: 

Thoeun Vongdy has been currently working in Japan International Cooperation Agency in Social Development & Governance Sections. He also serves as a lecturer in various universities in the Discipline of International Relations, Educational Psychology, Global Studies, etc. He also used to work for the foreign mission including Embassy of India in Cambodia. He obtained Master Degree of Politics, Specialization in International Relations from Jawaharlal Nehru University (JNU), India. He has been pursuing Ph.D. of International Relations at University of Cambodia (UC). His interest papers in world politics, India-Cambodia, China-Cambodia as well security issues in world affairs.