Cambodia and China have been close allies for centuries, however in the past decade or so a deep and restricting reliance has developed which challenges Cambodia’s sovereignty, and resultingly threatens the wellbeing of the entire Southeast Asian region. Now, the development, and even the maintenance of Cambodia’s economy are contingent upon continued support from China.[1] Such a reliance has already been leveraged to use Cambodia as a bulwark from which regional politics can be influenced, which raises serious concerns relating to future issues of Cambodian stability and financial independence and sets the stage for possible US/China conflicts in Southeast Asia.[2] Before the geopolitical implications can be considered, however, an overview of the situation must be developed.
In 2016, Chinese President Xi Jinping visited the Cambodian capital Phnom Penh on a diplomatic state excursion. Immediately following this visit, Cambodia cut all military relations with the US and began to pull away from ties with most of their other allies.[3] As Cambodia distanced themselves from the rest of the world however, they embraced the support of China which can be clearly seen as represented through their financial debt. Specifically, Cambodia owes China over 4 billion USD ($ 5.4 billion CAD), representing around 40% of their entire national debt.[4] These borrowed funds were used to develop Cambodian infrastructure and pursue modernization, as was the case with investment into China’s Belt and Road Initiative for example.[5]
Enabled largely by Chinese investment, the Cambodian economy has thrived in recent years. Before the pandemic, Cambodia’s GDP increased at an average rate of nearly 8% per year from 1995 to 2019.[6] It may seem then, that although Cambodia is falling further into debt with China, the increased welfare achieved through national development outweighs the financial burden of owed profits. Cambodia is flourishing through their agreements with China; however, such a relationship poses considerable long-term risks.[7]
Some experts fear that Cambodia is falling into a debt trap: a state where one country becomes so reliant on another that a system of dependence forms.[8] For decades, China has used the Third World as a medium through which they could expand their political reach beyond their own borders, and it seems that Cambodia is contributing to this mission.[9] Globally, China is the second largest foreign creditor, and as they invest in developing countries they can, to a degree, mould the formation of nascent industries and political structures to favour their own domestic and international ambitions.[10]
While on the surface, Chinese funding allows Cambodia to develop quickly, there are considerable sacrifices. Even though the country is getting richer year over year, domestic business owners and residents of large cities are beginning to suffer. For example, Chinese investors have priced out Sihanoukville, a large Cambodian city, as around 90% of its businesses were owned by citizens of China in 2019.[11]
What is perhaps more concerning however is the broader political implications of Cambodia’s reliance upon China. Specifically, Cambodia is often seen to use their regional political influence to advocate for a policy which would in some way favour China. Often, such policy comes at the detriment of fellow neighbouring states. For example, during a 2012 Association of Southeast Asian Nations (ASEAN) conference, an issue regarding Chinese territorial claims to a region in the South China Sea went unresolved. Consequently, for the first time in the organization’s history, a meeting ended with no resolution, and Cambodia was largely to blame.[12] This failed 2012 meeting set a precedent which would later be seen to repeat in contentious issues in which China was involved.
More recently, tensions in the Southeast Asian region have heightened as a direct consequence of Cambodia’s unwavering support for China in diplomatic issues. Through official channels like ASEAN or the UN, Cambodia seems to act in unison with China, as they know that without China their nation would suffer. Not only would the economy suffer, but a change in government would also be likely. China heavily supports the current authoritative regime, and without this support, poor public perception would likely mobilize to invoke a change in power.[13]
Cambodia’s alliance with China is enabled by this leadership, and it can reasonably be assumed that Chinese debt and political influence will continue to increase under Prime Minister Hun Manet’s regime.[14] An optimal solution therefore would likely demand a change in governance. However, either through willingness from the current government, or strategy from the next, the path forward is clear.
Cambodia should multilaterally reduce trade barriers with Southeast Asian countries and should appeal to these neighbouring nations for aid. Simultaneously then, Cambodia could shift away from Chinese reliance, and towards the interests of other countries in the region. Regional investment in Cambodia would reduce conflicts of interest and could contribute to the reparation of Southeast Asian stability. Unity is paramount, and by strengthening trade and diplomatic relations with Cambodia’s direct regional partners, a more sustainable system of cooperation and shared ambitions can be developed which will necessarily be beneficial for all those involved.
It should be noted that such changes will be impossible without adequate pressure. This pressure must be exerted by Cambodia’s own people, but also from international organizations like the UN or the WTO, who have a responsibility to intervene as Cambodia’s economic issues could quickly evolve into human rights issues if conflict were to emerge.[15]
Chinese influence compromises regional priority, as Cambodia is forced to consider the needs of China over those of Southeast Asia. Tangibly, this results in the emergence of an arena through which Chinese/US conflict could emerge. It was recently revealed that China completed the construction of its Ream Naval Base on Cambodian territory, and such militaristic expansion necessarily contributes to a sense of instability throughout Southeast Asia.[16] Both the US and China are increasing military presence in the region, and the possibility of open conflict could be disastrous to Cambodia’s prosperity, and to the prosperity of all neighbouring countries who would inevitably be pulled into participation.
Cambodia clearly benefits through Chinese financial aid, however as they veer towards debt entrapment, Cambodian sovereignty is increasingly challenged. As the autonomy of Cambodia is threatened, so too is Southeast Asian stability, as China enters to manipulate geopolitics to their own gain where Cambodia acts as a channel through which such influences can be expressed.
Paul Hindoian is a second-year student studying international relations and mathematics. He is interested in studying the historical context of modern issues to understand modern geopolitics and to forecast possible future outcomes. Through sharing his opinions and perspectives, he hopes to first inform readers, then to encourage them to think critically about the issues at hand and what the optimal path forward may be.
Footnotes
[1] Horton, Chris. “China’s Engagement with Cambodia Developing a Strategic Foothold in Southeast Asia.” China’s Engagement with Cambodia: Developing a Strategic Foothold in Southeast Asia | The National Bureau of Asian Research (NBR), August 5, 2020. https://www.nbr.org/publication/chinas-engagement-with-cambodia-developing-a-strategic-foothold-in-southeast-asia/.
[2] Mit, Mom. “China’s Continuing Influence over Cambodia’s Economy.” East Asia Forum, May 2, 2024. https://eastasiaforum.org/2024/05/01/chinas-continuing-influence-over-cambodias-economy/.
[3] Sun, Narin. “After 10 Years of China’s BRI Projects in Cambodia, Benefits up for Debate.” Voice of America, October 18, 2023. https://www.voanews.com/a/after-10-years-of-china-s-bri-projects-in-cambodia-benefits-up-for-debate/7316544.html.
[4] Sreng, Sokleap, and Sovinda Po. “Chinese Cash Paves the Way for Complicated Cambodian Development.” The Cambodia Daily, August 17, 2024. https://english.cambodiadaily.com/opinion/chinese-cash-paves-the-way-for-complicated-cambodian-development-189013/.
[5] Zhao, Minghao. “The Belt and Road Initiative and China–US Strategic Competition.” China International Strategy Review 3, no. 2 (November 9, 2021): 248–60. https://doi.org/10.1007/s42533-021-00087-7.
[6] “Overview.” World Bank. Accessed December 1, 2024. https://www.worldbank.org/en/country/cambodia/overview.
[7] Hung, Vo Minh, Nguyen Hung Vuong, Phan Thi Tram, Nguyen Van Tuan, and Vo Mau Thuong. “Increasing Security and Political Cooperation between Cambodia-China in the Second Decade of the 21st Century.” Journal of Law and Sustainable Development 12, no. 2 (February 27, 2024): 1-3. https://doi.org/10.55908/sdgs.v12i2.1482.
[8] Rithmire, Meg, and Deborah Brautigam. “The Chinese ‘debt Trap’ Is a Myth.” The Atlantic, April 12, 2021. https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/.
[9] Lengauer, Sara. “China’s foreign aid policy: Motive and method.” Culture Mandala 9, no. 2 (2011): 5899.
[10] “Overview.” World Bank. Accessed December 1, 2024. https://www.worldbank.org/en/country/cambodia/overview.
[11] Sreng, Sokleap, and Sovinda Po. “Chinese Cash Paves the Way for Complicated Cambodian Development.” The Cambodia Daily, August 17, 2024. https://english.cambodiadaily.com/opinion/chinese-cash-paves-the-way-for-complicated-cambodian-development-189013/.
[12] “ASEAN Nations Fail to Reach Agreement on South China Sea.” BBC News, July 13, 2012. https://www.bbc.com/news/world-asia-18825148.
[13] Sochua, Mu, and Jianli Yang. “The Cambodian Regime Is a Key Element in China’s Regional Expansion Strategy.” – The Diplomat, October 3, 2023. https://thediplomat.com/2023/10/the-cambodian-regime-is-a-key-element-in-chinas-regional-expansion-strategy/.
[14] Fook, Lye Liang. “Cambodia’s Outreach to the West Does Not Change China’s Centrality.” FULCRUM, August 5, 2024. https://fulcrum.sg/cambodias-outreach-to-the-west-does-not-change-chinas-centrality/.
[15] “Belt and Road Initiative in Cambodia: Economic Diversification and Debt Management.” UNDP, April 2, 2019. https://www.undp.org/cambodia/press-releases/belt-and-road-initiative-cambodia-economic-diversification-and-debt-management.
[16] Pheakdey, Heng. “Cambodia-China Relations: A Positive-Sum Game?” Journal of Current Southeast Asian Affairs 31, no. 2 (June 2012): 57–85. https://doi.org/10.1177/186810341203100203.
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