China's Cambodian Hegemony

 
 

Pushing the long grass aside, Phorn pointed to a marker stone. ‘The Chinese workers came and put this here,’ he said. Just metres away, the vast muddy expanse of the Mekong swirled past. Asked if he knew what the stone was for, he nodded and pointed to the river. ‘The Chinese want to build a dam over here.’

Phorn is a middle-aged farmer in the riverside hamlet of Sambor in Cambodia’s Kratie Province. Here the villagers live in simple houses and eke a living from fishing, or, like Phorn, tend plots on the many fertile islets that dot the Mekong. When I asked what effect the dam will have, Phorn shrugged: ‘I am not really sure’.

The truth, though, is that if the dam is built, Phorn’s farm – and his modest village – will disappear beneath the giant lake created by the dam barrier.

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In late 2006, China undertook a feasibility study to build a hydro-dam in Sambor. Proponents of the dam claim it will deliver a massive payoff to Cambodia in the form of domestic access to stable, cheap electricity and major revenue from sales of energy to neighbouring Thailand and Vietnam. But detractors question the economic viability of the project and warn of an environmental and social disaster if the Mekong is halted at Sambor.

Whether or not the dam is ever built, the Sambor project is a potent symbol of China’s growing – and increasingly controversial – profile in Cambodia.

In 2008, China was the biggest foreign investor in Cambodia and also the leading aid donor. According to the Xinhua news agency, China invested US$5.7 billion – more than 20 per cent of Cambodia’s total foreign direct investment (FDI) – between 1994 and 2008. In 2008, international donor nations pledged some US$951.5 million. China led the way with US$257 million, followed by the European Union (EU) with US$214 million and Japan with US$113 million. By contrast, the United States’ aid commitment to Cambodia totalled just US$57 million.

Today, Chinese interests in Cambodia are extensive and include large hydroelectricity projects, mining, forestry, oil exploration, highways and bridges, biofuel and manufacturing. Chinese firms are the main investors in a new Special Economic Zone in the southern port of Sihanoukville. In 2005 and 2007, China donated naval vessels to Cambodia to help protect its interests in the South China Sea. In late 2008, China announced it would help fund a new US$500 million rail link from Phnom Penh to neighbouring Vietnam. Tourists can glimpse the massive new PRC Embassy taking shape on Phnom Penh’s bustling Mao Tsetung Boulevard, and Chinese language schools are mushrooming across the country. The Cambodian Government has recently made Mandarin Chinese part of the national university curriculum.

One of the world’s poorest nations

China’s growing investment and generosity to Cambodia come at a critical time for Prime Minister Hun Sen and his government.

Despite achieving average annual economic growth of 10 per cent between 2004 and 2007 – and a 12-fold increase in FDI – Cambodia’s economy remains fragile and desperately in need of new investment and aid funding. The global financial crisis is starting to bite in a country still recovering from decades of war and the Khmer Rouge genocide.

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Cambodia is one of the world’s poorest nations and faces massive problems in health and education. Infrastructure is inadequate, and the government is struggling to diversify the fledgling economy away from reliance on tourism, low-cost garment manufacturing and foreign aid. And with one of the youngest populations in the world, Cambodia faces the additional challenge of generating rapid growth in new employment opportunities. New industries such as oil, gas, minerals and hydro energy offer both lucrative financial rewards and new employment.

China’s influence in Cambodia has grown steadily since the United Nations-imposed peace accords of 1993. Despite its well-documented support for the genocidal Khmer Rouge during the 1970s and the ’80s, China has cultivated close ties with Hun Sen and the ruling Cambodian People’s Party.

A series of reciprocal high-level visits during the past decade have cemented the architecture of bilateral bonhomie. It was during Chinese premier Wen Jiabao’s official visit to Cambodia in 2006 that Hun Sen uttered his now famous endorsement of China as Cambodia’s ‘most trusted friend’. Hun Sen has also repeatedly advised his ASEAN neighbours to view China’s rapid economic rise as an opportunity rather than a threat.

Yet despite the effusive rhetoric from Phnom Penh and the deliberate official portrayal from Beijing that China’s financial largesse and support for Cambodia are simply the actions of a benevolent, friendly neighbour, China’s cultivation of closer ties with Cambodia is primarily motivated by hard-nosed economic self-interest and the pursuit of wider strategic goals in South-East Asia.

Investing in Cambodian oil, minerals, energy and agribusiness commodities reflects China’s global drive to secure stable access to vital commodities. It is no coincidence that China’s gift of equipment and engineers to build new roads into the rugged jungles north of Siem Reap was soon followed by the decision of four major Chinese steel makers to develop the rich iron ore reserves believed to lie in the area.

Cambodia is also a key element in China’s wider strategy to project greater influence in South-East Asia. China can use Cambodia as a buffer to its longstanding rival, Vietnam, and to potentially check US influence.

According to South-East Asia expert Milton Osborne, China regards the region as its ‘backyard’ and a natural zone of political and economic influence. The low-interest loans, generous aid and major investments are part of China’s ‘charm offensive’ designed to secure greater regional influence. Beijing studiously avoids confrontations and disputes with its neighbours, and rejects any suggestion of interfering in their domestic affairs. According to Osborne, Beijing’s ‘charm offensive’ has paid off handsomely: ‘China has now assumed a position as paramount regional power’.

The United States is Cambodia‘s harshest critic

Unlike Western governments, China has avoided castigating Cambodia for alleged widespread corruption, poor governance and human rights abuses, remaining conspicuously silent when Hun Sen used force to rout his parliamentary opponents in 1997.

The United States has been Cambodia’s most vocal critic and ties with the Hun Sen government have been frosty. Between 1997 and 2007 the US banned aid and funding to Cambodia and, despite the easing of these restrictions by Congress in 2007 and the first US naval visit in 30 years, also in 2007, continues to criticise Cambodia’s record on corruption, the rule of law and democratic elections.

In January 2009, the USA’s chargé d’affaires in Phnom Penh, Piper Wind Campbell, summed up Washington’s irritation at Cambodia’s continued failure to legislate effectively against government corruption as ‘a terrible cancer which costs the people of Cambodia billions of dollars annually – money that could be better spent improving their infrastructure and their lives.’

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Despite Cambodia’s need for aid and investment, critics argue that China’s unquestioning approach to how its aid is used – and how its firms and investments operate – will only exacerbate already serious official corruption, poor governance and the degradation of Cambodia’s resources and environment.

The example often cited is the 2004 Cambodian government decision to grant Cambodian conglomerate Pheapimex, and its joint venture partner, Chinese plantation operator Wuzhishan, a major land concession in remote Mondulkiri Province. The grant included an immediate allocation of 10,000 hectares to develop a commercial pine-tree plantation. The project was soon embroiled in controversy. Local communities and environmental groups protested that the Chinese firm had illegally and without any prior agreement or consultation grabbed extra land used by local communities.

International non-government organisation Global Witness claims the original concession was 20 times the existing legal limit. Global Witness also claimed that deals involving Chinese state-backed companies were likely to be the least transparent and the most strongly defended by Cambodian security forces, which are alleged to have used military force to suppress anti-logging protests by villagers in Mondulkiri.

Given this apparent laissez faire attitude of the Chinese and Cambodian governments, NGOs and domestic critics allege that Chinese mineral, oil, logging and engineering companies will ignore with impunity corporate social responsibility, environmental standards and even existing legal safeguards.

Dam Nation

The Mekong River begins its 4350km pan-Asia journey high on the Tibetan plateau, then winds down through the Chinese province of Yunnan, then Burma, Thailand, Laos, Cambodia and Vietnam before emptying into the South China Sea. The river is essential to the everyday lives of the millions who live along its banks – a vital source of food, water and transport.

No country is more reliant on the Mekong than Cambodia. The Cambodian fishery, which depends on the Mekong’s annual flood cycle and fish migration, supports more than a million people. Fish is the major source of protein for the Cambodian population. Any serious disruption of the Mekong’s flow could have disastrous consequences for Cambodia.

China is pushing aggressively to develop a series of hydro-electric dams in Cambodia, including several along the Mekong. So far the approved dam projects are the US$300 million Kamchay dam in Kampot and the US$500 million Stung Atai dam in Koh Kong province. Another six hydro dams are believed to be under consideration in Cambodia, four involving China and two supported by Vietnam.

The attraction of developing hydro power in Cambodia is undeniable. Only 20 per cent of the population has reliable access to electricity and prices are among the highest in the world. Cambodia relies on inefficient diesel-fuelled power stations and blackouts are common.

While all proposed dam projects in Cambodia have aroused controversy, it is the plans to build dams across the lower Mekong that have ignited the most debate. In a 2008 report, International Rivers (IR) warned of significant environmental and social costs from poorly planned hydro projects being developed in Cambodia. IR argues the proposed Sambor dam would block major fish migration and have adverse impacts on vital fish populations and already endangered species, notably the Irrawaddy dolphin.
IR is critical of the lack of transparency surrounding the hydro projects, claiming that little detail of the contracts, including that signed between China and Cambodia for the Kamchay Dam in 2005, have been made public.

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