Why Cambodia is pinning its hopes on Chinese president’s visit
Fresh from backing Beijing over South China Sea dispute, a country reeling from falling rice prices and foreign investment has its eyes on emergency aid and a boost in trade
By Luke Hunt 12 Oct 2016
Along the outskirts of Phnom Penh rice farmers have it tough. Prices have dropped by a third since August with targets of a million tons in exports failing to materialise, hurting producers like Path Chanthorn.
“Life is difficult. I borrowed from the bank to buy soil, seed and fertiliser,” the 47-year-old father of three said. “Then we lost all the rice and the family has no income.”
His plight has not been helped by late rains which have flooded his fields and upset planting for this country’s two million rice farmers who are now pinning their hopes on a two-day visit by Chinese President Xi Jinping ( 習近平 ). He lands here on Thursday.
Prime Minister Hun Sen and his long-ruling Cambodian People’s Party (CPP) have asked China for US$300 million in emergency aid and Asia’s longest serving leader also wants to see a lift in two-way trade to US$5 billion next year from US$4 billion in 2015.
He has also asked Xi to open the Chinese market to Cambodian-grown bananas in addition to doubling imports of rice from a current 200,000 tons a year, and loans for construction of rice mills, kilns and warehouses needed to reach government export targets.
“Compared to six months ago, one year ago and two years ago the price just keeps falling. It’s falling every year by 30 or 40 per cent,” Path Chanthorn added. “There is no money and no food just some leftover rice that we cook.”
Cambodia exported 538,096 tonnes of rice last year amid falling prices. Prices have dropped again, from US$250 a tonne in August to a recent US$193 a tonne.
That came after a sharp deterioration in the Chinese economy, substantial falls in commodity prices and fears a construction bubble in the capital is about to burst, which have increased the pressure on Hun Sen, who remains mindful of elections next June and a fall in his popularity.
His resolute support for Chinese foreign policy, particularly in the South China Sea, has won him admirers in Beijing over recent years and their financial backing. But this diplomatic alliance has caused a great deal of anger among neighbours, particularly Hanoi, opposed to China’s maritime ambitions.
Cambodian officials were stung by recent figures which showed Vietnamese-approved foreign direct investment coming into their country had dropped to virtually zero in the first six months of this year while overall foreign investment fell 43 per cent over the same period.
That has increased Cambodia’s dependency on Beijing’s largesse and Hun Sen is hoping to sign around 28 agreements and protocols with Xi. Chief among them is fast-tracking a price purchasing pact and the fresh loan agreement.
“There is an element of this trip that will be about Cambodia receiving one of its largest financial supporters, like the old emperor,” said CL Consulting analyst Billy Chia-Lung Tai.
“I would not be surprised – in fact I would expect – more aid packages will be announced during the visit.”
Exact figures are not available but according to the Cambodian Institute for Cooperation and Peace China has invested about US$10 billion in this country since it launched its “go global” policy in 2001. A further US$13 billion is promised.
Phnom Penh picked-up US$600 million and a big thank you from Xi in July after Cambodia scored a diplomatic coup by forcing Asean (Association of Southeast Asian Nations) members to water down its statement on the South China Sea dispute during its annual summit.
Importantly the statement omitted Beijing’s defeat in the international courts after Manila sought a ruling over Beijing’s claims in its sovereign waters, heartening other claimants; Brunei, Indonesia, Malaysia and Vietnam.
“From China’s perspective this is money well spent, to have a willing and loyal subordinate partner in Southeast Asia, all for the cost of a few roads and other development projects,” said Chia-Lung Tai. “Why not?”
However, a recently elected Rodrigo Duterte could change that. He is patching up ties with Beijing and shifting his country’s allegiance away from the United States and the West and that could undermine Cambodia’s role as China’s chief ally in Southeast Asia.
Chia-Lung Tai added Duterte seemed to be warming up to China by choosing not to openly confront China on the maritime dispute, sidelining it for further discussion at a later date.
“The South China Sea issue will continue to be a barrier in any meaningful political dialogue between the two countries in the long term,” he said. “China would perhaps still feel that they want to foster support from countries like Cambodia to maintain a strong alliance within Southeast Asia.”
Hun Sen is turning on the pomp and ceremony for Xi’s visit. Security is expected to be tighter than the operations mounted three years ago, when Phnom Penh played host to Asean, with 7,000 military and security personnel expected to be deployed.
Analysts also said Hun Sen was favouring China as a potential role model for a future Cambodia built on foreign aid and investment which he insists does not come with strings attached. He has often criticised Western governments for tying aid and investment to human rights issues.
“This type of economic progress, without having to sacrifice control in politics, would be very attractive to Hun Sen,” Chia-Lung Tai said.
It’s also the type of aid which can’t come quick enough for Path Chanthorn, whose flooded fields have been overun by rats and insects. He has taken one daughter out of school and she now works in a factory with his wife to help pay off the family’s debts.
“We’ve cut spending but every month we struggle to pay the bank,” he said. “The income from the rice does not even cover the interest.”
Former bureau chief of AFP in Afghanistan and Cambodia, Luke Hunt is currently a professor at Pannasastra University in Cambodia