KATHMANDU: Cambodia’s over-reliance on China has posed several challenges for Cambodia.
The country’s international image has also suffered as Cambodia has been seen as a Chinese client state.
It may be noted that the Chinese government partners with many countries in a bid to build a trade route that will supposedly be beneficial to all countries. However, take for instance how is the condition of Sri Lanka, Djibouti or even Pakistan due to China – meaning all these countries are inching closer to bankruptcy.
Cambodia, too, is likely to face the same problem as China is showing a lot of interest in. Even Cambodia has also reciprocated. This is one of the reasons why several Belt and Road Initiative-related loans are being made in Cambodia.
However, observers have to note that China is creating yet another debt trap in Cambodia.
It should also be recalled that the United States has already warned Cambodia that its economy might be damaged because of Chinese loans, reports said.
The China-Cambodia relationship intensified when eleven bilateral agreements between China and Cambodia were formalized and over US$600 million in aid was pledged to Cambodia.
Moreover, Cambodia has embraced BRI projects mainly for economic reasons. China has already built around 3287km of road in Cambodia, and eight main bridges.
The cumulative Chinese investment capital from 1994 to 2019 was US$23.43 billion, accounting for 49.84% of total foreign direct investment in Cambodia, according to reports.
China also provided grants to Cambodia of about US$280 million from 2013 to 2015, about US$590 million from 2016 to 2018, and about US$560 million from 2019 to 2021.
However, notwithstanding the risk of falling into a debt-trap, Cambodian Foreign Minister Prak Sokhonn, speaking at the Asia-Pacific High-Level Conference on the Belt and Road Cooperation last year, said that BRI projects in Cambodia were quite resilient.
Meanwhile, China is constructing a 190km expressway connecting Phnom Penh to Preah Sihanouk province. It will be the first expressway in Cambodia, costing about US$2 billion.
Other key infrastructure projects include new Siem Reap international airport (costing US$880 million) constructed by the Chinese-owned Angkor International Airport Investment (Cambodia), and the new Phnom Penh international airport.
Likewise, a new Phnom Penh international airport funded by the Overseas Cambodia Investment Corporation has a close connection with China, reports said.
In 2020, Cambodia’s external public debt stood at US$8.8 billion of which about US$4 billion were with China, according to a report.
China’s debt-trap diplomacy has been a topic of interest which has gained increasing attention in the last couple of years.
From Asia to Africa, the issue of debt trap has become headlines.
The trade volume between China and Cambodia was valued at US $5.8 billion in 2017 and China pledged to expand the trade volume to $10 billion by 2023, reports said.
According to the AidData, an international development research lab based at William & Mary’s Global Research Institute in the United States, Chinese debt burdens are substantially larger than research institutions, credit rating agencies, or intergovernmental organizations with surveillance responsibilities previously understood.”
It said that the hidden debt problem is getting worse over time.
Accrding to AidData’s study, around 35 percent of the BRI infrastructure project portfolio has encountered implementation problems, including corruption scandals, environmental hazards, labor violations, and public protests.
Meanwhile, Cambodia’s outstanding external debt has reached more than US$9.18 billion as of the first half of 2021 and is expected to reach more than $10 billion by the year’s end, reports said.
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