Cambodia to Receive up to $700M Yearly From China

China has agreed to furnish Cambodia with a regular line of grants and loans totaling at least $500 million per year to help fund the country’s development, an aide to Prime Minister Hun Sen said Sunday upon their return from a trip to Beijing.

Mr. Hun Sen met with Chinese President Xi Jinping at a summit of regional leaders on Friday at which the Chinese leader also announced his country’s plans for a $40-billion Silk Road Fund to pay for infrastructure projects across Asia.

“Samdech Prime Minister [Hun Sen] asked for China’s help with $500 to $700 million every year to develop our country,” Kao Kim Hourn, a minister attached to the prime minister, said at Phnom Penh International Airport.

“This $500 to $700 million will begin next year,” he said. “If they give it to us for free [as a grant] or without an interest rate, it would be good. Generally speaking, China will decide how much will be a grant and how much will be a loan with interest.”

Mr. Kim Hourn did not elaborate on how much of the aid might come as a grant or a loan, or on what interest rate China would charge. Cambodia has in the past complained that China’s rates were higher than those of some other lenders.

According to its latest report on Cambodia, in March, rating agency Moody’s said China was the country’s largest individual lender, holding nearly a third of Cambodia’s external bilateral debt.

Moody’s gave Cambodia an overall rating of B2, meaning it considered the country capable of meeting its financial commitments but at considerable risk in the event of unfavorable business, economic or financial conditions.

Opposition lawmaker Son Chhay, vice president of the National Assembly’s finance and banking commission, on Sunday said the government claims it currently faces a debt of some $4 billion, but that his reading of records suggests the actual figure could be twice as high.

Mr. Chhay said he had not heard of China’s new aid pledge but was “concerned” about the potential of such a large line of recurring credit opening up for Cambodia.

“We will ask the government about this when we discuss the national budget for 2015,” he said. “We must be very careful with our national budget expenses.”

According to a statement posted to the Chinese Foreign Ministry’s website, Mr. Xi told Mr. Hun Sen that friendship between Cambodia and China was “very precious and should be unremittingly maintained and developed…to form a community of shared destiny featuring mutual help.” Mr. Hun Sen, in turn, expressed support for China’s efforts in “safeguarding national sovereignty, security and territorial integrity.”

At the airport, Mr. Kim Hourn said Mr. Hun Sen’s trip to Beijing also included meetings with Chinese Vice President Li Yuanchao and officials from several major Chinese firms, including the China Road and Bridge Corporation, Huawei and the State Development and Investment Corporation (SDIC).

He said SDIC would partner with Cambodia’s Royal Group, owned by businessman Kith Meng, on four projects.

“These four projects include, first, a railway project, second, a Chinatown development, third, an island development along our coast, and fourth, electricity generation by burning garbage,” he said, without elaborating on any of them.

Finally, Mr. Kim Hourn said Mr. Xi accepted an invitation to visit Cambodia and that the foreign ministries of the two countries would work on fixing a date.

According to Chinese state news agency Xinhua, Mr. Hun Sen also expressed his support for China’s $40-billion Silk Road Fund, which Mr. Xi announced at a meeting with leaders from Bangladesh, Burma, Cambodia, Laos, Mongolia, Pakistan and Tajikistan. Xinhua offered no details on how the fund would work.

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