China To Forgive Cambodia’s 2010 Debt

Visiting Chinese legislator Wu Bangguo yesterday inked a deal to forgive more than $4 million of Cambodia’s debt to the country, the amount that Cambodia was due to repay this year, according to the government spokesman.

As well as agreeing to forgive the debt, Mr Wu, chairman of the standing committee of the National People’s Congress–China’s highest-ranking legislative body–put pen to paper on 16 infrastructure deals.

The debt forgiveness agreement–formalized during a meeting with Prime Minister Hun Sen at the premier’s Cabinet building in Phnom Penh yesterday–brings into focus the differences between China’s foreign aid policy and that of its superpower competitor the US as the two engage in a perceived turf battle for influence in Cambodia.

Speaking after the meeting, government spokesman Khieu Kanharith said that the $4.24 million debt China has agreed to write off was the sum Cambodia was due to repay this year.

“China agreed to cancel…the debt that [we] are on deadline to pay China in 2010,” he said.

A Chinese Embassy spokesman said yesterday evening he was too busy to comment.

Cambodia has refused to repay roughly $445 million in Lon Nol-era debt. During her visit to Phnom Penh this week, US Secretary of State Hilary Clinton said the US would reopen talks on the debt “as soon as possible.” A US Embassy spokesperson could not be immediately reached for comment yesterday but US officials have consistently said the debt cannot be forgiven without an act by US lawmakers.

Although details on the 16 infrastructure deals were unavailable yesterday, Mr Kanharith said they would “help Cambodia to increase roads, bridges, railways and information technology.”

Mr Wu also announced that China is cooperating with Cambodia on 23 projects worth an estimated total of $1.6 billion, to be carried out from 2010 to 2015, Mr Kanharith said. He added that a $600 million Chinese grant for a Cambodian section of the planned Singapore-Kunming Rail Link “could be included” in this figure.

China will also try to conduct more exploratory mining operations in Cambodia, import more agricultural products from Cambodia including rice, cassava and corn, encourage more direct flights to stimulate tourism, and improve cooperation on anti-terrorism issues, Mr Kanharith added.

Mr Kanharith said the country had also promised to give Cambodia almost $15 million dollars, though he said he did not know when, or even why. However, CPP lawmaker Cheam Yeap, chairman of the National Assembly’s Finance and Banking Commission, said he believed the $15 million would be used “to improve roads, bridges and other infrastructure.”

Cambodia imported almost $776 million worth of goods from China in the first nine months of this year, roughly the same as the figure for the whole of 2009, according to Kong Putheara, director of the trade department at the Ministry of Commerce. Exports topped $37 million in the first nine months of the year, he added.

“Cambodia exported mostly agriculture products and textile goods,” Mr Putheara said.


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