Behind a tall, rusting, barbed-wire-topped fence on Mao Tse-tung Boulevard, laborers at the Chinese Embassy were perched on rickety wooden scaffolding on Monday, working on at least four large, new embassy buildings.
Sitting at her soft drink stall near the compound wall, where a photo display shows Prime Minister Hun Sen meeting with Chinese officials, Vy, a 32-year-old from Svay Rieng province, said she was puzzled by the construction work going on behind her, and by China’s expansion in Cambodia. “China is increasing its relationship with Cambodia, but I don’t know why,” she said, recalling Friday’s announcement that Hun Sen had returned from China with approximately $400 million in loans, grants and promised investment.
“Recently we had a lot of aid [from China], but I don’t know where it goes,” she said. Supporters of China’s increasing investment in Cambodia say it is providing much-needed infrastructure, particularly in the countryside.
But diplomats and Western business experts say little is known about Chinese aid and investment, and some observers say China, which is not believed to tie its assistance to reform, may be using these loans and grants to gain influence over the government. Two Chinese Embassy officials declined to discuss Chinese investment on Tuesday.
China’s investment is partly motivated by the fact that it is trying to build a regional “security belt,” Lao Mong Hay of the Center for Social Development said Monday.
According to a May 23 article in Time Asia magazine, Beijing hopes that tens of millions of dollars in military aid and loans will result in a docking facility on the Cambodian coast for China’s navy.
This would give Beijing better access to the Straits of Malacca shipping route, through which 80 percent of China’s imported oil passes, Time Asia reported.
Beijing hopes to establish the base in Ream National Park, near Sihanoukville, one foreign diplomat in Phnom Penh said on condition of anonymity Monday.
Cambodia “cannot afford the luxury” of turning down investment from other countries, but it won’t allow a Chinese base at Ream, government spokesman Khieu Kanharith said Tuesday.
“We don’t accept any base in Cambodia. Not China, not any country,” he said. In 2004, China was the top foreign investor in Cambodia, with $80.4 million. Although Foreign Minister Hor Namhong announced Friday that China agreed to spend $30 million on a new Council of Ministers building, China is not trying to obtain political influence, said Jimmy Gao, president of the Chinese Chamber of Commerce in Cambodia.
“In diplomatic issues, China needs all countries in the world to declare a One China policy,” Gao, said, but he added that Cambodia has long supported this.
Cambodia is more attractive to Chinese investors than other developing countries because its lack of infrastructure provides a market for construction businesses, he said, adding that the Chinese private sector is “much more concerned about profit than political issues.”
In the coming months, a new $40 million to $50 million power project by China Electricity Equipment Import and Export Company is set to be implemented in Kirirom National Park, Gao said.
Kang Chandararot, an economist with the Cambodia Institute of Development Study, welcomed such development.
“I really appreciate this direction to finance our infrastructure,” Kang Chandararot said Monday. But China’s support is making it harder for the Cambodian government to take action over controversial concessions held by Chinese firms such the Wuzhishan LS Group’s in Mondolkiri province, Mike Davis of Global Witness said Tuesday.
Villagers in Mondolkiri say the concession is encroaching on their farmland and desecrating their spirit forests. “China just has such close links with the government now…. You can see that in the very defensive way that the government has reacted to Wuzhishan,” Davis said.
Several political observers say Cambodia’s claims of how much money it receives from China can be misleading, as it sometimes repeats pledges of Chinese assistance several times.
“If Hun Sen asks for more, they repeat their ongoing pledge, but it’s in Hun Sen’s interest to say ‘I’ve come back with this stuff,’” the diplomat said.
China does not attend donor meetings, leaving many in the donor community unaware of their activities, a second diplomat said.
“They’re never there. They’re not part of the CG process…. It’s all outside the system,” the diplomat said.
Critics have often charged that China may be hoping to persuade the government through financial incentives to stall the Khmer Rouge tribunal, in order to conceal its backing of the regime.
But decades of flip-flopping indicate that the Cambodian government does not need financial incentives from China to do so, Veng Thon, a tuk-tuk driver outside the Royal Palace, said Monday. “They won’t have [the tribunal] anyway,” he said.
Although China’s involvement here is laced with political objectives, Cambodia still stands to benefit from the relationship, the first diplomat said, noting that any foreign investment is a good thing. “They’re not getting investment from anywhere else,” he said.
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