China Pledges Nearly US $600 Million in Aid to Cambodia Over Three Years: PM Hun Sen

2019-01-22
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Cambodia's Prime Minister Hun Sen (2nd L) meets with China's President Xi Jinping (R) at the Diaoyutai state guesthouse in Beijing, Jan. 21, 2019.
Cambodia's Prime Minister Hun Sen (2nd L) meets with China's President Xi Jinping (R) at the Diaoyutai state guesthouse in Beijing, Jan. 21, 2019.
AFP Photo

China will provide Cambodia with 4 billion yuan (U.S. $587.6 million) in aid over the next three years, Cambodia’s Prime Minister Hun Sen said Tuesday, as Phnom Penh further cements ties with Beijing in the face of sanctions threats from the European Union.

Hun Sen met with Chinese President Xi Jinping on Monday for bilateral talks during a three-day trip to Beijing and requested additional aid from China, his country’s largest donor and investor.

In a post to his Facebook account Tuesday, Hun Sen said that Xi had pledged the 4 billion yuan in aid “for a three-year project” from 2019 to 2021.

“The Chinese President said that in 2019, China will import 400,000 tonnes of rice from Cambodia, will increase bilateral trade to U.S. $10 billion by 2023 and encourage more Chinese investment,” Hun Sen added.

Hun Sen said Xi “praised [China’s] special cooperation with Cambodia and vowed to make the relationship even stronger.”

Additionally, the prime minister said, the two nations signed several smaller deals that would see China provide Cambodia with a highway from Sihanoukville to Phnom Penh, a clean water initiative, and a bodyguard compound to protect the Council of Ministers in the capital, as well as restore several temples in Cambodia and rebuild its National Route 7, which was damaged in recent floods.

A statement from China’s Foreign Ministry said Xi had called for greater cooperation bilaterally, and increased coordination at the United Nations and the Association of Southeast Asia Nations (ASEAN)—several member nations of which are embroiled in disputes with China over territorial claims in the South China Sea.

The Chinese statement did not mention plans to provide Cambodia with financial aid.

EU tariffs

The meeting in Beijing comes as Western influence in Cambodia is on the decline amid criticism of Hun Sen and his ruling Cambodian People’s Party (CPP) over rollbacks on democracy in the lead up to and aftermath of a July 29 election in which the CPP effectively ran uncontested and won all 125 seats after a ban of the opposition party.

The CPP overwhelmingly won the election following the Supreme Court’s November 2017 dissolution of the main opposition Cambodia National Rescue Party (CNRP) and a five-year ban on the political activities of 118 of its senior officials for the party’s role in an alleged plot to topple the government.

The U.S. has since announced visa bans on individuals seen as limiting democracy in the country, as part of a series of measures aimed at pressuring Cambodia to reverse course, and the EU, which was the second biggest trade partner of Cambodia in 2017, has said it will drop the Everything But Arms (EBA) preferential trade scheme for Cambodian exports based on the country’s election environment.

Last week, the EU reintroduced tariffs on rice from Cambodia for three years after a probe found that Cambodian rice imports had nearly doubled since 2013 while prices dropped, hurting local producers. A statement from the European Commission announcing the decision said it had been made separate from deliberations over the EBA scheme.

Council of Ministers spokesman Phay Siphan has said the rice tariffs will not affect Cambodia, which will encourage exports to alternative markets, such as the Philippines, and will continue to rely on demand in China.

But political analyst Kim Sok said Tuesday that China can’t take on a significant amount of Cambodian imports because it is also a rice-producing nation.

He added that Hun Sen knows rice farmers in Cambodia will be affected by the EU tariffs, and that he must turn to China for help because he can no longer expect it from the West.

“He is seeking a way to stay in power,” Kim Sok said.

Last month, the Secretariat of One Window Service for Rice Export said Cambodia exported 497,240 tons of milled rice in the first 11 months of 2018, down 13 percent compared to the same period last year. It said China was the Southeast Asian nation’s top export market for rice, followed by France, the Netherlands, Poland and Britain.

Trade volume between Cambodia and China was valued at U.S. $5.8 billion in 2017, up 22 percent from U.S. $4.76 billion dollars a year earlier, while China is currently Cambodia’s largest investor, and has poured U.S. $12.6 billion into the Southeast Asian nation from 1994 to 2017.

China, which typically offers aid to countries without many of the prerequisites that the U.S. and EU place on donations, such as improvements to human rights and rule of law, offered “sincere congratulations” to Hun Sen’s party for its showing in July’s polls.

Plea to reconsider

Meanwhile, Kith Meng, the president of Cambodia’s Chamber of Commerce, sent a letter to European Commissioner for Trade Cecilia Malmstrom on Monday expressing “our deepest concerns” over the process to withdraw preferences to his country under the EBA scheme, which grants least developed nations tax- and quota-free access to the EU’s market.

“The consequences of such a decision will impose serious economic damage on Cambodia and would neglect the tremendous efforts undertaken by the Cambodia private sector to align its values and policies with the economic model championed by the European Union,” read the letter, co-signed by the European Chamber of Commerce and 30 other associations.

The letter noted that in recent decades, Cambodia had “managed to leverage itself out of humanitarian and economic turmoil” with the support of favorable trade preferences, adding that the growth of the country’s garment sector alone had “enabled the adoption of international conventions on human and labour rights,” as well as workplace reforms for all Cambodians.

“However, the withdrawal of this arrangement will jeopardise this progress, by directly harming the livelihood of millions of workers and their families that rely on employment within the garment sector, placing them once again at risk of returning to poverty,” it said.

Withdrawal of EBA preferences would devastate Cambodia’s rural women, who make up 85 percent of the country’s 700,000 garment workers, the letter said, while the cumulative effect of the decision would threaten the income of another 3 million people from the hospitality, transportation and accommodation sectors.

It ended with an appeal to the commissioner to refrain from “taking any action that will harm the interests and livelihoods of the country’s people.”

The letter came on the same day of a meeting between Malmstrom and Cambodian Foreign Minister Prak Sokhonn that focused on the EBA.

Bloomberg reported Tuesday that the European Commission in Brussels has asked EU national governments to approve by Jan. 29 the suspension of the EBA, citing two officials familiar with the matter, who spoke on the condition of anonymity because the deliberations are private.

Any approval from EU national capitals would still require a decision by the commission, which is scheduled to take place a year from now.

Rainsy return

Also on Tuesday, Cambodia’s government issued a statement warning that authorities will “take action” against anyone who identifies as a member of the CNRP and gathers to welcome acting CNRP President Sam Rainsy, who has said he plans to return to Cambodia by March after living in self-imposed exile for three years to avoid a string of convictions seen as politically motivated.

“The Royal Government of Cambodia would like to clarify that Sam Rainsy’s return is his personal decision, because he left of his own will,” the statement said.

“If there are requests from the court and government, authorities will take action [against those who gather], according to the law.”

The statement also warned that if Sam Rainsy’s return is associated with the CNRP, the government will view it as a violation of the Supreme Court’s November 2017 decision, but added that “the executive branch is separate from the judiciary,” and will not interfere in any legal decision.

Reached for comment, Phay Siphan told RFA’s Khmer Service that Sam Rainsy supporters can welcome him to Cambodia, but “not on behalf of the CNRP,” and “must cooperate with the authorities.”

Hun Sen has dared Sam Rainsy to return to Cambodia and said he will be arrested if he does.

Former CNRP lawmaker Long Ry, who is currently living in the U.S., told RFA that his party recently held a meeting to prepare for Sam Rainsy’s return to Cambodia, but refused to provide a specific date for his trip.

He said the party plans to gather supporters throughout the country for Sam Rainsy’s arrival, and had called on foreign diplomats to be present for the event.

Reported by RFA’s Khmer Service. Translated by Samean Yun. Written in English by Joshua Lipes.

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