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Following a decade of China's Belt and Road Initiative (BRI) projects in Cambodia, the perceived advantages are being questioned.

After a decade of China's BRI endeavors in Cambodia, there is debate surrounding the benefits.

Following a decade of China’s Belt and Road Initiative (BRI) projects in Cambodia, the perceived advantages are being questioned. After a decade of China’s BRI endeavors in Cambodia, there is debate surrounding the benefits.

Despite the potential for displacement due to a $60 million bridge project connecting two bustling areas along the Tonle Sap river in Phnom Penh, 62-year-old produce seller Sok Ul remains optimistic in the capital city of Cambodia. He acknowledges the possibility of his modest vegetable farm being affected, but remains calm and positive.

He expressed his pleasure at the construction of a bridge that will alleviate traffic problems while speaking to VOA’s Khmer Service from his roadside market where he sells vegetables. If he is required to relocate, he simply desires fair compensation for his property.

The debt debate

The BRI, or Belt and Road Initiative, is providing loans for numerous projects throughout the country, including the construction of this bridge.

Prime Minister Hun Manet is leading a Cambodian delegation to join representatives from more than 150 countries in Beijing for a two-day forum to mark 10 years of China’s BRI on October 17 and 18.

The program has allocated large sums of money internationally, benefitting many impoverished Asian nations including Cambodia, but BRI undertakings also contribute significantly to Phnom Penh’s external debt.

The program is a key element of Chinese President Xi Jinping’s economic diplomacy, as the Communist Party aims to position China as a global rival to the United States.

The United States, engaged in a worldwide competition with China, has cautioned nations against incurring significant debts through China’s BRI infrastructure strategy. Certain individuals voice concerns about the possibility of falling into a debt trap, in which China would obtain economic and political control by lending beyond a country’s capability to repay.

According to a 2021 paper titled “Cambodian Perspective on the Belt and Road Initiative” by political scientists Vannarith Chheang and Heng Pheakdey, there is a significant concern regarding Cambodia’s involvement in the BRI. This concern revolves around the potential consequences of relying heavily on Chinese investments and loans, which could lead Cambodia into a debt trap.

They caution that this could lead to “the erosion of confidence and independence as an independent nation and the weakening of its ties with other ASEAN countries.”

Yet, Jayant Menon, a previous chief economist at the Asia Development Bank and currently working at Singapore’s ISEAS – Yusof Ishak Institute, reached a contrasting determination in his March report titled “The Belt and Road Initiative in Cambodia: Actual and Perceived Costs and Benefits.”

According to him, worries about potential debt traps and debt diplomacy linked to the BRI in Cambodia seem unfounded, despite taking into account the impact of the pandemic.

Although acknowledging the immediate negative impact on nearby communities and nature, Menon stated that the expenses of BRI projects were deemed necessary.

According to him, the progress in infrastructure has enhanced the competitiveness of the tradable goods industry and led to a rise in exports. Additionally, it has also resulted in reduced prices for both consumers and producers in Cambodia.

After assuming leadership from his father in August, Hun Manet has expressed confidence in Chinese investments.

During the 26th ASEAN-China Summit in Jakarta, Indonesia in September, the speaker mentioned that the Belt and Road Initiative (BRI) has brought numerous advantages to the citizens of Cambodia, particularly in terms of transportation and logistics.

Heated debate

The advantages and disadvantages of the BRI have generated intense discussions among numerous member nations.

“I understand that China has contributed to the construction of numerous roads, but their quality remains subpar,” stated Em Sovannara, a professor of political science in Phnom Penh, during an interview with VOA Khmer. “Certain roads are hastily built and eventually deteriorate, requiring repairs.”

According to him, the BRI has brought advantages to Cambodia, but it does not live up to the hype of politicians.

As of June 2021, the Future Forum in Phnom Penh reports that China has constructed eight bridges and 3,287 kilometers (2,042 miles) of roads through the use of over $3 billion in concessional loans. These loans offer more favorable terms, such as lower interest rates, compared to those offered on the market.

The Ministry of Economy and Finance in Cambodia reported in December that the country’s foreign debt amounts to nearly $10 billion, with 41% of that being owed to China.

Chinese loans and investments have greatly altered the skyline of Cambodia, resulting in significant developments such as a major highway connecting Phnom Penh and Sihanoukville, a large special economic zone in Sihanoukville complete with an energy plant, a newly built airport in Siem Reap, and numerous other smaller projects.

Vannarith Chheang and Heng Pheakdey wrote that the projects have provided advantages to the ruling Cambodian People’s Party, serving as concrete evidence of their efforts to modernize the nation.

According to the authors, the Belt and Road Initiative (BRI) has contributed to enhancing the resources and credibility of the Cambodian government. This is due to the significant influx of Chinese investments and aid for development in the country.

Nevertheless, the Cambodian scholars observed that the economic advantages do not always trickle down to the targeted population of these projects.

“Despite the fact that Chinese investment is leading to economic growth in Cambodia, the benefits primarily benefit the Chinese community within the country. Chinese citizens and tourists in Cambodia tend to support Chinese-owned businesses, dine at Chinese restaurants, and stay in Chinese-run hotels. This has a limited impact on local businesses,” stated the authors.

People vs elites

Sihanoukville has become a symbol of the risks and rewards of Chinese investment. While development and construction have skyrocketed, crime and casinos are also on the rise. The rapid development has also pushed up property costs, forcing many residents and business owners to move outside the city.

Chhay Lim, a visiting fellow at the Center for Southeast Asian Studies at the Royal University of Phnom Penh, stated in an email to VOA Khmer that the BRI should consider the needs of the general population rather than just focusing on the elite in order to have a significant impact in Cambodia.

He stated that the anticipated profit from Chinese investments is evident.

“We have noticed that Cambodia has been providing assistance for important Chinese international goals, as well as the recently proposed ideas and catchphrases of the Community of Shared Future, Global Security Initiative, Global Development Initiative, and Global Civilizational Initiative.”

Hun Manet visited Beijing last month to strengthen ties with China, picking up where his father Hun Sen left off. Hun Manet said Cambodia’s new government will maintain an “unchanged stance” on Beijing’s “One China” policy, and a “noninterference policy” toward China.

The leaders of China have reaffirmed their commitment to supporting economic growth and enhancing the well-being of the people in Cambodia. This will be accomplished through various projects including the construction of rural roads, bridges, water systems, schools, and hospitals. A joint statement was released following the meeting.

of the global economy

The impact of China on the world economy in the coming years.

Menon noted that there was indication of China taking into consideration the societal and environmental effects of its ventures, potentially in response to local resistance over the past ten years.

Menon and Chhay Lim both expressed the importance of Hun Manet’s government not becoming too dependent on China in the future.

Menon stated that depending heavily on one country for economic and non-economic necessities poses significant risks. With the growth of China beginning to slow down, diversifying trade and investment relationships can mitigate risk by decreasing susceptibility to shocks specific to a single country.

According to Chhay Lim, it may be a difficult task due to Phnom Penh’s strained relationships with the Western countries caused by its decline in democracy in recent years.

“It is important to recognize the need for Cambodia to diversify its partnerships and not rely solely on China, while also strengthening its relations with Western countries without causing conflict with China,” stated the speaker. “To achieve this equilibrium, Cambodia must develop comprehensive strategies for both China and the West, which, in my viewpoint, have not been fully established yet.”

Sok Ul, a farmer who grows vegetables in Phnom Penh, is sure that China will not force Cambodia to repay its debt.

He stated that they can repay it once they have the funds, and expressed confidence that Beijing will pardon Phnom Penh if they are unable to make the payment on schedule.