China has played a crucial role in the recovery of the world economy since the global financial crisis hit in 2008. And the outlook for Asia's superpower is expected to remain strong - albeit at a slower rate. In the US too, the economy is making progress from the lows of the financial crisis. At a critical time for economic development in South East Asia, there will be opportunities for Cambodia to capitalize on the strengths of the worlds superpowers. Sophal Ear, associate professor of diplomacy and world affairs for Occidental College of the United States, sat down with the Post’s Chan Muyhong last week to talk about China’s influence in Cambodia, the impact of trade agreements across the region, and strengthening the Kingdoms economic prospects.
How do you interpret Cambodia’s relationship with China?
China has been very generous to Cambodia from a foreign aid perspective, I think, some estimates have been $2 billion or more, investment wise it has been $6 billion to $8 billion. Of course, these numbers are always rather murky, there is no clear source where you can find this data.
The impact of Chinese aid and investment is, of course, a big influence in a country as small as Cambodia.
What they’re able to do is get Cambodia to agree to support their policy. You saw it in 2012 essentially, with Cambodia Chairmanship of ASEAN, the resulting outcome of no joint communique and then in November when US President Obama visited, it was claimed that ASEAN had agreed not to internationalise the South China Sea. That money [Chinese aid and investment in Cambodia] was well spent for a country like China – they got what they wanted out of the arrangement
They get to build things here and invest in infrastructure as well as companies like Shukaku, the company backed by China. The problem with Chinese involvement here is they go straight to the government. They don’t talk to people. So when you don’t talk to the people, you get the problem that people don’t want things to happen but the government say that is fine.
When Samdech Ouv [King Father] was alive, he was asked by John Foster Dulles, the secretary of state of the United States, his majesty, are you pro-China or pro-America? And he said I am pro-Cambodia. And that is what we should be. We should be supporting whatever is in Cambodia’s interests.
ASEAN is currently negotiating the Regional Comprehensive Economic Partnership (RCEP), free-trade negotiations between ASEAN and six non-ASEAN countries – Australia, China, India, Japan, Korea and New Zealand. At the same time, the US is negotiating the Trans-Pacific Partnership (TPP) with 11 Asia-Pacific nations, However, China is not one of them. What do these types of agreements mean for the region and in particular for Cambodia?
These trade arrangements are meant to, on the one hand, without saying so but it is obvious, exclude China with bilateral arrangements with the countries with the US and offer favourable trade conditions. And on the other hand, the RCEP excludes the US, apparently. I think, it is in the interest of ASEAN and it is the interest of Cambodia. But, what we don’t want to see is a situation in which Cambodia ends up, essentially, not getting into the level of development it needs.
So we talk now about Myanmar, Lao, Cambodia, and Vietnam; Vietnam is now reaching a new level of development. We should no longer even be saying CLMV, we should say MCL because now Vietnam is outside of the grouping. We don’t want Cambodia remaining with the poorest group of ASEAN.
There is rising competition for foreign investment and trade from Vietnam who is part of the TPP negotiations, what will that mean for Cambodia?
Because Cambodia is not part of the TPP, treatment that Vietnam receives will be more favourable. Countries that join the TPP will have advantages over the countries that do not join the TPP. This is the whole reason that China is being excluded because it is not going to get the same advantages as those other countries that are in the TPP with the US. The bottom line is Cambodia should seek a relationship that benefits Cambodia the most, like Cambodia joining the WTO, and that is why Cambodia joined the WTO and AEC.
But how can we have a better relationship with the US? Our biggest sector is garments and a lot of it goes to the US so it is critical for us to have a good relationship with the US in order to have that market. What does China buy from Cambodia? It is not going to buy garments from Cambodia, it is going to buy some timber, things that we can grow maybe, and things that they can mine, minerals and so on. But those are not high value added things that can grow our economy. I think it is important for us to consider all our options.
China is looking to establish the Asian Infrastructure Investment Bank (AIIB). What do you think this means for Cambodia?
I think it is good to have more options. Right now, what are the options in Asia? The Asia Development Bank. As an institution of $50 billion, the AIIB, will be a competitor to the ADB.
Some people will say this is dangerous because China doesn’t have the same standards in terms of its infrastructure projects, it does not respect the environment or look at the impact of its projects as much as with the ADB or the WB and so on. But the positive, look at the Asia Development Bank, it is an institution that was created after the war, it is run by a Japanese head. They have a joke that the ADB has the Indian bureaucracy which can be the worst kind of bureaucracy.
So, why is China doing that? China does not get a seat at the table where it wants to be, so it just creates its own institution in order to say, “ok, we cannot seem not to be listening the way we like to, so we’re gonna just put the money down, $50 billion and possibly another $50 billion in private investment from the private capital sources in the AIIB to reach $100 billion”, so we are now talking possibly larger or as big as the ADB.
What can be done to ensure Cambodia’s economy is on the right path?
I would say that if Cambodia’s economy can find things that it can export, aside from garments and aside from shoes, something that is high value and you are paid more money in order to produce them, then that is how we develop the economy. The economy is not going to develop by selling your land to people. You have just sold your asset to someone.
And of course, infrastructure is important. In many ways, you assume that having high buildings means development, but there is also human resources where you have to build up peoples capability. If people do not know how to produce things because schooling is bad or you have to pay to go to school, then you lose a generation of people who could change the economy and who could do so much more.
I always say it is very sad because in Cambodia, if people were less greedy with respect to corruption, Cambodia would be rich and everyone would be so much better off as a result. But unfortunately, people have a short-term view of things.
Development should be what? What is the wealth of the nation? It is the people. It doesn’t matter if you have all these buildings, but the people have no education, no good health and no opportunity.
This interview has been edited for length and clarity.