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From China with cash


Chai Zhizhou explains China's aid policy - "non-conditional"

LAST week the People's Republic of China strode boldly to the forefront of Cambodia's

foreign donor community with a multi-million dollar package of loans and grants aimed

at overhauling the parlous state of the Kingdom's infrastructure and industrial base.

Following up on Prime Minister Hun Sen's visit to China in February, China's Deputy

Minister of Trade and Economic Cooperation Sun Guangxiang spent last week touring

Cambodia with a high-powered delegation of Chinese officials and business leaders.

Sun and his delegation arrived in Cambodia with deep pockets, bearing loan and grant

guarantees totaling more than US$220 million.

Chai Zhizhou, Economic and Commercial Counselor at the Embassy of the People's Republic

of China in Phnom Penh, described the aid package as a way of "bringing together

Chinese and Cambodian expertise to help develop Cambodia".

According to Chai, China is currently providing development aid to "more than

100 of its diplomatic allies ...from Africa to Romania", but admits that the

Chinese aid package for Cambodia "is one of the largest".

So is the timely injection of Chinese funding a sign of a new willingness on China's

part to fill the aid gap largely vacated by western donors in the wake of the 1997


Not at all, says Chai.

"The Chinese government has enjoyed excellent relations with Cambodia since

1955," Chai says. "This financial aid is merely the latest evidence of

the mutual friendship and support that exists between our two countries."

According to Chai, the two governments have compiled an extensive list of industrial

and infrastructure projects that Chinese government and industry will work together

to develop with Cambodian authorities.

Top of the list is a series of projects to expand Cambodia's industrial base, with

loans aimed at building and expanding factories that produce everything from cement

to sugar.

One of the largest projects, however, is a dam construction project that was ironically

originally undertaken by foreign donors that pulled the plug after the 1997 coup.

"These dams [in Kampong Thom and Svay Rieng respectively] were

originally supposed to have been built by the ADB and Vietnam, but they did nothing,"

Chai says.

Unlike the original foreign donors, Chai stresses that Chinese aid will be dispatched

with little or no delay. "Within two or three months the [dam] projects will

get underway."

Chai is keen to emphasize the "no strings attached" nature of this latest

Chinese development aid to the Kingdom.

"There have been reports in the press that these Chinese government loans to

Cambodia carried interest rates of eight percent," Chai says. "That's not

true - the loans are interest-free."

In spite of the Cambodian government's perpetual cash-crisis woes, Chai says the

issue of when the Cambodian government will be able to repay the loans is not a matter

of concern for the Chinese government.

"There hasn't been any discussion of a [loan] repayment schedule," Chai

says. "There's no time limit [on the loans repayment]."

According to Chai, the Chinese government's aid to Cambodia differs philosophically

from that of western aid donors in its "non-conditional" approach.

"The Chinese government doesn't offers loans or grants and say, 'We give you

money, so you must therefore... '," Chai explains. "China doesn't put conditions

on foreign aid... [instead] China maintains that every country has to follow its

own distinct plan of development."

Chai suggests that the traditional insistence of Cambodia's western donors on guarantees

from the Kingdom's government regarding human rights and democratic reforms may be


"China is committed to assisting Cambodians unite their society and develop

their democracy," Chai says. "But economic development is necessary [first]

in order for democracy to develop."



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