Cambodia has received $400 million in loans, grants and investment projects from

China, including a $60 million loan for naval patrol craft.

Chinese

Prime Minister Wen Jiabao and Cambodian Prime Minister Hun Sen signed five

agreements guaranteeing funds during the second summit of the Greater Mekong

Subregion (GMS). The two met in the capital of southwest China's Yunnan province

on July 4 and 5, said Hor Namhong, Minister of Foreign Affairs on July

8.

"The loans and investment project of China will give a lot of benefit

to Cambodia," Namhong said.

Tea Banh, minister of defense, told the Post

on July 12 that work on approximately seven naval vessels has already begun in a

Chinese warship factory and hoped that the additional ships would be completed

within two years.

"It is difficult to tell you a concrete number, but

there are many and different kinds of vessels," Tea Banh said.

He would

not comment on what kind of ships would be supplied or what weapons they would

carry, but said they would not be "empty boats."

Banh said that the

existing naval fleet of the Royal Cambodian Armed Forces is very old and no

longer capable of fighting crime, such as drug smuggling and trafficking, on

Cambodian seas.

"I think that the warships will not only help to refrain

the activities of smuggling on the Cambodia seas, but also terrorists," Banh

said.

Namhong said that other spending initiatives negotiated in China

include $300 million to build and operate a 180-megawatt hydropower plant at

Phnom Kamchay and $30 million to build a new Council of Ministers building.

China will also donate 200 water pumps, 30 fire trucks and an additional loan

for construction on Route 7 that connects Dong Krolor to the Laotian border.

Previously, China loaned Cambodia $62 million to build Route 7, a 186-km highway

linking Stung Treng province with Laos.

China also promised to encourage

its investors and tourists to come to Cambodia, Namhong said.

The GMS

countries of China, Myanmar, Thailand, Cambodia, Laos and Vietnam established a

regional bloc in 1992, agreeing to focus their cooperation on five strategic

areas: infrastructure, investment facilitation, participation of private-owed

enterprises, human resources and environmental development.

Sok Chenda,

general secretary of the Council of the Development of Cambodia, said that

leaders of the six countries agreed to focus on economic cooperation to boost

economic growth and the reduction of poverty.

The leaders also agreed to

work towards a single tourist visa that is valid in all GMS countries.

During the first GMS summit, held in Phnom Penh in 2002, former Chinese

Prime Minister Zhu Rongji offered a $12.5 million aid and interest-free loan

package and agreed to cancel debt owed by Cambodia.

However, an MP from

the opposition Sam Rainsy Party (SRP) said that the loans and grants from China

never come with conditions of government reform, in contrast to other donors who

use bilateral aid to improve the social and economic development of the

Kingdom.

"I think that loans and grants from China ... would not help

much to improve the economy or democracy, but would only encourage the ruling

party toward more dictatorship," said Keo Remy, SRP member of

parliamentary.

Remy further criticized the government's policy of

awarding forestry and land concessions to Chinese companies and highlighted

demonstrations against Chinese-owned garment factories.