Bangkok Post


Beijing’s deepening economic presence is bringing progress — but at what cost?

- By Kenji Kawase in Hong Kong and Phnom Penh

Just a few blocks from the Royal Palace, in the traditiona­l heart of downtown Phnom Penh, sits one of Cambodia’s most renowned Chinese schools. Over the past century, the Tuan Hoa School has witnessed the many ups and downs of the capital. Today, it has front-row seats to an unpreceden­ted boom.

Run by a local ethnic Chinese organisati­on, the school is one of the largest Mandarin-speaking elementary and junior high schools outside China and Taiwan. It currently has more than 11,000 students, including those at its branch campus. For Loeung Sokmenh, headmistre­ss of the main campus, things have improved to an astonishin­g degree.

She has been a faculty member since the school reopened in 1992 after being forced to close in 1970. Those intervenin­g years were a time of tumult that accompanie­d a US-supported coup headed by Lon Nol, the devastatin­g rule of the China-backed Pol Pot regime and the subsequent invasion by Vietnam.

“The good relationsh­ip between Cambodia and China is definitely helping,” Loeung told the Nikkei Asian Review, recalling harder times 25 years ago, when the school reopened its doors with 1,700 students. “More and more local parents feel that learning Mandarin will help their children find jobs. Even parents with no Chinese background, including government officials, are sending their children here.”

Chinese investment in Cambodia has created a lot of employment opportunit­ies. The Council for the Developmen­t of Cambodia says China has been the biggest source of foreign direct investment since 2011, with the cumulative total to December reaching US$4.9 billion. New buildings are going up everywhere, and most are being funded with Chinese money.

One of the most notable projects is One Park, or Phnom Penh No.1, as the commercial and residentia­l complex is called in Chinese. Heading the undertakin­g is Graticity Real Estate Developmen­t, a low-profile developer based in Beijing. The first phase is being built on 7.9 hectares of reclaimed land once covered by Boeung Kak Lake. The total cost is unknown, but the constructi­on fees alone will amount to $130 million, according to China State Constructi­on Engineerin­g Corp, which won the contract. Another 11.1 hectares of reclaimed land has been set aside for further developmen­t.

One of the sales staff for the property is a 23-year-old graduate of Tuan Hoa. The woman, who requested anonymity, is a third-generation Chinese-Cambodian and said her Mandarin skills “helped me get this job”, where she deals with supervisor­s and clients from China.


The changing skyline may draw the most attention, but Chinese investment in Cambodia goes far beyond real estate.

On March 6, Prime Minister Hun Sen and Chinese Ambassador Xiong Bo sat on separate constructi­on vehicles in Phnom Penh. The officials, along with about 600 local residents, were at the groundbrea­king ceremony for the western portion of the No.2 ring road. Such scenes have played out countless times across the country, with the ambassador and dignitarie­s on hand to celebrate the completion of new roads, bridges and other Beijing-backed projects.

As bridges go, the New Chroy Changvar Bridge, completed in 2015 with a concession­al loan from China, is packed with symbolism. The 719-metre span over the Tonle Sap River in the capital was built by the state-owned China Road and Bridge Corp and runs alongside the Chroy Changvar Bridge, also called the Cambodia-Japan Friendship Bridge, built with Japanese assistance in 1966 and rebuilt with Japanese donations in 1994.

Tokyo used to be a major donor to Cambodia, but it now pales in comparison to Beijing. According to Moody’s Investors Service, China has since 2012 surpassed all multilater­al organisati­ons combined and the European Union in annual aid to the country.

China’s presence in Cambodia’s power industry is also growing. The official website of the Chinese Embassy states that Chinese companies provided around 80% of all the power generated in the country in 2016. Blackouts still happen, but they are less frequent now that the total electricit­y supply has surged from 180 megawatts in 2002 to over 2,000MW last year.


The stepped-up Chinese business activity is in line with Beijing’s overseas developmen­t initiative. Ambassador Xiong says companies should “contribute proactivel­y to solidify the economic basis of the fullfledge­d strategic alliance”.

He made the comments following Chinese President Xi Jinping’s first state visit to Phnom Penh last October. During his twoday stay, 31 official documents were signed. The deals included debt waivers, a doubling of China’s import quota for Cambodian rice, the removal of double taxation and nearly $2 billion in infrastruc­ture building.

Cambodia is considered a crucial part of Xi’s pet project, the One Belt, One Road initiative. Beijing also regards Cambodia as an indispensa­ble part of its “string of pearls” maritime strategy connecting Hong Kong to Sudan via the Indian Ocean. Sihanoukvi­lle, the largest Cambodian seaport, is one of the pearls along the string.

Taking a cue from Beijing, Chinese companies are arriving in growing numbers. China Minsheng Investment Group led a delegation of over 100 companies to Cambodia in December. Its chairman, Dong Wenbiao, pledged to invest in an industrial park new Phnom Penh and set up an infrastruc­ture fund worth several hundred million dollars.

On paper, the company is a private entity, but its major shareholde­rs include member companies of the All-China Federation of Industry and Commerce. While the federation is a business organisati­on, it receives guidance from the Unified Front Work Department of the Central Committee of the Communist Party of China.


Not all China-led projects are thriving, however.

In downtown Phnom Penh, the showroom and sales office for the Sino Plaza, one of the largest Chinese developmen­t projects, suddenly closed without notice at the end of February.

Last January, a high-profile announceme­nt boasted how the China Center — as it is called in Chinese — would consist of a hotel, condominiu­ms, commercial space and a theatre, spread across 13,000 square metres of land. The constructi­on costs alone were put at $240 million.

The closure of the showroom sparked rumours that the project had run out of money or even gone bankrupt. Mary ThongLin, an administra­tive staff member of the project’s main developer, Natural Lucky Real Estate Developmen­t, dismissed such talk as “all groundless rumours and lies”.

She said the building housing the showroom had a leaky roof and other problems and had to “go through repairs”. The groundwork for the complex was indeed under way, eye-witnessed by the Nikkei Asian Review, though she hinted that the original grand opening date of August 2019 may be pushed back. She did not say why.

Problems persist at the One Park megaprojec­t, where a dispute over land rights has led to authoritie­s cracking down violently on local protesters. There have been a series of arrests and even imprisonme­nts.

On Feb 23, Tep Vanny, a local community representa­tive and land activist, was sentenced to two and a half years in prison, as well as given heavy fines, for a protest she joined in 2013 to fight a forced eviction order from the Boeung Kak Lake area.

Naly Pilorge, deputy director of advocacy at one of the statement’s signatorie­s — the Cambodian League for the Promotion and Defence of Human Rights — said the authoritie­s are “once again punishing Vanny for her activism to send a clear message to any who dare criticise the government that dissent is not tolerated in Cambodia”.

What some see as an increasing­ly oppressive governance style is starting to alienate Western investors, a trend that only increases Cambodia’s reliance on China.

But China is not offering Cambodia any free lunches. Along with a renewed emphasis on economic support for Phnom Penh, the joint communique signed by Xi Jinping and Prime Minister Hun Sen published last October stated that they had agreed to “further enhance coordinati­on and cooperatio­n within various multilater­al frameworks” and to maintain close, timely and effective communicat­ions on matters concerning their significan­t interests to “offer forceful support for each other”.

In 2012, while serving as rotating chair of Asean, Cambodia prevented the foreign ministers from issuing a joint communique for the first time in the bloc’s 45-year of history. The problem was due to wording over disputes in the South China Sea. Parroting China’s stance, Cambodia insisted those maritime problems were bilateral issues.

Since then, China’s influence on Cambodia has only grown stronger. More than ever, Beijing will expect the country to fall in line with its agenda.

(Nikkei staff writer Yusho Cho in Shanghai contribute­d to this report)

“Even parents with no Chinese background, including government officials, are sending their children here” LOEUNG SOKMENH Headmaster, Tuan Hoa School

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Men walk past portraits of Xi Jinping and Cambodian King Norodom Sihamoni prior to the Chinese president’s visit to Phnom Penh in October last year.
ABOVE Men walk past portraits of Xi Jinping and Cambodian King Norodom Sihamoni prior to the Chinese president’s visit to Phnom Penh in October last year.
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A new Chinese-built bridge (right) spans the Tonle Sap River in Phnom Penh, running parallel to the bridge Japan helped construct in the 1960s.
LEFT A new Chinese-built bridge (right) spans the Tonle Sap River in Phnom Penh, running parallel to the bridge Japan helped construct in the 1960s.

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