“Changed society, fossilised government: China’s destination of choice”, Le Monde diplomatique

Christine Chaumeau, July 2018 Issue

For Sale and For Rent signs in Chinese are prominently displayed on buildings and construction sites in Sihanoukville, a Cambodian port city on the Gulf of Thailand that has become a destination of choice for Chinese investors in just a few months. On Independence Beach, two 38-storey towers are going up as part of the Blue Bay development, dwarfing everything around them. In the sales office, there’s a model of the development and brochures in Chinese and English. ‘We’ve already sold all the apartments in the first tower and 65% in the second. Our clientele is Chinese, Cambodian and Singaporean,’ the saleswoman told me. Bungalows on stilts and a swimming pool will be built on the beach. A casino and shopping centre will go on the mezzanine. The 1,450 apartments are due for release in 2019 and priced at $2,500-3,500 per square metre, a rate previously unheard of in this city.

‘The Chinese love this sort of place,’ said estate agent Paul H. ‘My clients are ideally looking for sites with a sea view. The Cambodian owners are ready to evict their existing tenants to get a higher rent.’ Since President Xi Jinping came here in October 2016, the number of Chinese visitors to Cambodia has continued to grow, reaching 1.2 million in 2017 (+46%). There are now weekly charter flights to Sihanoukville from seven Chinese cities and Macao. Besides the appeal of its beaches, the city’s main draw is its 24 casinos, as gambling is officially banned in China. The Cambodian government plans to grant 30 more gaming licences.

Whether the arrival of Chinese investors is a cause for delight or concern depends on who you talk to. ‘Property owners are delighted. They can name their price,’ said a tuk-tuk driver. Most Cambodians have no hope of competing. Ochheuteal Beach, a popular destination for budget travellers, is evidence of the changes. The little seafront restaurants have all gone, and in their place a five-star hotel and a casino are being built by a Chinese joint venture with one of Cambodia’s most powerful conglomerates, the Royal Group, owned by an associate of Prime Minister Hun Sen.

In Sihanoukville I heard irritation at the investment fever: ‘The Chinese have their own networks. When tourists arrive they’re taken straight to the casino hotels where they’re staying. They never buy our services,’ one local tour operator told me. ‘We’ve got nothing from these developments apart from higher prices,’ a young construction worker said.

Exact figures are hard to come by, but there may be over 10,000 Chinese workers employed in this city, most in construction or casinos. In January the Phnom Penh Post (1) published details of a report from the governor of Sihanoukville to the interior ministry in which he warned of negative trends: organised crime is increasing, housing cost inflation is raising the cost of living, and developments that are controlled and built by and for the Chinese bring no economic benefits to locals.

With a bilateral aid programme that accounts for a third of the $732m that Cambodia received in 2016, China has become Cambodia’s main economic partner, ahead of Japan, South Korea and the EU. According to commitments by both governments, the value of trade should reach $6bn by 2020, up from $5bn in 2017.

China has funded many infrastructure projects as part of its new Silk Road: over 2,700km of roads have been built according to the public works ministry; a motorway linking Phnom Penh and Sihanoukville, a deepwater port at Kampot and a huge airport in the south of the capital are planned. And seven dams are planned or already under construction along the Mekong. Cambodia’s government has also asked for Chinese help fighting terrorism and cybercrime.

Within a few years, Cambodia has become China’s biggest supporter in Asean (Association of Southeast Asian Nations). In 2012 and 2016 it blocked planned condemnations of Chinese ambitions in the South China Sea and the militarisation of atolls also claimed by Vietnam and the Philippines.

Chinese influence has grown since the mid-1990s in reaction to western criticism of Cambodia’s human rights violations. This March, Chinese foreign minister Wang Yi reaffirmed his country would support Cambodia in ‘safeguarding its national sovereignty as well as legitimate rights and interests’ and holding its general election in July (2). The US threatened commercial sanctions if the opposition was not able to participate in the vote. In early May the European Commission announced a possible audit of Everything But Arms (EBA) agreements, which offer privileged (customs duty-exempt) access for some products — a significant attraction for the garment industry. But to date, no steps have been taken.

In any case, Cambodia’s prime minister has little time for a West that dispenses moral lessons despite allowing the Khmer Rouge a seat in the UN in the 1980s. He said in February: ‘The Chinese representatives respect me and treat me as an equal’ (3). He’s happy though to gloss over such historical details as China’s support for the Khmer Rouge regime (1975-79) or its war with Vietnam in December 1978. Today both parties feel they enjoy a win-win relationship. And, as Cambodian People’s Party spokesman Sok Eysan suggested (4), China works very well as a single-party state, so why shouldn’t Cambodia?