Countering Cambodia’s economic reliance on China

Australia should be attempting to play a pro-active part in their development in the Asia-Pacific region as China has done, writes Callum Burkitt.

Callum Burkitt is studying a Bachelor of International Relations at La Trobe University.

Out of all the ASEAN member states, Cambodia has proved the most willing to align its interests with the Peoples Republic of China. When the country held the position of ASEAN chair in 2012 (a title they will hold once again in 2022) they blocked the use of language implying that China was taking aggressive action in the South China Sea, resulting in no consensus on the region being reached.

This was the first time ASEAN failed to draft a joint communique since the grouping’s inception in 1967. Furthermore in 2009 the Cambodian government made a decision to deport twenty Uyghur refugees to China, an action which was met with strong condemnation by human rights groups. Through an assessment of Cambodia, we can see why the PRCs heavy influence over Southeast Asian nations matters, how this influence is attained and how it therefore can be countered.

Cambodia’s industrialisation process over the last twenty-five years, from a small agricultural economy to now one of the fastest growing economies in the world, is largely reliant on Chinese assistance. According to the Cambodian transport minister, over 70% of roads and bridges in the country have been funded by China.

Moreover, the countries amassed debt to China is estimated to be over 25% of Cambodia’s GDP according to the Kiel Institute for the World Economy, which puts the country at severe risk of the debt trapping. The PRC’s dominance over South-East Asia is contingent on the value the nations within this region see in utilising Chinese economic aid and development programs to fulfil their own development goals. For this reason, Australia must attempt to provide viable alternatives to what has been described as the PRCs ‘debt trap diplomacy’.

We can pinpoint the beginning of Cambodia’s close relationship with China to 1997. This was when Hun Sen, who remains the prime minister of Cambodia today, embraced Chinese economic assistance following the withdrawal of Western donors from the country, and a suspension of ASEAN member status.

The China-Cambodia relationship was further intensified in 2006, when eleven bilateral agreements between the two countries were formalised and over $600 million in aid pledged to Cambodia, a figure which has increased drastically since. This 1997-2006 period can therefore be described as the point at which the economic growth and development enjoyed by the country now was set off.

While the relationship between Cambodia and ASEAN as well as the West has evolved in the past two decades, any support provided to Cambodia by Western nations, including the most recent Mekong-Australia partnership wherein Cambodia represents one component, is dwarfed by the stability in infrastructural and economic development that China’s Belt and Road Initiative (BRI) provides.

According to the University of Southern California’s US-China Institute, $5.3 billion USD is invested in Cambodia alone through the BRI. Notable BRI projects in the country include investment into a new international airport in Phnom Penh and the construction of Cambodia’s first ever controlled access highway, which will connect the capital of Cambodia Phnom Penh to the coastal province Preah Sihanouk 190km away.

Conversely, Australia’s total budget for overseas development is $4 billion, with Department of Foreign Affairs and Trade’s budget estimate for overseas development assistance to Cambodia each year remaining in the tens of millions. Furthermore, the only formal bilateral agreement Australia has with Cambodia is an open market access agreement drafted in 2004. This can be contrasted with the aforementioned eleven bilateral agreements between Cambodia and China.

From this assessment Australia should be looking to the developing nations of Southeast Asia and the broader Asia-Pacific region and attempt to play a pro-active part in their development as China has done. Stronger ties with Cambodia itself should also be cultivated in the form of our own bilateral agreements in order to balance the influence of powers in the country.

While Australia’s overseas development assistance budget is small compared to its defence budget, the government is no stranger to using overseas development assistance as a geopolitical tool. we can see this especially in the Pacific Islands, through initiatives such as the $2 billion Australian Infrastructure Financing Facility for the Pacific, and the provision of police to nations such as the Solomon Islands, with a proactive role being taken in the development of these nations’ institutions of governance.

While Cambodia is one example, Australia should also look to countries such as Laos. While not as close to China as Cambodia it is certainly moving in the same direction. It’s as much in Australia’s best interest to increase its aid and investment in these countries, creating a balance in their soft power influence, as it is to maintain a rules-based order in Southeast Asia and the broader Asia Pacific region.