China throws Hun Sen an economic lifeline


Cambodia’s Prime Minister Hun Sen (L) shakes hands with China’s President Xi Jinping before their meeting at the Great Hall of the People in Beijing on April 29, 2019. PHOTO/ AFP/Madoka Ikegami/Pool

It is becoming a regular occurrence: Every six months or so, Cambodian Prime Minister Hun Sen jets to Beijing and returns with a bounty of new trade deals, investment promises and assurances of the Chinese government’s backing against Western criticism.

Hun Sen, who spent five days in Beijing for the second Belt and Road Initiative (BRI) Forum, arrived home on April 29 with half a dozen new trade agreements that he said brings “Cambodia-China relations to their best level ever.”

“As a comprehensive strategic partners and iron-clad friends, we are siblings who share a single future,” he added, noting that China for has been for years the largest investor in Cambodia.

The new deals include US$89 million in Chinese aid for the Cambodian military; a Beijing pledge to import 400,000 tonnes of Cambodian rice; an agreement by Huawei, the Chinese tech giant, to help build Cambodia’s 5G network; and a new memoranda on customs regulations.

Equally important, Hun Sen arrived home with a promise from China of its “clear willingness to help” in the event that the European Union (EU) removes Cambodia from the Everything But Arms (EBA) preferential trade scheme, a decision that would severely undercut Cambodia’s export competitiveness by removing its duty-free status in EU markets.

The EU is the main purchaser of Cambodia’s exports, and its threat to remove Cambodia from the preferential deal could decimate parts of the country’s export-driven economy. The process of withdrawal began in February and could take 18 months to finalize, though Brussels can call it off if it feels Cambodia is making progress on rights and democracy.

It all stems from the EU’s criticism of Cambodia’s democratic backsliding, a political crackdown by the ruling Cambodian People’s Party (CPP) that saw it forcibly ban the main opposition party in late 2017, stage manage a general election in 2018 and in the process create a de facto one-party state.

Hun Sen said he discussed his financial concerns about the possible withdrawal of EBA with Chinese premier Li Keqiang and senior politburo member Wang Huning, who apparently told him that China had conducted its own studies on the likely impact of the EBA’s removal and found “it will not cause any serious impact.”

Wang also promised, according to Hun Sen, that Beijing “will find other measures by which to help Cambodia” in the event that the European trade scheme is removed.

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