http://www.startribune.com/484/story/695885.html

Chinese mining, building and business are havinga huge impact on the economy,but some see the effort as athreat to the U.S.
Don Lee, Los Angeles Times


PHNOM PENH, CAMBODIA- U.S. diplomats made a big splash this year when they opened an embassy near Wat Phnom, the sacred hill of temples where Phnom Penh was founded.
U.S. Ambassador Joseph A. Mussomeli trumpeted the three-story marble-and-granite outpost as a "powerful symbol" of American interests in the impoverished country.

On the other side of the capital, the Chinese also are giving their embassy a makeover. But they're doing a lot more in Cambodia.

The Chinese are digging up minerals and exploring for oil. They are cutting down forests and in some places planting saplings. And across Cambodia, they are building garment factories, power plants, bridges and roads, some into neighboring Laos.

For centuries, the Kingdom of Cambodia has tried to fend off greater powers such as Thailand, Vietnam and France. But today Phnom Penh is welcoming the Chinese with open arms, praising Beijing as a government that offers its largess unconditionally.

By Phnom Penh's tally, Chinese state-owned and private companies plowed more than $450 million into Cambodia last year -- a 460 percent increase over 2004 -- making China by far the nation's top foreign investor. Beijing says it is also giving hundreds of millions of dollars in loans and aid to Cambodia, easily surpassing the $62 million in loans and aid from the U.S.

A fledgling democracy

Some Western diplomats see China's growing influence as a threat to American political interests in the region. Cambodia, a nation of 14 million, is a fledgling democracy. It conducted open elections in the wake of civil war a decade ago and the brutal Khmer Rouge regime in the 1970s. Its constitutional monarchy provides for a multiparty system, unlike neighbors Vietnam, Laos and China, each ruled by an unopposed Communist Party.

Cambodian politics are dominated by Prime Minister Hun Sen, who came to power in a bloody 1997 coup but has overseen the country's democratic reforms, and analysts say the rule of law and media freedoms have not taken root. Washington has tried to exert influence on Cambodia through its aid, which is earmarked mostly for health and education. But as Chinese support increases, some U.S. officials worry that it will ease the pressure on Phnom Penh to fight pervasive corruption and build democratic institutions.

Cambodia has embraced the Middle Kingdom because "China has proven different from other donors. They don't impose conditions," said Cham Prasidh, the minister of commerce. "Others say, 'You have to do this with human rights, you have to do that with democratic reforms.' China doesn't do that."

China's interest in this country, where income per person was $350 in 2004, is largely driven by the same need that is sending Chinese to remote regions in Africa, Central Asia and South America: to secure natural resources to fuel its expanding economy and enhance its global political muscle.

Out of the economic doldrums

China's spending spree has helped Cambodia's economy come out of the doldrums. Tourism and garment production are growing briskly. Luxury sport utility vehicles are a common sight in the streets of Phnom Penh. The country's banks hold 30 percent more in deposits than a year ago.

The cash is certainly flowing at Naga's casino next to Buddhist temples on the eastern end of town. A construction company from China is building a 500-room hotel by the gambling hall for its Chinese Malaysian owner.

"The big rollers are from mainland China," said Michael Nen, a former Long Beach policeman who runs security for Naga Resorts & Casinos here.

Yet many Cambodians are wary of China's growing presence in their homeland. Some talk bitterly about Beijing's support for Pol Pot, the man who engineered the Khmer Rouge's reign of terror, which left more than 1 million Cambodians dead.

Other Cambodians complain that the Chinese, along with other foreign companies, are plundering the nation and buying up vast swaths of land in secret deals with corrupt local officials. Such trade has uprooted families and made life harder for many people, they say.
Companies are racing to exploit oil and natural gas deposits found beneath Cambodia's waters last year. Chevron Corp. has locked up key drilling sites, but Chinese enterprises, including state-owned CNOOC Ltd., which lost its bid for Unocal Corp. to Chevron last year, are jockeying for an advantage in Cambodia.
Chinese officials in Beijing and Cambodia declined to talk about China's presence here.

Chinese academics said Beijing had good reason to extend its hand toward Cambodia.

"China needs Cambodia's cooperation on many important issues, such as Taiwan, Tibet and human rights," said Shen Shishun, director of Asia-Pacific studies at the China Institute of International Studies in Beijing.

A new Chinatown

Throughout Phnom Penh, hundreds of storefront signs are written in both Khmer and Chinese. Ethnic Chinese account for just 1 percent of Cambodia's population, but as in other Southeast Asian countries, they play a significant role in commerce. Chinese businesspeople are helping build a $10 million Chinatown near the French Embassy.

Pung Kheav Se, who is ethnic Chinese and was born in Cambodia, is the founder of Canadia Bank, which holds one-fourth of the nation's bank deposits. He fled the country in the late 1970s and made a fortune trading gold bars in Montreal before returning to Phnom Penh in 1991. Pung said China Development Bank officials recently paid him a visit to discuss aid to Cambodia.

"I see a lot of change for the better," he said.

On a recent weekend, the city of Chongqing in central China was recruiting students for its schools at a domed conference center here. Across town, behind the gates of Universal Apparel Co., a red banner welcomed governors from China's Fujian Province.

Cham Prasidh, the commerce minister, said the Chinese were not given preferential treatment.

If the United States has lost economic influence in Cambodia to China, the minister suggested, Americans have only themselves to blame.

"The investors from the U.S. say they want more transparency. They don't understand the Asian mentality; they are not flexible in negotiating," he said. "The Chinese feel very much at home in Cambodia."

I don't know what to think, but China has invested heavily into Cambodia whereas the US of A has done the absolute minimum. Had it not been for China, Cambodia would have had a much smaller garment manufacturing industry... the women who work in it would have either:

a) starved to death
b) become beggers in Cambodia, Vietnam or Thailand
c) forced into prostituion

China has also helped pave many roads, helping travellers both foreign and local to get through the country, which in turn has help boosted tourism.

Eh, if Cambodia can't get sufficient investment from somewhere, they'd still be where they were in 1990.

Plus, as China is growing rapidly, that could bode well for Cambodia to take China's side instead of US of A later...

can this be looked at as in indirect bribe for cambodia to switch it's government to communism?

It can, but that won't really happen.

government to communism? WTF are you talking about?

like you really wanted to know ... why do i get the felling you trace my posts?

Usual there is stipulation of one countries doing business with China to adhere 'To the one Chine policy.'

Chinese people are nice.

Switch to communism? Doubt it. Nor would China really care if Cambodia were democratic or not, since if Cambodia were democratic, it wouldn't necessarily affect China in a big way.

Although the Cold War is over, China is still trying to court Asian countries for favortism. In that sense, it's really a war of sucking up: China's and the US are vying for Asia's favor.

In this regard, this is China's "Friendly Rise", or soft power policy. China aids Cambodia, and in turn, Cambodia will prefer China more than say, the US.

Also, Cambodia has a lot of potential for growth; China probably sees that as sees Cambodia as an investment opportunity that will pay back good dividends.

Since China has these "no-strings-attached" aid, it's doubtful that China really cares about Cambodia's political system. If it doesn't affect China, it's nothing for China to worry about.

I think you sum it up perfectly, but there is usual mentions from the other nation to adhere to the one China policy.

enlighten us.

great explanation, thank you ..

konomuchu, i was just speculating/wondering .. but no need to anymore

damn China is monopolizing all of southeast asia....well except for vietnam of course....those sneaky chinese

vietnam doesnt accept aid from china?

from reading this article, how is it sneaky?

I doubt Cambodia will recognize Taiwan. These other incentives seem to be more of what China's asking for. I don't see Taiwan curting for favors from Cambodia.


Vietnam trades with both the US and China, so they're both at a tie. Vietnam decided to side with neither.

haven't you known that almost all of the richest people in southeast asia are chinese...if vietnam have too much chinese investment than vietnam would be place in a death trap....investment is always good but too much foreign investment can also hurt a country and it's people that why vietnam allow no more than 50% investment from foreigner

For small countries, they have to rely on foreign capital coming in. China does that too. However, smaller countries such as Cambodia, Taiwan, etc, are too small to support a strong domestic market, so they need to rely on international sales to boost GNP. However, many SE Asian countries are third world, and the only way to catch up is to rely on foreign capital. China followed the same road, and unless of course you know a faster way to pour money in, I'd like to hear it.

One of biggest reasons that foreign investors do not view Vietnam as a good investment environment is because the VC won't allow any foreigner to own more than 49% of a Vietnamese company and 30% of a bank

like I said before it is essential to have foreign investment when you are rank among peripheral nation, but too much foreign investment is definitely going to hurt you on the long run....

In the sense that the companies can tally up and bail and outsource to God knows where? Or if the $hit hits the fan then investment will plummet?

These are real concerns that have been happening in China also. The influx of foreign capital does pressure China to, in a sense, acquiece to demands in order to keep foreign investment in, so they artificially devalue the yuan and don't give much of a crap about work standards. In a way, you come to rely on foreign capital and you want to keep them in, because they can arbitrarily outsource to wherever.

It's a risky source of money really, but it's a gamble that you don't really have much to lose in. Without this capital, at least initial capital flowing in, you won't have enough money to develop a real consumer middle class base that is the real driving point of a strong domestic market.

Let me explain it these terms, you have a group of people with no money, and a company comes in and gives them jobs. They work, and become middle class. By the time the company leaves, these middle class people have enough money to buy, say, TVs or computers. This develops a market for those items, and the economy can run on these domestic buyers, whereas before when people had no money, they couldn't buy these things so there was no market for them. The ideal would be a strong domestic market, but for third world countries that's more a dream than a tangible goal as of yet.

socialized education funded through tax, but yeah i dont think they can really do that until there are enough jobs to collect enough tax to have suffient amount of money to spend p (im looking at this in the long process point of view)

Ah, don't worry about education until you have an economy. You know what happens when you focus on education first? You produce a lot of engineers and researchers, but since they can't find jobs in their mother countries (nascent economy) they brain drain to other countries and use thier talents there, and the mother country does not benefit. Economy first.


This actually happened a lot to the Philippines and S. Korea during the early days. They produced a lot of doctors and nurses, but without the economy to give them jobs, they fled to the US and western countries. Same thing happened in early China and many African countries. Economy first.

Can you name a country that has been 'hurt' because they have too much foreign investment?
China needed foreign aid after WWII, they have done very well as far as i can see.

Cambodia too needs foreign aid, and alot of it especially when close neighbors havent seemed to help out much at all.
spend $450 mill renovating my house and i'll be on China's side anyday. China isn't asking to big brother Cambodia like the US try to do the whole world over. They just need cooperation. By helping us, they help themselves.

how do you explain vietnam 8% growth rates even though it dosen't heavily emphasize on foreign investment...let's take an example such as Thailand looking at it you would come to conclude that its an industrialize country, but the truth is that all of the heavy industry are all foreign own, the product that are produce and sold can only will only benefit the foreign invester

yeah rite, Vietnam has their @$$ in the mount position when it comes to western foriegn investment. Not so much as Thailand and the Philipines but they will have to prepare to whore themselves if they want to reach the level that of their prominent neighbors. Soon after Vietnam will grow accustomed to the taste of sucess and toss away their foolish pride and submit to China's generosity.

watch CCTV9 bro it's always apart formal diplomatic meetings, but I learning that since I'm not chinese I can't make a comment about china

http://en.wikipedia.org/wiki/One-China_pol...matic_relations

Vietnam does rely on foreign capital.

we'll just have to wait and see don't we...

Gomeny, name a country off your head that doens't recognize the One Child Policy. You'll be hard pressed to find any. Cambodia has always recognized China's position on Taiwan; China didn't need to pressure Cambodia to switch views.

Belize Burkina Faso Costa Rica Dominican Republic El Salvador Gambia Guatemala Haiti Vatican City (The Holy See) Honduras Kiribati Malawi Marshall Islands Nauru Nicaragua Palau Panama Paraguay Saint Kitts and Nevis Saint Vincent and the Grenadines São Tomé and Príncipe Swaziland Solomon Islands Tuvalu

Are you divorced from reality? Unless you have some sound references disputing the one china policy which i high doubt. I don't even think it's a big deal

I think China is better than the WB.

did u use wikipedia?

The benefits trickle down towards all Thais........................wtf.....................im defending Thailand............where's that Siri guy when u need him.

*eh* i'll shut up.. :P, but u know its true!

The countries you listed don't trade with China because of the One China Policy. The question you brought up was if this were related to this article and to the investment China has been putting into Cambodia. I said no because Cambodia prior to the aid has recognized the One China Policy for quite a while now, and that this investment has more to do with the things I listed already, and less to do with the One China Policy. The One China Policy is more of an agreement that establishes recognition of two countries: China and the country that agrees with is. It does not mean that China will give aid to that country.

I typed it off of wikipedia

http://vsearch.cctv.com/play.jsp?storyref=..._20060919_6.wmv early in the video President Hu thanked Italian PM for supporting the One china Policy.

I could careless if China supports the one world policy. I was simply replying to Goom that the only thing China would want Cambodian government to adhere is to the one china policy.

Yes and in the video Italy a long time adherer of the one china policy is thanked again.

Oh you're right, my misinterpretation.

Yes, you do need to follow the One China Policy in order to trade. It has little to do with communism though.

Cambodia aheres to one-China policy...I read it long ago. And Sihanouk been kissing China's arse for long time too. XD

"China's generosity"...haha...Cambodia should be wiser in choosing which @$$ to suck. Sucking up is sucking up, you should go for a rich @$$ at least.

lol. Im here man. Im just reading das all.

Btw. Thanks for speaking up for us Thais. I got your back from now on.