China’s aid beyond the headlines

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Reuters

The past two decades have seen increased collaboration between Cambodia and China most noticeably in the areas of investment, trade, and development assistance. Such close relations between the two countries have drawn much scrutiny. China pessimists or sceptics argue that close Sino-Cambodian relations have turned Cambodia into China’s client state whose role is to facilitate the dragon’s thirst for regional domination.

Generally, these China pessimists have made little effort to look into how China’s engagement with Cambodia, and for that matter with the developing world, has helped to promote the countries’ economic growth. It is argued here that China’s engagement has positively contributed to Cambodia’s economic development. This is evidenced by examining China’s assistance to Cambodia particularly China’s key investment and assistance in infrastructure such roads and bridges.

First it should be noted that China’s assistance and investment helps to balance the overall foreign development assistance to Cambodia. It is already well-known that since 1993 Cambodia has received over $10 billion from Western countries. One has to acknowledge that Western assistance has been critical to Cambodian development; however, it should also be pointed out that Western investment has been lopsided with a biased focus on the social and governance sectors.

A country’s long-term sustainable development requires comprehensive investment. Therefore, Chinese investment and assistance in infrastructure fills the gap left by Western engagement. Furthermore, China’s assistance and investment are in line with the Cambodian government’s short and long-term economic development needs and plans.

In collaboration with the Asian Infrastructure Investment Bank (AIIB), or on its own, China provided funding for infrastructure development projects such as roads, rails and bridges in the Greater Sub-Mekong region linking peninsular Southeast Asia to China’s southwestern land-locked region, particularly under the ambitious One Belt and Road Initiative. Of course, this infrastructure development has helped to mitigate uneven economic growth that has over the past three decades favoured China’s coastal region.

However, one should not overlook the fact that these road networks have also linked previously remote Cambodian provinces not only to the country’s major economic centers but also to neighbouring Southeast Asian countries. Empirical research in Cambodia and other developing countries indicates that better access to roads promotes rural commercial activities via diversification of agricultural production and off-farm income and business activities.

Better access to roads also helps to improve access to health care and education. Surveys by the International Republican Institute – a non-profit organisation affiliated with the United States Republican Party – consistently show that Cambodian voters credit the CPP/government with its success in building the country’s infrastructure. Such satisfaction suggests that China’s investment and aid in infrastructure to Cambodia have to a great extent helped to promote good governance i.e., government responsiveness to people’s need for infrastructure development.

Furthermore, China’s investment in hydropower plants helps the Cambodian government towards achieving its economic development plan, which includes the provision of cheap reliable electricity as a major component not only for industrialisation but also for electrifying rural areas. Multilateral institutions such as the World Bank, the Asian Development Bank, and the International Monetary Fund have urged the Cambodian government to diversify its economy.

The Cambodian government has made note of the need for economic diversification. Diversification of an economy requires, among other things, good infrastructure and electricity. It is widely recognised that in addition to key issues such as infrastructure bottlenecks, lack of human resources, and poor governance, domestic and international investors cite high electricity costs and accessibility as obstacles to doing business in Cambodia. Therefore, Chinese investment in hydropower plants has helped reduce the price of electricity and increased the availability of electricity in rural areas. The increase in electricity supply and infrastructure improvements will continue to contribute to Cambodia’s sustainable economic development which has been around 7 percent per annum over the past two decades.

It is constructive to appreciate the tangible and practical fact that China is satisfying Cambodia’s needs in its pursuit of economic development, particularly in infrastructure development and connectivity. China is an opportunity not a threat. Therefore, seeing China’s engagement in Cambodia from the China pessimist view is counter-productive. Such a view overlooks the need and possibility for Western donors to coordinate their development assistance projects in Cambodia.

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