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Economy Should Do Well, Despite China Slowdown: Experts

Chinese Foreign Minister Wang Yi (L) meets with Cambodia's Prime Minister Hun Sen in Phnom Penh August 21, 2013.

Chinese Foreign Minister Wang Yi (L) meets with Cambodia's Prime Minister Hun Sen in Phnom Penh August 21, 2013.

Although China has undergone an unprecedented economic slowdown, Chinese and Cambodian officials believe it will not seriously affect Cambodia’s economy.

Over the past nine months, China’s GDP grew slightly above 7 percent, its slowest pace in 13 years, and some economists expect poor performance for the remainder of 2013. But so far Cambodia, which relies heavily on Chinese investment, has not been adversely affected, officials said.

“We don’t think that China’s economic adjustment will impose any negative effect on Cambodia’s economy,” Cheng Hongbo, a spokesman for the Chinese Embassy, told VOA Khmer in an e-mail. “On the contrary, the industrial restructure of China’s economy will bring more opportunity to Cambodia, especially on investment and infrastructure sectors.”

China has sought to reduce its reliance on trade and investment and is hoping more domestic consumption with help it grow from within. That has created a downturn that was longer than forecast.

However, Chan Sophal, an independent economist, said this slowdown is unlikely to affect China’s trade or investments with Cambodia, thanks to their strong bilateral relationship. “Also, Chinese investment in Cambodia accounts for a very minimal portion of its international investments and savings,” he said.

Meanwhile, Cambodia’s untapped resources and investment opportunities will continue to bring in international investors, including China, he said.

Other experts said recently that China’s changes are not the greatest concern to Cambodia’s economy, but rather the ongoing political tensions here that have arisen in the wake of July’s national election.

“I have met many investors, and they share similar concerns,” said Mey Kalyan, a senior adviser to the Supreme National Economic Council, a government body. “Some ask me whether to invest in this situation, and some have already come but are waiting for the political tensions to ease.”

According to Chinese statistics, bilateral trade between the countries was more than $1.4 billion in the first five months of 2013, up 36 percent from the same period in 2012. Both sides are seeking $5 billion in trade by 2017.

And Cambodia continues to see large numbers of Chinese visitors. In the first six months of this year, more than 230,000 Chinese have come to Cambodia, up from 149,000 over the same period last year, according to Cambodia’s Tourism Ministry.

Official investment data for 2013 was not available. However, in 2012, 417 Chinese companies were investing in the country, bringing in an estimated $9.2 billion. That makes China the largest investor in the country. Most recently, China has pledged to invest in a $1.68-billion oil refinery.

China has become a major donor, as well. Earlier this year, the Chinese government pledged $500 million in loans and $48 million in grants to aid in infrastructure. That was added to an estimated $2.7 billion in aid by 2012, making China the second-largest donor after Japan.