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China-Cambodia Ties Grow Tighter

In the past five years China and Cambodia have drawn ever closer, with Beijing investing billions of dollars in the impoverished Southeast Asian nation. Cambodians see both benefits and potential risks in the relationship.

In the past five years, China has become Cambodia's most important source of foreign investment: Cambodia has approved $6 billion of Chinese investments since 2006, while China provided at least $2 billion more in grant aid and loans.

Those are big sums for Cambodia, which has a $10 billion economy.

The relationship between the two countries is nothing new. Chea Vannath, an independent analyst based in Phnom Penh, says China's influence goes back at least 1,000 years.

"So it shows a good relationship with China. Since then either during the bad time or the happy time, China and Cambodia always have - you can say - sweet and sour, or long-lasting relationship. Always," said Chea Vannath.

In recent years that relationship is one the Cambodia's Prime Minister Hun Sen has come to value highly.

He has publicly welcomed the rapid increase in Chinese investment. He also says China is his kind of friend since he says, unlike some donors to this aid-reliant nation, Beijing provides cash with no strings attached and without interfering.

Cheang Vanarith is the director of the Cambodian Institute for Cooperation and Peace, a research body in Phnom Penh. He notes that China's financial interests in Cambodia have other benefits for Beijing.

"But probably China looks beyond economic interests toward more strategic interests in this region. So China used to be the center of the universe. China is the kind of regional hub in terms of strategic (strategy) and economic (economy). Some people call it China returning to the past," he said.

But there are concerns about China's rising influence in Cambodia. For instance, some critics, including witnesses who recently testified in the U.S. Congress, say the money China invests in Cambodia's infrastructure ends up going to state-owned Chinese companies that build the roads and hydropower dams. These contracts are not open to public scrutiny or independent oversight.

The International Monetary Fund, among others, has expressed concern about Beijing's insistence that Phnom Penh pledge to buy all of the power the hydropower dams generate for 30 years.

That could total hundreds of millions of dollars a year.The IMF says Phnom Penh must ensure it does not lock itself into huge open-ended commitments for fear that the liability could harm the fight against poverty.

Despite those concerns, Cheang Vanarith says China will continue to expand its influence in Cambodia. He says China's friendship provides Cambodia with a useful balance against countries such as Thailand, with which it has historical disputes.

He sees few risks to the relationship, and says some of the money from China's aid and investment helps anti-poverty efforts.

But human rights activists say the relationship could be too cozy. They pointed to Phnom Penh's decision last year to send 20 Uighur refugees back to China, at Beijing's request. Days later Cambodia received economic assistance deals worth $1.2 billion.

The United States and other countries sharply criticized Cambodia for deporting the Uighurs, members of a Muslim minority group in China. But Cheang Vanarith says there has been no economic backlash.

"Yes, we got strong negative reaction from the U.S. But later stage it seemed to be O.K. The bilateral relations between Cambodia and the U.S., I could feel it's on the right track - coming back," said Cheang Vanarith.

Chea Vannath, however, like many civic activists, worries about China's effect on Cambodia's environment, and the effort to improve governance and human rights protections here.

China is ranked in 79th in the most recent Transparency International corruption perception survey, out of 180 nations. She says Cambodia ought to learn the lessons of governance from nations with a better track record on democracy and human rights.

"And with the money that goes along with lack of transparency, lack of democratic governance - not just governance, but democratic governance - the participation of people into the state affairs. That concerns us. Yes, it concerns me," she said.

It appears to be less of concern to the Phnom Penh government. Just this month, China and Cambodia agreed to continue strengthening the relationship and to cooperate on projects to develop Cambodia's agriculture, tourism and communications industries.