Cambodia’s playing with Chinese fire

As Cambodian leadership continues to undermine democracy, it increasingly relies on China that provides credit, investments, military support and international backing to mitigate Western criticism and sanctions.

Key takeaways:

Hun Sen, who has ruled Cambodia and the Cambodian People’s Party (CPP) with a firm hand for almost four decades, once remarked that China is like a fire: you can use it to cook, but getting too close can be risky. However, Hun Sen seems to have abandoned his own dictum dating to the time before he started to build friendly relations with Beijing.

China’s stance has been integral to the development of Cambodia’s political situation over the last decades. Without Beijing’s decision to stop funding the notorious Khmer Rouge, the Paris Peace Accords in 1991 as well as the free elections that were held two years later, would not have happened. Although Hun Sen lost this democratic test to the monarchists, thanks to his successful blackmailing of King Norodom Sihanouk, he was given the post of second prime minister, thus sowing the seeds of decay in the fledgling democracy. When Hun seized full power in a coup in 1997, China reevaluated its approach and began to support his regime. Since then, the erosion of Cambodian democracy has run in parallel with the strengthening of relations with Beijing.

Cambodian democracy with Chinese characteristics

Today, democracy in Cambodia is merely a facade; the last reasonably free elections, likely won by the opposition, were held in 2013. Fearful of losing power, Hun Sen has created a de facto one-party system in recent years. The last independent newspaper, Cambodia Daily, was closed in 2017, with the Phnom Penh Post being sold to a government-friendly Malayan businessman. The role of unions, independent associations, and NGOs has been curtailed, and opposition figures as well as activists have been persecuted. 

Elections in Cambodia still officially take place, but they are not democratic. Before the 2018 vote, Hun Sen stopped any pretense of democracy and simply outlawed the largest opposition party, with his CPP winning all of the seats in parliament. In the most recent July 2023 elections, the CPP won 120 of 125 seats, with the remaining five going to the royalist FUNCINPEC–likely thanks to the intercession from China, which has a special relationship with the royal court.

The United States condemned the 2023 election as not free and unfair, while authoritarian China, which ironically sent its observers to monitor the vote, congratulated new Prime Minister Hun Manet, the son of Hun Sen anointed to be his successor, on his victory. Other democracies were much more restrained in condemning the conduct of the elections, in the hope of a new start and liberalization of the system by West Point-educated Hun Manet. However, the new prime minister made his first foreign trip to Beijing in September 2023, and its results have called into question any hopes that the new leader would launch a liberalization process. 

The content of the joint communique published after the visit, in principle, followed the one signed earlier by Hun Sen in February 2023, positioning Beijing as the security protector for the regime. China reaffirmed support for Cambodia’s independence, sovereignty, security, and development interests. Beijing expressed opposition to any external attempts to interfere in Cambodia’s internal affairs. Furthermore, both regimes agreed to jointly oppose politicizing human rights as well as any interference in the affairs of other countries under “the pretext of protecting human rights and democracy”. The leaders of the two states also pledged to intensify military and party-to-party ties and internal security cooperation, including countering color revolutions, demonstrating the synergies in deepening authoritarian control.

China’s patronage of Cambodia

What’s in it for Cambodia? Strong ties with China play a key role in bolstering the legitimacy of the CPP regime. In the last five years, party-to-party cooperation has intensified via exchange programs, through which Cambodia is training a new wave of political leadership based on China’s governance.  China and the purchase of Chinese surveillance technologies. In 2020, the National Internet Gateway was introduced with Chinese technology. Moreover, in October 2023, during the Third Belt and Road Forum in Beijing, an agreement was signed to lay an undersea Internet cable linking Cambodia with Hong Kong (the country’s other two links are from Thailand and Vietnam).

China provides regime security, investment and international support to mitigate criticism and sanctions from the West. Although the main destinations for Cambodian exports remain the United States and the European Union, China is the main source of imports and investment. Beijing also holds 39% of Cambodia’s USD 10.27 billion in foreign debt. The Chinese language is growing in popularity, becoming a career-making tool, allowing young people to double the average monthly salary, which is around USD 200-300. 

China has also become a protector of Cambodia against powerful neighbors, namely, Thailand and especially Vietnam. In return, Cambodia supports China politically at the regional (ASEAN) and global (UN) levels, and grants strategically important access to the Indian Ocean. 

It is a transactional arrangement, but one embedded in a commonality of beliefs—a distrust of liberal democracy, Western values and often, paradoxically, capitalism.  Naturally, ‘it takes two to tango’—Cambodia is one of the most corrupt countries in the world. In the 2023 Corruption Perceptions Index, the country ranked 158 out 180. Politics and the economy are controlled by a narrow elite of 15-20 families, and individual ministries are essentially family businesses. The weak rule of law favors China’s relational politics, facilitating informal business activities and increasing Beijing’s political influence. 

Trust instead of rules

An example of China’s way of doing business is Cambodia’s first highway from the capital to the port city of Sihanoukville, which until recently had been a sleepy seaside town. This China-built and China-operated toll road costs USD 12, which the average local resident cannot afford. The improved infrastructure has instead been an impetus for an influx of Chinese citizens, who are often involved in illegal activities. 

Sihanoukville, in recent years, has become a mecca for China’s gambling industry and gangsters involved in counterfeiting, money laundering, cybercrime, drug trafficking and even human and organ trafficking. A critical point in the city’s transformation was the legalization of online casinos in Cambodia in 2017, which Beijing actually prohibits from operating within China. The 2017 legislation resulted in a significant inflow of illegal capital from China that was being driven out by Xi Jinping’s anti-corruption campaign. Casinos, hotels and scam compounds began to appear across Sihanoukville. While it is difficult to assess to what extent this took place with the tacit approval of Beijing, it is certain that the operation of such businesses would not have been possible without the Chinese winning the favor of local officials, police and even senators and ministers. 

At one point, however, the situation in Sihanoukville, which became a crime hub, spiraled out of control.  In the fall of 2019, Cambodia outlawed online casinos, which, combined with the pandemic, caused an exodus of ‘investors’ from Sihanoukville. The decision to ban online gambling reportedly came from the Chinese leadership, fearing the outflow of capital from China. The Chinese tourists did not return en masse after the pandemic, as their enthusiasm for visiting Cambodia was effectively cooled by the fear generated by the 2023 Chinese blockbuster film No More Bets (guzhu yizhi). This gripping thriller tells the story of forced labor in online casinos and the criminal realities of the gambling industry in an unnamed country in Southeast Asia, whose inspiration was clearly Cambodia. However, the closure of online casinos has not put an end to criminal activity in the city as illegal operations have merely changed in nature.

Before the pandemic, over 10% of Sihanoukville’s population was Chinese; today, it is largely a ghost town, dotted with unfinished buildings whose owners fled Cambodia, often taking their construction plans with them.  

China’s access to the Indian Ocean

The pandemic has also stalled a mega-project started 15 years ago in nearby Dara Sakor, which is expected to cover up to 20% of the Cambodian coast. According to the initial plan, this massive complex, half the size of Singapore, would consist of an international airport, a seaport, an industrial park and a luxury resort along with a special economic zone. So far, only the project’s major airport has been built. While the investment is highly questionable from an economic perspective, it has already led to serious environmental damage. 

The Chinese state-owned company, Union Development Group (UDG), is responsible for the project, which is part of China’s Belt and Road initiative. Due to suspicions that the huge airport may be used for military purposes, the United States in 2020 sanctioned both the UDG and the Cambodian generals who were involved in its implementation. 

US concerns have also been raised over China’s activity in the port of Ream, where Cambodia has a small naval base. Cambodia has never had a military fleet of any kind. However, China is now filling this space. Under the auspices of Beijing, work is currently underway to expand and deepen the port to accommodate larger ships, officially for commercial purposes. While the permanent presence of foreign troops on Cambodian territory is unconstitutional, given the relational model of cooperation between the two countries, it is not difficult to imagine a scenario in which Ream becomes a base for China’s navy that allows for access to the Gulf of Thailand. According to the April 2024 analysis of the Center for Strategic and International Studies (CSIS), the Chinese navy already has a permanent or at least rotational presence at Ream, with two Chinese warships being present there for most of the past five months

Cambodia at a crossroads

For the past two decades, the Cambodian economy has been growing at an average rate of seven percent, and the regime’s legitimacy was based on ensuring social peace and economic growth. However, the pandemic has dealt a serious blow to the local tourism industry. In the first three quarters of 2019, 1.86 million Chinese visited the country, with only 607 thousand for the same period of 2024. Today, despite China’s post-COVID opening, the gigantic hotels around Angkor Wat that were built to accommodate Chinese visitors still stand largely empty. Before 2020, Chinese visitors bought almost 40% of tickets to the famous temple complex out of the total of 2.2 million sold. In 2024, the figures dropped to 8% out of 1 million sold, respectively. 

Economic problems are compounded by the perturbations of the global economy and Cambodia’s place in the supply chain – mainly as a food producer and production line for garment companies. According to the Asian Development Bank (ADB), Cambodia’s GDP will grow at 5.8% in 2024. 

Although there are signs of an economic recovery in the tourism and manufacturing sectors, the overall economic challenges, such as rising private debt and fluctuating energy prices, may dampen Hun Manet’s zeal, real or imagined, for liberalizing a regime whose legitimacy is based on ensuring social peace and economic growth. As a consequence, the new prime minister is more likely to consolidate power and seek even more support from a Chinese patron.