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Dividing ASEAN and Conquering the South China SeaChina's Financial Power Projection$
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Daniel C. O'Neill

Print publication date: 2018

Print ISBN-13: 9789888455966

Published to Hong Kong Scholarship Online: May 2019

DOI: 10.5790/hongkong/9789888455966.001.0001

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Sino-Cambodian Ties That Bind

Sino-Cambodian Ties That Bind

(p.112) 6 Sino-Cambodian Ties That Bind
Dividing ASEAN and Conquering the South China Sea

Daniel C. O'Neill

Hong Kong University Press

This chapter first surveys the close historical ties between the governments of China and Cambodia, as well as between the Chinese Communist Party (CCP) and the Cambodian People’s Party (CPP). It then presents data on Cambodia’s dependence on Chinese “aid” and other forms of capital, including foreign direct investment (FDI). It argues that both the relatively high levels of Chinese funding as well as the “no strings attached” nature of that funding, which lacks the conditions for political and economic reforms often attached to foreign aid by other governments and multilateral institutions, provide additional leverage for China over Hun Sen’s government. The chapter shows how China uses this leverage both to help its state-owned enterprises (SOEs) overcome the high risk in Cambodia’s investment environment for their very specific (immobile) assets and to gain the support of the Cambodian government on issues vital to the legitimacy of the Chinese Communist Party, including its territorial claims in the South China Sea. The chapter specifically analyses cases of Chinese investments in Cambodian hydropower projects and shows how Chinese influence over the Cambodian government helps overcome domestic opposition to these projects and secures long-term guarantees for the profitability of investments in this sector.

Keywords:   asset specificity, Sino-Cambodian Iron Triangle, Cambodia, China, corruption, foreign direct investment (FDI), Hun Sen, hydropower, Khmer Rouge, state-owned enterprises (SOEs)

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