Tuesday January 28, 2020
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‘Debt-Trap’ Ahead of Cambodian PM Visit to China Belt, Expert Alerts

China’s Embassy responded with a statement accusing the U.S. of “trying to stir things up again with the so-called trade deficit issue,” adding that bilateral relations are “not just about trade.”

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A woman uses a Chinese national flag to protect the sun as she listens to Prime Minister Hun Sen who delivering his speech during an inauguration ceremony of a sky bridge funded by China for its official use in Phnom Penh, Cambodia, Monday, July 2, 2018. In early July, Cambodia will begin its election campaigning for the 2018's general election. (AP Photo/Heng Sinith) RFA

Overdependence, coupled with loans and the cost of maintaining infrastructure, could leave Cambodia in a “debt trap” to China, an expert said Tuesday, as Cambodia’s Prime Minister Hun Sen prepares to attend a summit in Beijing on Chinese President Xi Jinping’s sweeping Belt and Road Initiative (BRI).

China will hold its second Belt and Road Forum for International Cooperation from April 25-27 to outline the implementation of the BRI, which aims to strengthen infrastructure, trade, and investment links between the Asian superpower and 154 countries and international organizations.

Hun Sen will join nearly 40 other heads of state and 150 global representatives at the event, where he will speak on “boosting connectivity to explore new sources of growth,” according to a statement issued on Monday by Cambodia’s Ministry of Foreign Affairs.

Last week, China’s economic planning agency said that the total trade volume between China and BRI nations had exceeded U.S. $6 trillion from 2013 to 2018, and that China has spent U.S. $80 billion in direct foreign investment in these countries.

Critics of the BRI say that China is using investment to push its own political agenda, and that nations involved in the initiative see their sovereignty undermined if they fall into a “debt-trap” that leaves them beholden to Beijing because they are unable to meet regular payments on loans and default.

Speaking to RFA’s Khmer Service, Carlyle A. Thayer, Emeritus Professor at the University of New South Wales, noted that Cambodia is already an estimated U.S. $3 billion in debt to China, and that it stands to take on further debt through the BRI.

“China provides most of overseas development assistance in the form of loans—these must be repaid,” Thayer said.

“In addition, although China finances major infrastructure projects that do contribute to Cambodia’s economic development, recurrent maintenance costs are left to the host country,” he added.

“Overdependence on China, coupled with loan repayments and maintenance costs, could result in Cambodia’s falling into the so-called debt trap … Chinese companies involved in providing infrastructure take possession of the infrastructure. This could hypothetically mean Chinese ownership of Cambodian ports and even airports.”

Under the BRI, China has pledged to invest in Cambodian agriculture, finance, special economic zone development, capacity building, culture and tourism, and environmental protection—though the lion’s share of funding will be set aside for infrastructure projects that include highways, bridges, ports, airports, and high-speed rail.

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Cambodian Minister of Information Khieu Kanharith accused the U.S. of releasing “fake news,” as part of a bid to drive Cambodia and China apart. Pixabay

‘No realistic alternative’

Thayer noted that Cambodia was an early backer of the initiative and said Hun Sen’s attendance at this week’s forum will reaffirm his nation’s support for the BRI, while adding political clout for China’s hosting of the event.

“Beijing expects nothing less and will continue to reward Cambodia by extending diplomatic and political support, continued economic engagement [such as aid, trade and investment], and defense cooperation,” he said.

As Cambodia’s largest trade partner, its most important foreign investor, and a major supplier of development aid, Thayer said the country “has no realistic alternative to dependence on China,” while Beijing benefits from maintaining a regional client it can count on to support its core interests.

Cambodia drew condemnation from Western trade partners and aid donors  after its Supreme Court dissolved the CNRP in November 2017, paving the way for Hun Sen’s ruling Cambodian People’s Party (CPP) to steamroll a general election in July last year widely seen as unfree and unfair.

China, which offered its full support of Hun Sen’s government following the election, typically offers funding without many of the prerequisites that the U.S. and EU place on donations, such as improvements to human rights and rule of law.

But Thayer said Cambodia’s government had “painted itself in a corner” by targeting its political opposition amid a wider crackdown that also included restrictions on NGOs and the independent media.

Since the election, the U.S. has announced visa bans on individuals seen as limiting democracy in the country, as part of a series of measures aimed at pressuring Cambodia to reverse course. The European Union, which was the second biggest trade partner of Cambodia in 2017, has said it will drop a preferential trade scheme for Cambodian exports based on the country’s election environment.

Comparing ties

Hun Sen’s planned visit to Beijing comes as the U.S. Embassy in Phnom Penh warned through social media that Cambodia’s relations with China had done little to create jobs in the country, when compared to its partnerships with the U.S.

“China is Cambodia’s largest trade partner, but this relationship is heavily skewed in China’s favor,” the post to the embassy’s Facebook page said.

“About 87 percent of trade are Chinese imports, which do not support jobs or industry in the same way Cambodia’s trade relationship with the United States or EU does. This is just one more way Cambodia has shifted from a more balanced and diverse economic approach to one more dependent on China.”

China’s Embassy responded with a statement accusing the U.S. of “trying to stir things up again with the so-called trade deficit issue,” adding that bilateral relations are “not just about trade.”

The statement noted that China had built nearly 40 highways and bridges for Cambodia and helped to construct every hydropower station in the country, while questioning how the U.S. had contributed.

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“China is Cambodia’s largest trade partner, but this relationship is heavily skewed in China’s favor,” the post to the embassy’s Facebook page said. RFA

Cambodian Minister of Information Khieu Kanharith accused the U.S. of releasing “fake news,” as part of a bid to drive Cambodia and China apart.

“We want to build a good relationship with all countries, especially the U.S., but some individuals are trying to destroy this relationship because of their ignorance,” the minister wrote on social media.

Lack of transparency

On Tuesday, Koul Panha, director of local NGO Comfrel, told RFA that Chinese money is negatively impacting the people of Cambodia because of the way it is invested.

“Chinese investment in Cambodia lacks transparency and doesn’t help to promote democracy,” he said, adding that the loans have left Cambodia “under Chinese influence both economically and politically.”

Also Read: Rare Earth Metals in Smartphones Can Now Be Tracked

Chinese investment has flowed into Cambodian real estate, agriculture and entertainment—particularly to the port city of Sihanoukville—but Cambodians regularly chafe at what they say are unscrupulous business practices and unbecoming behavior by Chinese residents, and worry that their country is increasingly bending to Beijing’s will.

Trade volume between Cambodia and China was valued at U.S. $5.8 billion in 2017, up 22 percent from U.S. $4.76 billion dollars a year earlier. China, Cambodia’s largest investor, has poured U.S. $12.6 billion into the Southeast Asian nation from 1994 to 2017. (RFA)

Next Story

Here’s how China Invaded India with Its Technology

Chinese invasion decimates Indian mobile players, automakers next?

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China has slowly but strategically spread its roots in the Indian IT/technology and allied sectors in India. Pixabay

BY NISHANT ARORA

The Great Wall has slowly but strategically spread its roots in the Indian IT/technology and allied sectors in India, and there is no stopping the dragon which has only grown fierce — threatening industries after industries across the spectrum as India celebrates its 71th Republic Day.

From smartphones to automobile/electric vehicles, from digital payments and consumer electronics to social media, Chinese companies have created massive ripples in the country in the last couple of years, while American giants like Amazon and Facebook/WhatsApp face the political heat.

China, which is a fastest-growing trillion-dollar economy with a current GDP of $14.14 trillion is on the path to become a $20 trillion economy by 2024 and India is its “sweet spot” — with millions of consumers buying Chinese goods which has decimated domestic players in certain sectors.

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Xiaomi, a Chinese company has also established itself well in the country. Pixabay

Take the case of smartphone industry. According to Hong Kong-based Counterpoint Research, Chinese smartphone brands captured 72 per cent of the market in 2019 compared to 60 per cent a year ago.

Behemoth like the BBK Group (the parent company of OPPO, Vivo, Realme and OnePlus brands) captured 37 per cent market share while Xiaomi (along with Redmi and POCO brands) came second at 28 per cent.

Led by Xiaomi and BBK Group, the Chinese brands have invested heavily in manufacturing devices and accessories in India.

Xiaomi currently has seven smartphone manufacturing plants in India in partnership with Taiwanese multinational electronics company Foxconn and Singapore-based technological manufacturer Flex Ltd.

More than 99 per cent of smartphones that are sold in India are manufactured locally. Across these seven plants, Xiaomi has employed more than 25,000 people.

Xiaomi also locally sources and assembles PCBA (Printed Circuit Board Assembly) in India. It has invested in setting up smart TV manufacturing plant in partnership with Dixon Technologies in Tirupati, Andhra Pradesh. The company last year infused Rs 3,500 crore into its Indian business unit.

Vivo has committed Rs 7,500 crore as part of its India expansion plan while Chinese company TCL is investing Rs 2,200 crore in Tirupati for plants that will produce mobile handsets and TV screens.

Amid the onslaught, where do you see domestic players like Micromax, Intex, Lava and Karbonn (known as ‘MILK’ brand)?

According to Navkendar Singh, Research Director, IDC India, while we cannot rule out any player making a comeback, especially in such a dynamic market like India, it looks nearly impossible for Indian mobile phones brands to win back any relevant portion of the market.

“China-based brands have been in India for almost 5 years plus now. In this time, apart from snatching the market share almost entirely from the other brands, they have gained immense knowledge about the workings of the India market in terms of consumer thinking, preferences, channel dynamics and marketing interventions,” Singh told IANS.

The Chinese brands are continuously committing resources and investments in all these key areas.

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As China keeps introducing its technology in India, automobile makers will be affected. Pixabay

“Moreover, with more than 3/4th of the market being with 5 players, it is becoming increasingly challenging for any new or old brands like Indian brands to attempt any sustained comeback,” Singh elaborated.

So what are the options for the Indian smartphone players?

“Indian brands can surely look at the feature phone segment, where almost all major China-based brands have chosen to stay away from (expect Shenzhen-based Transsion Group which is the leader). Also, their brand salience remains strong with that consumer segment and Tier II and III markets,” said the IDC executive.

Cut to the Auto Expo 2020 and you will have a better understanding of how Chinese companies muscle their ways.

Top Chinese firms such as SAIC (owner of MG Motors), BYD (maker of electric buses and batteries), Great Wall (which is the biggest SUV maker in China) and FAW Haima, among others, have reserved nearly 20 per cent space in the annual jamboree of carmakers and industry leaders, at a time when the Indian automobile industry is going through a severe slowdown.

Bucking the slowdown trend, SAIC has recorded healthy sales ever since it launched the Hector SUV. At present, the carmaker’s first offering SUV Hector has an order book of 20,000 bookings. It has till date sold nearly 16,000 units of Hector since its launch in July 2019.

The Chinese automobile major has now launched its first electric offering called ZS EV, at a starting price of Rs 20.88 lakh. The company said that it has secured an overwhelming response for the new-age electric SUV, with over 2,800 bookings in 27 days.

To let its EVs run smoothly in India, MG Motor India is building a five-way EV charging ecosystem in association with major domain players.

China’s leading EV company, Sunra, has expressed interest in setting up a factory in the country as it sees India emerging as the world’s biggest market for electric bikes in the next four to five years.

The EV firm has partnered with 16 private companies in Delhi. Nearly six e-bike models of Sunra are under the Automotive Research Association of India (ARAI) test and two of its models are available in some of the showrooms.

Also Read- New Stretchable Battery Can Safely Store Power for Wearables

According to a TechSci Research report, electric vehicle market in India is forecast to reach nearly $2 billion by the financial year 2023.

As the Indian government firms up its EV plans, Chinese companies have already set their eyes on the EV sector roadmap in the country. (IANS)

One response to “Here’s how China Invaded India with Its Technology”

  1. This is a win-win relationship.Is India losing anything? Indians get job, foreign investments, latest technology from China. Do you think local Indian companies have the latest technology? Of course not. Its time for India to open up more, absorb these technologies and then go for home grown solutions. In short do to China what Chinese did to West.