Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

Cambodia: What Price Chinese
Infrastructure?
Carlyle A. Thayer
July 22,2017

Sun Chantol announced today that China has funded 70 percent ofthe country's roads
and bridges with a total of 52 billion to date. I wanted to get your thoughts on this for
a story on Sunday.

e1. What is the significance of China having ,contributed to this much of road
infrastructure?
ANSWER: The strategic context is that the demand for infrastructure finance far
outstrips the capacity of the Asian Development Bank and other financial institutions
to deliver. Even with China's Asian lnfrastructure lnvestment Bank the gap between
demand and supply will remain.
Providing concessional loans for infrastructure is what China does best. Such loans
provide work for Chinese companies and they assist Chinese firms engaged in resource
extraction get their materials to the market or ports. They also assist regional
connectivity as China links one countryto another. There are also domestic spin offs
as the ruling Cambodian People's Party (CPP) get the credit for bringing development
projects to the provinces.

Q2 How might this impact future road planning by the Cambodian government?

ANSWER: Cambodia has no choice but to follow the money. Cambodia can suggest
projects to the Chinese government and they will be reviewed through a well
established process. ln the end it is China's priorities that dictate where the finance
goes. The real questions are how does Cambodia repay concessional loans and how
does Cambodia pay for road maintenance and repair?

Q3. Are there any other layers to this in regards to international relations, etc?
ANSWER: China buys political influence with its infrastructure funding and undercuts
western aid donors who set conditions. This gives Cambodia - through Prime Minister
Hun Sen - space to turn down Western offers of assistance. Both Hun Sen and the CPP
benefit through project-related corruption. Hun Sen relies on Chinese support to stay
in power and tailors his foreign policy to China's preferences. China makes a point
about no strings attached aid in reality Chinese aid is conditioned on political stability,
protection for Chinese enterprises, and China friendly foreign policies by the recipient
state.
 2

Suggested citation: Carlyle A. Thayer, "Cambodia: What Price Chinese lnfrastructure?"

Thoyer Consultoncy Bockground Brief , July 22,2017. All background briefs are posted
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.
 Thayer Consultancy Background Briefing:
ABN # 65 648 097 123
Cambodia: China's 'Fifth
Columno in ASEAN

Carlyle A. Thayer
August 7 ,2017

We request your insight into what the main topics of discussion are in Manila today
and what influence Cambodia may have on these topics. We are interested in
following up on developments to the South China Sea issue.
ANSWER: ASEAN and China agreed to adopt the Eramework Code of Conduct and a
three-step process: formal adoption at the ASEAN + 1 (China) meeting; resumption of
consultations in late August, and three, then commence substantial consultations in
November after the ASEAN Plus 1 (China) Summit of government leaders formally
approves the Framework COC.
The wording of the ASEAN Joint Statement' s section on the South China Sea was due
in no small part to Cambodia proactive intervention to object to any language that
could be construed as critical of China. The Chinese media has heaped praise on
Cambodia for its role. Cambodia's foreign minister deserves a medal for devoting so
much diplomatic energy to an issue in which Cambodia has no vital interests at stake.
Cambodia is in fact China's "fifth column".

Suggested citation: Carlyle A. Thayer, "Cambodia: China's'Fifth Column' in

ASEAN,' Thayer Consultancy Background Brief, August 7,2017. Al1 background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from
the mailing list Wpe, UNSUBSCRIBE in the Subject heading and hit the Reply
k"y.

Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in2002.