Bradley J. Murg, Director of Research
Apologies to our readers for the absence of a China in Cambodia updates in a while, we've been rather busy. So, while wishing everyone the best for the Pchum Ben holiday - let's see what the Middle Kingdom has been up to in the Kingdom of Wonder as of late ...
- In the upper tiers, an official visit was paid by officials of the Overseas Chinese Affairs Bureau of the State Council of the PRC to discuss how Cambodia has been progressing with the "One Belt, One Road" initiative. Topics under discussion included the question of the integration of new Chinese migrants in Cambodia into the established Chinese-Cambodian community, celebration of the success of the local Chinese association in establishing branches in all cities and provinces, and the assistance provided to PRC citizens citizens "in distress" by the local Chinese/Sino-Khmer communities.
- A fun little data point that we came across this week: 80% of Cambodia's electricity genertion now comes from Chinese state-owned enterprises. According to the Chinese Chamber of Commerce in Phnom Penh, China has installed a total of 1333 MW capacity for electricity generation in Cambodia and the Chinese ambassador recently highlighted China's role in alleviating electricity shortages in the Kingdom. With estimates of 20% annual increases in electricity demand, the Royal Government also recently noted its enthusiasm in continuing this close cooperation with Beijing.
- Another data point - the luxury condo market saw a price drop of 1% or so and in our view demand looks likely to continue to fall in light of steadily strengthening capital controls in China. Only 5-10% of the market is comprised of domestic buyers, the vast majority of the market being mainland Chinese investors looking to park cash offshore.
- In case you missed it, the China-ASEAN trade fair took place in Nanning last week - with Cambodia as the country of focus this year. This was the BIG event of the last few weeks. The Chinese Ministry of Commerce utilized the event to promote deeper integration of the Chinese and ASEAN state economies and announced that next year's fair will take place in - wait for it - Cambodia. Side meetings were held as part of a separate China-Cambodia forum where the Council for the Development of Cambodia further encouraged greater Chinese investment and the topic of middle income-middle income inter-state investment and trade cooperation was discussed. Sihanoukville, per usual, took pride of place - with 110 Chinese investments currently active. Discussions also examined complementarities between China's current development plan and the Kingdom's industrial policy plan and strategies to build on those. Interestingly, the Chinese side openly noted the relatively small size of the Chinese market but highlighted the important role that Cambodia in general and the port of Sihanoukville in particular will play in advancing the One Belt, One Road Initiative and China's trade position in the Greater Mekong Subregion. While we normally focus primarily on Yunnan province's role with Cambodia, the event highlighted China's "other" designated province for major interaction with Cambodia, Guangxi. It is useful to note here that investment in Cambodia from Guangxi has nearly tripled since 2013. Although the total amount remains relatively low and, befitting Guangxi's level of development, agriculture will continue to be a primary focus. Finally, representatives from the Royal government stated that Cambodia continues to look to China as its primary source for technology transfer to facilitate long term development.
- At the provincial level, the government of Zhejiang province and the Zhejiang Chamber of Commerce donated $250,000 for infrastructure/road development in Siem Reap. The governor of Zhejiang province was in town for the ceremony. The project will, naturally, be managed by the government of Zhejiang province.
- At the municipal level, a delegation from the city of Qingdao (in Wade-Giles transliteration, Tsing-Tao - so you probably remember them from the eponymous Chinese beer, the region having been a German concession back in the day) was in town in order to promote greater economic ties and investment between the city and Cambodia.
And that's it for this week - we will be back to our regular weekly updates next week.