Chinese investment is an “important” employment and economic driver for Cambodia, and the approximately seven-per-cent average GDP (gross domestic product) growth rate logged over the past two decades is “inseparable” from the involvement of Chinese enterprises that have done business in the Kingdom, according to Deputy Prime Minister Yim Chhay Ly on April 2.
Chhay Ly, who doubles as chairman of the Council for Agricultural and Rural Development (CARD), was speaking at the closing ceremony of an event entitled: “‘Belt and Road’ Economic Cooperation (First) Phnom Penh Forum: The Launching Ceremony of Thousands of Chinese Enterprises Entering Cambodia”.
Lim Heng, vice-president of the Cambodia Chamber of Commerce (CCC), Cambodia’s apex trade body, agreed with him, saying that Chinese investment has genuinely contributed to the Kingdom’s economic growth through commitments in sectors such as garments and textiles, agribusiness and processing, tourism, finance, and petroleum and mineral resources.
“Cambodia, of course, has benefited greatly from Chinese investment boosting national economic growth and increasing exports. Moreover, the closeness between the leaders of the two countries also builds investor confidence between the two countries,” he said.
In 2022, mainland China once again emerged as Cambodia’s largest merchandise trading partner, with a record full-year volume of $11.686 billion – up 4.39 per cent over 2021 – of which Chinese exports to the Kingdom accounted for an 89.38 per cent share, up 2.87 percentage points on a yearly basis, according to provisional Customs (GDCE) figures.
The East Asian jurisdiction represented 22.29 per cent of Cambodia’s total international merchandise trade for the year, which was to the tune of $52.425 billion.
The Chinese mainland was the largest exporter to Cambodia, with a 34.89 per cent share at $10.446 billion – up 7.86 per cent over 2021. The region also accounted for 5.52 per cent of the Kingdom’s total exports, at $1.241 billion – down 17.85 per cent – putting it behind just the US ($8.969 billion) and Vietnam ($2.169 billion).
The Kingdom’s trade deficit with mainland China grew by 12.61 per cent, from $8.174 billion in 2021 to $9.205 billion in 2022, GDCE statistics indicate.
The uptick in trade has been in part credited to the bilateral Cambodia-China Free Trade Agreement (CCFTA), which entered into force on January 1, 2022.
The CCFTA covers 10,800 tariff lines for Cambodia and about 8,500 tariff lines for China, and “goes beyond what was offered under the ASEAN-China FTA [free trade agreement], covering an additional 340 tariff lines”, which include cereals as well as live animals and products thereof, the World Bank (WB) reported recently. The WB had put the China figure at 9,530 in an earlier report.
On January 1, 2022, a total of 98 per cent of China’s tariff lines became zero-rated, and 95 per cent of the 340 commodities untaxed, the Washington-based multilateral lender said. The Post understands that taxes on the remaining five per cent will be scrapped within the subsequent 10 years.