China and Cambodia sign free trade agreement: What is the significance?

China and Cambodia signed a landmark free trade agreement (FTA) on Monday (12/10/2020), the first such deal between Cambodia and a foreign state. The agreement covers tourism, trade, agriculture and investment, of which more than 90 percent will be tariff free.

Cambodia has been an important ally for China in recent years. It has been accused of giving China de-facto veto power in ASEAN’s decision-making process in return for economic support. This has of course been denied by both parties and Cambodia insists its foreign policy is not influenced by China. It is inevitable that a strong relationship with Cambodia will give China some level of influence in the region. I must add this is by no means a new tactic on the international stage.

Cambodia is the first on China’s four stop tour of Southeast Asia. Engagement with Southeast Asian states is vital for China, as its rivalry with the US intensifies the importance of economic allies in the region increases. Observes suggest China is acting as the economic backbone to ASEAN states in the wake of the pandemic caused economic downturn. This will embed strong Chinese relations for years to come, ensuring influence and support in the region. Similarities can be drawn to the US’s role post-WWII, propping up European economies in part to keep the USSR at bay. In this sense, possibly a measure to keep US influence in the region to a minimum.

This soft power tactic is clearly taking an increasing role in Chinese foreign policy. Not only is there a focus on trade, investments into infrastructure are a key component. As part of the agreement, there is a project to improve hospitals and the development of sewage systems across Cambodia. They have also offered Chinese vaccines in the fight against Coronavirus, another potential hit for the huge pharmaceutical companies of the US and the UK. Taking this holistic approach focusing beyond economics is proving beneficial for Beijing.  

Comments were made about US foreign policy in the region by Chen Xiangmiao, a research fellow at the National Institute for South China Sea Studies. Perhaps quite rightly, Chen suggests that cooperation like this should not be classified under the US cold war mentality, meaning Cambodia is either with the US or against it. He goes on to say that China has no intention of forcing a nation pick sides and that China ‘offers a helping hand while the US stands idly by armed with pressure and threats’. Those in western states may disagree with this analysis but perhaps that is the problem, this potentially outdated way of thinking is limiting cohesion on the international stage. Chinese investment in Cambodia should not mean to say it has picked a side, China and the US could work alongside one another. Harmonious and cooperative relations between major powers may be an overly optimistic outlook but it does not mean to say it is not important.

Having said this, a US built facility in the Cambodia’s largest port was reported to have been demolished to make way for Chinese funded expansion plans. A symbolic gesture that highlights Beijing’s expanding influence.

The embrace of China may serve as a jab at the European Union, who rescinded Canbodia’s duty-free access to the European Market back in August of this year on human rights grounds. Likewise, China may have seen this as an opportunity to further extend their influence at the expense of the EU, who have been (along with the UK and US) struggling to combat China’s aggressive investments and growing influence across the globe. A political and economic success for China in this regard.

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