Will Conflict Between China and Australia Over BRI Contract Affect Cambodia?

• 23 April 2021
• Local News
• 2811 Views

Photo credit to Wccftech

On 21 April, the Australian government announced it would revoke contracts signed by the state of Victoria with China over the Belt and Road Initiative in 2018 and 2019, stating that they were out of line with Australia’s foreign policy and their action is to prevent Australia from hosting a giant infrastructure scheme used for propaganda.

China in response claimed that the action was “unreasonable and provocative” and would make the trade and political ties between the two nations become even more bitter. Chinese social media users also called this action ‘the violation of the spirit of a contract’.

This conflict was not the first of its kind between the two nations. It began when Australia banned Huawei from conducting its 5G business in Australia, prompting China to retaliate by putting more tariffs on Australian products.

Analysts such as the Australian Chair Chin Jin of the Federation for a Democratic China said in ABC News that the move was to follow the lead of the United States, and could increase the possibility of a new ‘Cold War’. If the situation escalated, the whole world would face the consequences.

But will it affect Cambodia as a country that has received billions of dollars in loans from China through the Belt and Road Initiative?

At this stage, Cambodia is not under direct pressure as the issue is still between the two countries. However, if it escalates as analysts anticipate, it could inevitably impact Cambodia. Cambodia and other small countries will be under pressure to choose between the United States and China.

In the context of infrastructure development through aid, if Cambodia were to choose one side, it could lose benefits given by the other side. Although Cambodia does not currently receive much US assistance, the United States is also one of Cambodia’s largest trading partners, so if Cambodia chose China, Cambodia would also lose significant trade opportunities.

At this stage however, Cambodia is managing to stay neutral and gain benefits from both sides even though it frequently receives criticism and pressure from US-allied countries over the issue of leaning too much toward China.

To date, through BRI, Cambodia has received at least US$3 billion in loans from China to build over 3,000 kilometres of infrastructure. (Read more)

• Economy and Finance
• Policy and Strategy