The Japan Times - Cambodia's Chinese casino city bets big on Beijing

China is the largest investor and trading partner in Cambodia, much of it directed towards the Gulf of Thailand port, a key strategic location in the Belt and Road Initiative (BRI) championed by leader Xi Jinping, who arrives in the country Thursday.

While welcomed by local government officials, China's vast investments are viewed warily by critics who warn that they heap unserviceable debts on their hosts and leave the city highly dependent on Beijing.

"Sihanoukville changes year-on-year," said Xiaofan, a Chinese tourist visiting friends who started businesses.

"This year I came back and it was entirely a Chinese city. There are so many Chinese people."

Gambling is generally illegal in mainland China, and Sihanoukville is one of the many centres in the surrounding area that have sprouted to draw Chinese visitors and sate their hunger.

And Phnom Penh is among Beijing's most reliable supporters in Asia -- China's state news agency Xinhua described Xi's visit as a display of "iron-clad" friendship.

This month a Chinese-renovated naval base was inaugurated nearby that Phnom Penh insists will not be used "exclusively" by Beijing -- but where two Chinese warships have been docked since December 2023.

Cambodia actively courts investment from Beijing's state-owned enterprises, while Phnom Penh regularly stymies efforts in the regional Association of Southeast Asian Nations (ASEAN) grouping to act on Beijing's island-building and territorial assertiveness in the South China Sea.

- 'Make Sihanoukville great again' -

According to the Preah Sihanouk provincial administration, the area boasts a GDP per capita of $4,000 -- around double the Cambodian average -- driven largely by a Chinese-run manufacturing hub.

The Sihanoukville Special Economic Zone is a symbol of the Cambodia-China relationship, says provincial vice-governor Long Dimanche, who was sanguine about the prospect of his city becoming little more than a casino boomtown.

"For me, whatever," he told AFP. "Look at Macau, look at Las Vegas."

He says Sihanoukville welcomed investment from anyone, on a first come, first served basis.

"Cambodia is a small country. We don't have any choice."

Cranes from Chinese construction firms swing around on the coastline frantically building a luxury seafront shopping resort, Peninsula Bay.

A project representative described the developer as a "Chinese-Cambodian" company and said it was designed to "make Sihanoukville great again".

But Chinese investment projects around the world have had mixed outcomes, some proving to be white elephants and others burdening their hosts with crushing debts.

Ou Virak, president of Future Forum, a Cambodian think-tank, believes the port is becoming a "ghost city" full of empty buildings.

"Sihanoukville is a symptom of a broader real estate problem in China. They just export that to us," he said.

More than a third of Cambodia's $11 billion in foreign debt is owed to China, according to the IMF.

A $2 billion expressway connecting Sihanoukville to the capital Phnom Penh was built with Chinese funds and opened in 2022, but with minimum $15 toll fares the dual carriageway is generally empty.

A Chinese-financed airport in Siem Reap near the Angkor Wat UNESCO-listed heritage site, inaugurated in 2023, is designed to handle seven million tourists annually -- over a million more than visited the whole country that year.

A 180-kilometre (110-mile) canal linking the Mekong River to the Gulf of Thailand is still awaiting funds from a Chinese-owned company almost a year after groundbreaking.

"Some of the projects have been too mega, too quickly, and there's no organic demand for them," said Ou Virak, calling some of them stranded assets. But "economically, you can't deny China".

- 'Heavily dependent' -

Washington has said the Ream naval base -- originally built by the United States and now upgraded by China -- could be leveraged by Beijing for strategic access to the contested South China Sea, which it claims almost in its entirety.

Beijing's strategic investments "underscore China's long-term interest in securing influence" in the region, said Sophal Ear, associate professor at Arizona State University.

But, he said, with Cambodia's economy "heavily dependent" on Chinese capital, concerns over debt sustainability, economic overreliance, and sovereignty risks persist.

At the same time, the country has hosted some of the scam centres -- many of them targeting Chinese citizens -- that proliferated in recent years before a recent crackdown.

Meat skewer seller Wang Guohua has no such worries.

The 58-year-old moved from the southern Chinese province of Hunan to Sihanoukville with his wife five years ago and now barbecues snacks by the roadside every night for hungry Chinese tourists.

"We certainly hope that the (Chinese-Cambodian) relationship will get even stronger," he said.

"For us, that would be a good thing."

K.Nakajima--JT