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China’s Resource Diplomacy in Cambodia and Beyond: On Soft Power and Strongmen
Heng Pheakdey, VU University Amsterdam, Amsterdam, the Netherlands
Heidi Dahles, Griffith University, Brisbane, Australia
Abstract:
China’s growing resources demand to fuel its economic growth has pushed the country to
utilize its resource diplomacy to pursue resources abroad. China has encouraged outward
investment by its state-owned enterprises in resource rich countries around the world,
provided them economic assistance and offered political and diplomatic support at national
and international stage. While the mainstream literature tends to suggest that China has been
using its resourced diplomacy around the world to obtain energy and other importance
resources, this paper argues that in some cases China’s motives are more strategic than
economic. Drawing on extensive literature review on China’s resource diplomacy in various
countries around the world, this paper uses Cambodia as a case study and reveals that China
pursues its geopolitical interests based on patronage arrangements and strongman linkages.
Keywords: Resource diplomacy, soft power, neopatrimonialism, China, Cambodia
Introduction
With an average annual GDP growth rate of 10 per cent in the last three decades, China is one
of the world’s fastest growing economies (Haltmaier 2013, 2). China has overtaken Germany
as the world’s number one exporting country and Japan as the world’s second largest
economy. While rapid economic growth is an engine of development, it also presents massive
challenges for China to secure the resources necessary for sustaining its industrial progress.
China is currently the top consumer of key resources, consuming about 30 per cent of global
aluminum and copper, 40 per cent of iron ore and lead, more than 50 per cent of coal; and is
the second largest consumer of oil after the USA (Edinger and Pistorius 2011, 502). It is
estimated that China will run out of 25 kinds of domestic minerals by 2020 due to
industrialization, urbanization and agriculture modernization (People Daily, April 23, 2012).
Faced with a growing and pressing need to acquire natural resources and raw materials, China
has expanded overseas trade and investment to many resource-rich countries around the
world. China’s pursuit of natural resources is affecting the country’s grand strategy in various
ways. It is believed that acquiring resources is the driving force behind Chinese foreign policy
which has been dubbed as ‘resource diplomacy’ (Downs 2004, Zweig & Jianhai 2005,
Daojiong 2006). China is said to have used this resource diplomacy to secure access to vital
energy resources by establishing close relationship with many resource-rich nations, paving
the way for its State-Owned Enterprises (SOEs) to invest in the resource sector in many parts
of the world including Africa, Middle East, Central Asia and Latin America. The expansion of
China’s SOEs, often accompanied by ‘unconditional aid’ has sparked global debate on
China’s motivation and implication for the receiving countries.
While current literature suggests that the primary motive behind China’s resource diplomacy
is to obtain energy and other natural resources, this paper argues that, in some cases, China’s
motivation is more of a long-term strategic nature than tailored to immediate access to
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resources. Reviewing literature on China’s ‘resource diplomacy’ in various countries around
the world, this paper focuses on Cambodia as a case in point and argues that China’s interest
in Cambodia is not economically but rather (geo-)politically motivated. In order to fully
understand why China charms Cambodia this paper argues that an institutional perspective is
called for which includes the asymmetrical but reciprocal relationships between the two
countries and their political elites. By embedding the case of Cambodia in the wider historical
and political context of the Chinese-Cambodian relationship, this paper provides a more
sophisticated perspective on the concept of resource diplomacy in general and China’s
resource-diplomatic strategies in particular.
This paper is based on a comprehensive review of academic literature from recognized online
sources in order to ensure the reliability of the information (see annex 1). In addition, primary
data was collected through seven semi-structured interviews with stake-holders representing
government, local and international NGOs, development partners, and the academic and
research community. The selected interviewees have comprehensive knowledge on the subject
and who have worked on the issues for many years. To protect their identity, all participants
are referred to by pseudonyms (see annex 2).
This paper is divided into five sections. The next section presents evidence of China’s quest
for resources in resource-rich developing countries worldwide in order to identify gaps in the
current body of knowledge on China’s alleged resource diplomacy. Subsequently, in section
three, the concept of resource diplomacy is critically assessed and a framework is designed to
contextualise this concept in an institutional perspective. China’s resource diplomacy is
elaborated in an in-depth case study of Cambodia in section four and analysed, in section five,
against the background of the asymmetrical but reciprocal relationships between the two
countries and their political elites. The final section critically reflects on China’s interest in
Cambodia and questions the concept of resource diplomacy in this particular case.
China’s Global Quest for Resources
As China’s economy continues to grow, the country’s demand for resources will rise far above
its current level. According to the US Energy Information Administration, China surpassed
the USA to be the world’s largest energy consumer in 2010 and will remain in this position for
the next 25 years. To reflect the ever rising energy demand, China has altered its energy
policy a number of times from predominantly focusing on “self-sufficiency” (1949-1993)
when energy security mainly depended on domestic production to embracing a “going global”
policy (1993-2005) and its current “outward investment” policy (2006-present) which
encourages international cooperation in the energy sector and the diversification of energy
investments (Jian 2011, 4). It is during the latest period that Chinese corporations are
incentivized to invest abroad, especially in resource-rich countries and the pursuit of
international foreign sources of energy has become one of China’s top priorities. Currently,
securing sufficient resource supply is the main driving force of China’s foreign policy (Downs
2004, Zweig & Jianhai 2005, Daojiong 2006).
According to Heritage Foundation, from 2005 to 2013 China has invested US$ 370 billion in
energy sector in the Middle East, Central Asia, Africa and Latin America. This investment
amount is the largest sum relative to all the other sectors. China’s three largest national oil
companies (NOCs), China National Petroleum Corporation, China National Offshore Oil
Corporation and China Petroleum & Chemical Corporation (Sinopec Corp.) have been
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actively engaging in signing long term contracts and purchasing oversea assets in the energy
and natural resource sector around the world (Tylor 2009, 34). The successful bid for an
oilfield in Peru in 1993 by the China National Petroleum Corporation marked Chinese energy
industry’s first entry into the international market (Cheng 2008, 313). In 2009 Sinopec paid
US$ 8.8 billion for the acquisition of Addax, making it by far the largest such deal closed by a
Chinese NOC at that time (Jiang and Sinton 2011, 23). Since 2009, the NOCs have purchased
assets in the Middle East, North America, Latin America, Africa, and Asia. In 2011 alone, the
NOCs invested US$18 billion in overseas oil and gas assets, according to US Energy
Information Administration.
In the Middle East, which is China’s largest source of oil, Chinese investment has increased
sharply from US$1 billion in 2005 to US$11 billion in 2009, predominantly in oil and gas
(Chen 2011, 2). China has employed both economic and political tools to court the
government of the Middle Eastern countries to allow Chinese firms to invest in their oil
industry. For example, in order to maintain its access to Iran’s oil supply, China has provided
the country with diplomatic protection in the UN’s Security Council and other venues in
discussing Iran’s nuclear issue. China is now Iran’s number one oil and gas importer. Asia
Time reported that in 2004 China’s state-owned corporation, Zhuhai Zhenrong, had an
agreement to import 110 million tons of liquefied natural gas (LNG) over 25 years in a deal
worth US$20 billion while Sinopec has agreed to a 25-year deal worth US$100 billion for 250
million tons of LNG as well as a 50 per cent stake in the massive Yadavaran oilfield from
which China will get 150,000 barrels per day for 25 years. Similarly, China’s support for the
new Iraqi government was seen as a method to gain access to the bidding processes on its big
oil and infrastructure projects. China pledged US$25 million, agreed to forgive a large part of
its debt, trained Iraqi diplomats at the China Foreign Affairs University (Zhu 2010, 59). In
August 2008 China National Petroleum Corporation (CNPC) signed the first major oil deal
with a foreign company since the fall of Saddam. The US$3 billion oil contract would allow
CNPC to develop an oil field in southern Iraq’s Wasit province for about 20 years.
China has also used a similar approach in Africa, a continent with which has the world’s third
largest oil reserves and abundant non-fuel minerals (Aldens and Alves 2009, 6). According to
the State Council’s Information Office, Africa is the largest recipient of China’s total aid
disbursement. In 2009 alone, almost half of Chinese aid went to Africa.1 During China fifth
Conference of the Forum on Africa-China Cooperation in July 2012, China pledged another
US$20 billion of loan to this continent. In addition to offering a new loan package, China also
cancelled 312 debts of 35 African countries, totaling 18.96 billion yuan (US$3 billion),
according to the Chinese government’s official website. China’s generous economic
assistance together with its so called “no strings attached and non interference” policy have
won the heart of many African leaders. For instance, after receiving China’s credit line of
approximately US$4 billion to US$11 billion, Angola, China’s largest source of crude oil,
provides China with a large amount of equity oil contracts. Reuter reported that in 2005,
CNPC acquired a 50 per cent stake in offshore block 18 and in 2006 Sinopec acquired a 20
per cent stake in block 15 with an investment value of US$ 982 million, a 25.5 per cent stake
in block 17, with an investment value of US$1.1 billion and a concession for a 40 per cent
stake in block 18, with a total investment value of US$1.1 billion. Beside economic tools,
China has also used political power to secure investment deals in Africa’s energy sector. For
example, in exchange for access to their equity oil, China has provided protection for Sudan’s
human rights violations by threatening to veto any significant sanctions against the country.
1 The total amount of Chinese aid to Africa was not revealed but some estimate to be close to
US$1 billion in 2009.
3
China is now Sudan’s largest investor with total stakes estimated at US$8 billion (Salameh
2010, 22).
In addition to oil which accounts for 80 per cent of China’s import from Africa, other
important raw materials include iron ore, manganese, timber, copper, chromium and cobalt
mostly from Angola, South Africa, Sudan, and the Republic of the Congo. At present, Africa
has become China's fourth largest overseas investment destination. According to the State
Council’s Information Office, by the end of 2009 China's direct investment in Africa had
reached US$9.33 billion, climbing from US$490 million in 2003. There are more than 2,000
Chinese companies engaging in economic and trade activities in 49 African countries,
although the majority of investment is concentrated in South Africa, Nigeria, Zambia, Sudan,
Algeria and Egypt.
In Central Asia, securing energy and natural resources is the bedrock of China's strategy.
China is an important player in the region thanks to the huge investments and loans to develop
the region’s strategic infrastructures (pipelines, hydropower plants, bridges, roads, airports).
China offers the region generous funding, and discreet diplomatic support if Russia becomes
too demanding. As of 26 October 2005, the BBC reported the purchase of a Kazahstan’s oil
company, PetroKazakhstan, for US$ 4.2 billion by Chinese oil company CNPC. China, unlike
the western powers, registers no objections to the Kazakh government’s human rights abuses.
During President Xi’s visit in September 2013, a series of contracts worth about US$30
billion were signed, including deals in the oil and gas sector, according to an article published
by the Economist on 14 September 2013. In Turkmenistan, the CNPC is the only foreign
company that can boast of having an onshore contract to explore for energy. In Kyrgyzstan,
Chinese companies are developing infrastructure, including important road networks and
power lines. In Tajikistan, in addition to building roads and hydropower plants, China is also a
vital source of credit.
Econometric analysis based on aggregate data generally supports the thesis that Chinese
companies are seeking resources, among other things. Buckley et al. (2007) analyze 49 host
countries data and find that Chinese outward investment is positively correlated to a country’s
endowment of natural resources (using ore and metal exports as the proxy). Buckley et al.
(2008) using a different proxy for natural resources endowment (crude oil, and natural liquid
gas and petroleum product exports) reach the same conclusion. Also Cheung and Quian
(2009) confirm this result for both developed and developing countries. In a similar vein,
Kolstad and Wiig (2009) investigate the interaction between the strength of institutions of
host countries and natural resource endowment. Their findings reveal that host countries with
weak institutions attract Chinese investment in natural resources. Conversely, the more natural
resources a host country possesses, the more likely that Chinese FDI is attracted by weaker
institutions.
In addition to its outward investment, China also offers economic assistance to resource-rich
nations as part of its resource diplomacy (Alessi 2012, Zweig and Jianhai 2005, Downs and
Evans 2006). This includes the provision of aid to build roads, railways, ports, hospitals,
schools and provision of technical training. Based on the State Council’s statistic, China is
one of the largest emerging donors, generously giving 256.29 billion yuan (US$41 billion) to
161 countries by the end of 2009. China’s development assistance, generally provided without
conditions attached, though warmly welcomed by the government of the recipient countries,
is often questioned on its motives. For example, Naím (2007) characterizes China aid as
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‘rogue aid’ as it is not guided by need in the developing countries, but rather by China’s
national interests to access to resources, boost international alliances and advance its global
influence.
Another aspect of China’s resource diplomacy is the political backing from Beijing for oil
producing countries in order to win’s energy contracts. China often uses its veto power at the
UN as a tool to prevent any sanctions on Sudan, Zimbabwe, and other troubled countries in
Africa. For instance, it intentionally did not want to involve with international effort to force
Iran to abandon its nuclear bomb ambition; as a result, China’s SOE Sinopec and CNOOC
were awarded with major energy deals. China was also granted a major natural gas
exploration contract in Burma shortly after China’s decision to veto a UN Security Council
resolution directed against the junta in January 2007 (Lagerkvist 2007).
In summary, China’s resource diplomacy has three main components: (1) encouraging
outward investment by its state-owned enterprises in resource rich countries, (2) providing
economic assistance in terms if ‘unconditional’ aid to build hard infrastructure and advance
debt cancellation, and (3) offering political and diplomatic support to resource-rich nations at
the international stage.
Resource Diplomacy: a conceptual exploration
Resource diplomacy is defined in terms of any diplomatic activity designed to enhance a
nation’s access to resources and its energy security (Zweig 2007). According to Zweig (2007),
resource diplomacy is characterized by three elements: 1) insuring a stable supply of energy
and resources; (2) keeping resource supplies at acceptable prices; and (3) being able to
transfer those resources to designated locations where they are processed or consumed.
Resources, particularly energy resources, are vital for economic growth and social stability of
all nations. Therefore it is not surprising to see that each country has its own strategies and
policies to secure the earth’s dwindling resources. The concept of resource diplomacy
encompasses all the resources that a country needs and is less frequently used than the term
‘energy diplomacy’ and ‘oil diplomacy’ which are narrower terms used to refer to a country’s
strategy to obtain foreign supply of energy and oil respectively. Oil diplomacy is closely
intertwined with energy and resource diplomacy in that a successful oil diplomacy implies the
diversification of energy resources to minimize dependence on oil and oil imports (Lai 2007,
533).
The concept of diplomacy refers to conducting relationships without conflict and is a chief
instrument in foreign policies. The goal of diplomacy is to further a state's interests as
defined by its historical, geographical and economic conditions without using coercion or
force while maintaining good relationships with other nations. Methods of diplomacy include
linkage politics where diplomats engage in gaining additional leverage to advance a particular
interest (Biba 2012, 605). Successful linkage attempts combine issues that are of divergent
priorities to the states involved. Regular linkage politics, as Biba (2012, 606) explains, “are
more likely to work in situations where the relative significance of issues is such that the
stronger party is more concerned with the additional issue while the initial issue is more
relevant for the weaker party.” For example, if a developing country requires political support
for an infringement on a neighbouring country (their initial issue), its political leaders would
not approach a powerful ally directly, but instead send their diplomats to discuss technical
support for the exploitation of the country’s oil supplies (the additional issue). The ally, in
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need of energy resources, would agree to assist in exchange for a share of the oil and, in
addition, would object to sanctions issued against the developing country by the international
community.
Conversely, if the stronger party seeks to leverage their own linkage possibilities, as Biba
explains (ibid.), they put everything in place to press ahead with their initial interest while
avoiding to find themselves manoeuvred into a disadvantaged position over this initial issue, a
so-called actor-reversed issue linkage. Large power differentials are at the basis of this course
of action where the stronger party pre-empts possible issues with weaker parties and does not
allow the issue to be formally or publicly raised. Returning to the earlier example, the
powerful ally would publicly acknowledge the resource-rich country, pledge development aid,
coupled with manifold investments, without establishing an immediate linkage to its own
interest in accessing the recipient’s energy resources. This access would materialize as part of
a bundle of strings developing between the two nations. Such diplomatic tactics have come to
be described in terms of soft power, a concept developed to capture the ability to persuade and
co-opt rather than coerce (Nye 1990). Also dubbed as ‘charm offensive’, this approach
favours the establishment of political and cultural strings emphasizing mutual benefits and
influencing public opinion through social media and lobbying by powerful organisations. The
nature of these strings reach deep into the political economy of nations. While the literature
on diplomacy fails to address the underlying dynamics, this article makes an attempt at
embedding political economic dimensions in the concept of resource diplomacy.
In particular in the arena where resource diplomacy unfolds, wealthy industrial nations vie for
access to reserves vital to the growth of their economies. These nations compete to secure
reliable resource supplies at an acceptable price and safe ways of transporting these supplies
to their designated destination (Zweig 2007). Diplomatic tactics are widely employed in order
to succeed in these efforts. These tactics are embedded in historically and politically defined
unequal power balances between nations. In particular in rapidly industrializing nations and
emerging economies, access to resources may be regulated through patronage relations. Many
resource-rich developing countries are manipulated by a small powerful political clique which
abuses the state and plunders its resources to advance their own selfish interests. Political
cliques nurtured by and revolving around an autocratic ruler or strongman (Luiz 2000: 236)
are based on patronage arrangements. Patronage is understood as an asymmetrical but
reciprocal relationship between individuals or organisations. It works as follows: the powerful
party (the patron) creates a debt of obligation on the part of a client that binds them to their
patron and morally compels them to reciprocate by providing services, often in the form of an
exchange of non-comparable goods and favours critical to both parties (Boissevain 1966, 18–
22). These dyadic reciprocal relationships between patron and client are the building blocks of
a patronage system (Boissevain 1966).
Neopatrimonial regimes such as hosted by many resource-rich states in Africa and beyond,
such as Haiti and, until recently, Indonesia and the Philippines (Bratton and Van de Walle
1994) and, currently, Cambodia (Hughes and Un 2012), operate on the basis of personal
patronage. “The essence of neopatrimonialism is the award by public officials of personal
favours, both within the state (...) and in society (...)” (Bratton and Van de Walle 1994, 453).
Rule is built on personal loyalty to a strongman who derives his power from a more or less
monopolistic position in access to scarce resources (Scott 1972, 93). Patronage arrangements
are at odds with the development of formal authority structures such as bureaucracies,
democracy and the rule of law (Scott 1972, 92). Patronage systems are both the outcome of a
weak state ruled by strongmen and an instrument for sustaining restraints on civil society
(Boissevain 1966, 30). Once firmly established, a patronage system may provide templates
for modelling social relations at all levels of society (Migdal 1988). As Verver and Dahles
6
(2014) argue, these templates then become institutions that regulate relationships and
interactions within the system. Similarly, such templates extend beyond national borders and
define relations between nations. What seems to be diplomatic tactics if taken at face value
may be the expression of underlying patronage arrangements between two nations, as will be
shown by the Cambodian case in the next section.
China’s resource diplomacy in Cambodia
Last year marked the 55th anniversary of the establishment of diplomatic relations between
China and Cambodia. The two countries forged diplomatic bonds in 1958 under the leadership
of King Norodom Sihanouk and the Chinese Premier Zhou Enlai. Despite several changes in
its foreign policy, China has remained Cambodia’s oldest and closest friend in the region. In
recent years, the relationship between the two countries has become even closer due to the
increased frequency of high level visits. Currently, China is Cambodia’s top foreign investor,
a major donor, and an increasingly important trading partner (Pheakdey 2012, 59-66). This
section analyzes the China-Cambodia relations and raises the question whether China applies
its resource diplomacy in Cambodia for the same purpose as it does in other countries.
With a cumulative investment totaling at US$9.6 billion from 1994 to 2013, China is the
single largest foreign investor in Cambodia to date (Global Times, 18/01/2014). Chinese firms
have invested in a variety of sectors such as garment and manufacturing industries, banking
and finance, agriculture, tourism, real estate, minerals, energy, transport and
telecommunication. Close ties between the two governments have encouraged more and more
Chinese to invest in Cambodia. During his visit to Cambodia in April 2011, Zhang Xiaoqiang,
the Vice Minister of the National Development and Reform Commission, said that China had
urged more firms to invest in Cambodia. In April 2013, Prime Minister Hun Sen upon his
return from his official visit to Beijing, signed off on eight deals for further Chinese
investment in Cambodia. The New York Times reported that in 2013 Cambodia received the
largest-ever foreign investment in its history when the government and two Chinese
companies reached a deal to build a 400-kilometer rail line, a steel plant and a sea port at the
combined cost of US$11.2 billion. The Cambodia government has always warmly welcomed
Chinese investments stating that it has contributed positively to local economic growth and
poverty reduction.
“Chinese investments in Cambodia’s garment industry have boosted national exports and
generated employment for thousands of local workers, most of whom are low-skill females
from rural areas,” said Mr Han Phal, a senior local economist. China’s dominant investment
in the energy sector is also helping to solve Cambodia’s chronic energy shortage. Its
investment in hydropower, for instance, could provide relatively cheap electricity to 65% of
the population who currently are not connected to the grid. Building dams can create jobs for
the local community and prevent flooding. With dams producing sufficient electricity,
villagers do not need to burn wood for cooking and heating, which reduces the need for
firewood sources and contributes to the protection of forests. Civil society organizations,
however, claim that many Chinese investments, especially in hydropower, lack transparency,
fail to meet international standards and cause social and environmental harm. “Chinese
investors do not care about the community or the environment. They do not conduct proper
environmental impact assessment and they rarely communicate with the local community; as
a result, many of their projects affect the livelihood of the people,” says Mr. Van Chanra, the
director of a prominent local NGO.
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In addition to being the largest investor, China is also a generous donor to Cambodia.
According to Cambodia's Finance Ministry, China is one of Cambodia’s largest donors,
providing about US$2.7 billion in loans and grants since 1992. In 2013 alone, China gave
Cambodia US$1.67 billion in financing to build its first oil refinery which is expected to
produce five million tons of refined oil products a year after its completion in 2018. In the
same year, China also pledged another US$548 million in aid to Cambodia for infrastructure
and irrigation systems. China is also a major source of military aid, generously providing
military assistance to Cambodia in various forms since the 1990s. For example, in 1999 China
donated new military equipment worth US$1.5 million for the Cambodian armed forces
(Marks 2000). Between 2005 and 2007, China donated nine patrol boats and five warships to
Cambodia (Burgos and Ear, 2010). According to the Phnom Penh Post, in 2012 China signed
a military agreement with Cambodia and granted US$19 million in defense aid. And recently,
China delivered 26 military trucks and 30,000 sets of military uniforms to Cambodia in order
to help relieve the difficulties of the Cambodian army (China Daily 07/02/2014). According to
Ms Yan Nary, a political commentator, thanks to good political tie between both countries,
Cambodia has been a big beneficiary of China’s military aid. In 2014 China offered to send
more than 400 Cambodian officers to China for training to mark greater bilateral military
cooperation between the two allies.
Unlike development aid from the West which often comes with conditions attached, China
offers aid without any reform requirements and is pledged to states regardless of their human
right record, political transparency and environmental status. While most Western aid comes
in form of direct financial support, the majority of Chinese aid is in form of concessional
loans and mainly concentrates on infrastructure projects which are built by Chinese firms
bringing laborers from China. China’s so called “no strings attached” donation are said to be
weakening the role of the traditional donors such as the World Bank, IMF the US and the
West (Woods 2008, 1210). China’s easy money provides alternative sources of development
assistance and allows states with weak institutions to turn down aid offers from the West and
avoid the requirement to improve their governance, stop corruption, uphold human right and
protect the environment. In Cambodia, the government warmly welcomes Chinese money and
often praises China for contributing to the country’s development. However, analysts claim
that the way in which China is giving and using its money is undermining the work of the
civil society who has been trying to strengthen democracy, good governance, transparency
and accountability. Mr. So Hoeun, a local governance specialist from one donor institution
told the authors that Chinese aid to Cambodia was reducing the political leverage of
traditional donors in many ways and was making their effort to promote good governance
become harder.
On the political front, while China has claimed that it upholds its foreign policy of non-
interference and tried to refrain from meddling with Cambodia’s politics, Beijing has often
offered its support to Cambodia’s ruling government. For instance, after the contested election
in July 2013, China was among the first foreign countries to accept the results which the
opposition party rejected, alleging that the elections were manipulated. Sam Rainsy, the leader
of the opposition party (Cambodia National Rescue Party), appealed to the international
community not to recognize the results, but China assured Cambodia that it would stand by
the result. Chinese Foreign Minister Wang Yi said during his visit to Phnom Penh less than a
month after the election that China would firmly support Cambodia in preventing any
disturbance from outside (Global Post, 21/08/2013). “China fully supports any measure taken
by the Royal Government of Cambodia in order to secure stability, economic development
8
and peace,” he added. According to Dr. Heng Narith, a lecturer in Asia Pacific Affairs, China
supported the ruling government because it could count on Cambodia to do the same if the
needs arose in China.
“The political relation between China and Cambodia is mutually beneficial. China
lends its support to Hun Sen and his closes allies and in return they are expected to
return the favor by supporting China’s politic. For example, Cambodia is a strong
supporter of one-China policy. Cambodia were also observed to be leaning to China’s
side with regard to the South China Sea’s dispute,” he added.
As elaborated above, China has been using similar foreign policy tools as it has been using in
other countries by promoting investment, providing financial and economic assistance and
offering diplomatic support to the Cambodian government. But does China’s resource
diplomacy have the same motives (i.e. looking for resources) as in other countries? This
question will be addressed in the next section.
Resource diplomacy: a discussion
While it is obvious that China is seeking for resources wherever it can, the authors argue that
its primary motive for injecting huge amounts of cash and building good diplomatic relations
with Cambodia is more strategic than economic. Cambodia resource reserves are relatively
minute compared to what China can get from Africa, the Middle East and Central Asia.
Cambodia has an estimated 400 million barrels of crude oil, three trillion cubic feet of gas
(EIC 2008, 6) and some unexplored minerals but its oil and mineral sector is still in its
infancy stage and actual production is yet to be determined. While China is the largest
investor in Cambodia’s hydropower and coal power plants, no evidence currently suggests
that it has imported electricity back to China (Pheakdey forthcoming). All energy projects
financed by China are mainly carried out to meet the domestic demand. Also, Cambodia’s
market of just 14 million people is also insignificant for China’s export. Therefore, from the
economic perspective, Cambodia does not have much to offer to China. Why then, does China
charm Cambodia?
Let us briefly revisit the concept of resource diplomacy. As Zweig (2007) points out, resource
diplomacy is characterized 1) insuring a stable supply of energy and resources; (2) keeping
resource supplies at acceptable prices; and (3) being able to transfer those resources to fixed
locations where they are processed or consumed. When it comes to insuring a stable energy
supply for acceptable prices, China’s resource diplomacy is led by constant efforts to
strengthen ties with oil-producing nations in competition with oil-importing nations. At the
same time, in order to reduce its dependency on Middle Eastern countries, China is
diversifying both its importing sources and its energy sources by reaching out to Africa,
Russia, Central Asia and the Americas as earlier elaborated. Both diversification strategies
necessitate careful manoeuvring in order to secure oil transport routes and access to
alternative energy sources (Lai 2007, 519).
As far as these alternative energy sources are concerned, China has come to diversify import
sources to states in Africa (Angola, Sudan, the DRC and Gabon) that are avoided by the
European Union and the United States, and has come to court rogue states such as Sudan and
Myanmar (Lai 2007, 521, 525). China’s energy strategy is supported by its soft power tactics
also dubbed as ‘charm offensive’. This approach favours the establishment of political and
9
cultural strings instead of military intervention emphasizing mutual benefits and promoting
China’s benign international image of a ‘responsible nation’. Its most visible expression is
frequent high-level leadership visits. Such visits confirm and strengthen personalised relations
with the strongmen running the countries of interest and their families and cronies.
The ties between China and Cambodia are longstanding and well-maintained and have
sustained through diverse changes of leadership. The friendship between China and the
current regime in Phnom Penh was confirmed after the 1997 coup. The coup saw the leader of
the Cambodian People’s Party, Hun Sen, oust then Prime Minister Prince Norodom
Ranariddh, undoing the efforts of the international community to administer peace and good
governance in the country since the Paris peace agreements in 1991. While many countries
including the United States imposed sanctions on Cambodia for breaching the carefully
brokered peace agreement, China sent an unconfirmed amount of aid. China has always
offered instant rewards for displays of loyalty. By doing so, China avoids the necessity to
resume to a actor-reversed issue linkage (Biba 2012) but secures Cambodia’s persistent
loyalty. This loyalty was unequivocally for example with China was blatantly displayed on
the world stage in 2012 when, as ASEAN Chair, it refused to address the territorial disputes in
the South China Sea.
Undeniably, from a Chinese perspective, there are economic rewards for China’s unrelenting
support to Cambodia. There is easy access to Cambodia’s cheap labor for China’s garment
industry, to arable land, agricultural products and natural resources (such as valuable timber),
and to Cambodia’s networks extending into US and EU markets – all brokered through
Cambodia’s political elite (Dahles 2013). However, compared to other developing countries
— where access to cheap labor, land and natural resources come in abundance, Cambodia’s
assets are quite limited and rapidly declining. But what Cambodia has to offer – other than
many resource-rich countries that China charms – is its strategic geopolitical position.
Geopolitics are of critical importance: First with regard to China’s concern about access to
energy reserves in the South China sea. Second with regard to securing safe transport routes
for its oil supplies from the Middle East and Africa. And third with regard to its dam building
projects in the Mekong River. In the following sections, Cambodia’s strategic role in both
respects will be further analyzed.
First, China’s interest in Cambodia has to be analyzed in terms of Cambodia’s geographical
location that is strategically vital for China to strengthen its own security and maintain its
influence in Southeast Asia. China needs Cambodia as an ally in dealing with the territorial
disputes in the South China Sea. China together with six other countries namely Taiwan, the
Philippines, Brunei, Vietnam, Malaysia and Indonesia have claimed overlapping territories in
this ocean areas which is believed to have vast reserves of natural resources such as fish,
crude oil and natural gas. China, which has the largest claim of the territory, has recently
increased its maritime prowess to exercise its claims on potential resources in the area. China
has consistently said it did not believe that the Southeast Asian group was a proper forum for
dealing with the issue and has wanted to deal with the issue on the basis of bilateral
negotiations rather than multilateral talks. In the ASEAN summit 2012, Cambodia, the chair
of the meeting, was accused of siding with China when it agreed with China that the issue of
South China Sea would not be discussed during the meeting.
Second, the Indian Ocean and Malacca Straits are important strategic routes for China’s
import of energy and food. The Achilles heel is the Straits of Malacca. Over 75 per cent
China’s oil imports (from the Middle East and Africa) go through the Straits (Lai 2007, 526).
10
One of China’s important initiatives in oil diplomacy is the ‘string of pearls strategy’ to avoid
possible disruption to the route by competitors or terrorist attacks. China secures its oil routes
by finding alternatives in land pipelines and railway links (Lai 2007, 528-31). This strategy
entails building close ties along the sea lanes from the Middle East to the South China Sea
including Bangladesh, Pakistan, Myanmar, Thailand, and Cambodia (Lai 2007, 529)
following the soft power approach as earlier outlined. Situated in the center of mainland
Southeast Asia, Cambodia is part of a railway route across mainland Southeast Asia and its
port of Sihanouk Province offers an excellent base for China to secure vulnerable sea-lanes of
communication and protecting seaborne energy supplies. Gaining access to this port allows
China to project its maritime power and exert greater influence in Southeast Asia. For
example, should conflicts arise in the South China Sea, China may need Cambodia as a
strategic, sea-accessible location from which to launch a response.
Third, in view of China’s quest for alternative sources of energy, the large-scale hydro-power
project consisting of eight consecutive dams in the Mekong River is of critical importance. As
Biba (2012, 604) points out, the Chinese dams will most likely have adverse effects on
downstream countries. However, the Mekong River Commission (constituted by the member
countries of Thailand, Laos, Cambodia, and Vietnam) has not made the faintest attempt at
legally challenging China on its dam building in the river (Biba 2012, 605). China embarked
on a counter-strategy that Biba (2012) describes as ‘actor-reversed issue linkage’: China as
the beneficiary, has sought to tie its hydro-power projects to broader issues of common
development in an attempt to pre-empt any objections. One has to keep in mind the highly
asymmetrical nature of this conflict.
The position of Cambodia, in view of its long-standing friendship with China, is of particular
significance in this case. The Mekong issue is of utmost importance to Cambodia as China’s
dams seriously threaten Cambodian ecosystems and jeopardize the livelihoods of millions of
Cambodians. Instead of pushing the issue in the Mekong River Commission, Cambodia
pledges loyalty to China in international relations issues and, in return, received Chinese
investments in dam-building projects, like the Kamchay dam, on Cambodian territory. As
Cambodia accepted these investments, the country was silenced as an accomplice of China’s
resource diplomacy. Conversely, for China, sustained freshwater and energy provision and
access to supply routes is of critical importance for its future economic growth; it is of more
critical importance to China than friendly relations with the Mekong River Commission or
any other international institution. Biba describes the Mekong case in terms of an ‘upstream-
downstream Rambo situation’ (2012, 612) putting environmental and human security at risk.
However, it seems that the diplomacy approach falls short of explaining why this Rambo
situation has not resulted in any confrontations as China has not resumed to any Rambo-style
display of power. Instead, China works its soft power playing the patronage card. The dams
represent a potentially powerful tool to exercise influence over the member countries of the
Mekong River Commission as China so far has declined to become a member of the
Commission and commit itself to any formal agreement on a water management policy. In
line with patronage arrangements, China prefers to deal with the stakeholders unilaterally on
dam building, such as it does with Cambodia. Deals are closed at the highest political level
and sealed during high level visits. These deals benefit the Cambodian political clique in
manifold ways and it is through downward delegation in the Cambodian patronage pyramid
that land is cleared to be concessioned for the Chinese investments (Verver and Dahles 2014).
China never gets its hand dirty. If anybody is displaying Rambo behaviour it is the firms
subcontracted by Cambodian okhna to clear the land and dislocate rural communities. At a
diplomatic level, there is no issue over dam building as the Chinese and Cambodian
11
leadership and their political elites share the same interests. The rhetoric of a joint regional
goal of shared development in which the dam building issue is commonly wrapped suits the
political elites of both countries well.
Conclusion
China’s growing outward investment, no-string-attached economic assistance and political
support to resource-rich developing nations are elements of its diplomacy to secure important
resources to sustain its expanding economy. While the mainstream literature tends to prove
the resource-oriented nature of such diplomacy, this paper argues there are exceptions to this
common belief. Using Cambodia as a case study, this paper critically analyzes the motivation
of China’s resource diplomacy from an institutional perspective and finds that China charms
Cambodia not for short term economic benefits but rather for long term strategic and political
gains. China is indifferent to Cambodia’s limited resources but finds Cambodia’s strategic
geographical location vitally significant to increase its influence in the region. Specifically,
China needs Cambodia on its side in dealing with South China Sea dispute, in securing a safe
transport routes for its oil supply from the Middle East and Africa and in its effort to control
the region’s waterway through its dam construction in the Mekong. The finding of this paper
offers another angel of analysis on the way China employs its diplomacy and soft power in
different countries around the world. While its quest for resources to satisfy its insatiable
demand is obvious, it should not be generalized that China’s diplomatic motive applies to all
contexts. China is predicted to become the next superpower and other than resources it needs
friends and allies to stay on its side on international stage. Therefore, it can be assumed that
China establishes relationship with various nations for different reasons and in some
situations the motive is not about extracting energy and natural resources but about securing
strategic geopolitical gain like in the case of Cambodia.
Acknowledgement
The authors gratefully acknowledge the constructive comments of the four anonymous reviewers, as
well as the support of the Netherlands Organisation for Scientific Research (NWO) Science for Global
Development department (WOTRO) funding the Integrated Program titled “Competing hegemonies.
Foreign-dominated processes of development in Cambodia” (grant number W
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Annex 1: List of online newspapers consulted
Name Title of article Source
Asia Times The ties that bind China, Russia and Iran http://www.atimes.com/atimes/C
hina/GF04Ad07.html
Washington
Times
THALER: China’s foreign aid to Africa http://www.washingtontimes.co
m/news/2012/aug/14/chinas-
foreign-aid-to-africa/
CCTV.com China, Kazakhstan sign contracts worth
$30 bln
http://english.cntv.cn/program/china24/
20130907/103431.shtml
Global Times Chinese investment in Cambodia up in http://www.globaltimes.cn/conte
14
2013 nt/838148.shtml
People Daily
Online
China leading investments in some
fields in Cambodia: official
http://english.people.com.cn/900
01/90776/90883/7340993.html
New York Times Chinese Companies to Invest Billions on
Cambodia Projects
http://www.nytimes.com/2013/0
1/04/business/global/chinese-
companies-to-invest-billions-on-
cambodia-projects.html?_r=1&
The Wall Street
Journal
China to Finance Refinery for Cambodia http://online.wsj.com/news/articl
es/SB100014240527023043841
04579139193650154328
The Phnom Penh
Post
China gives Cambodia millions before
meet
http://www.phnompenhpost.com/nation
al/china-gives-cambodia-millions-meet
China Daily China provides military aid to Cambodia http://www.chinadaily.com.cn/china/20
14-02/07/content_17270494.htm
Global Post China vow to help Cambodia prevent
"disturbance from outside"
http://www.globalpost.com/dispatch/ne
ws/kyodo-news-
international/130821/china-vow-help-
cambodia-prevent-disturbance-outside
Annex 2: List of key participants interviewed
Anonymized Name Sector Area of expertise
Dr. Van Chanra Local NGO Environment
Mr. Oud Naya International NGO
Dr. Heng Narith Academic Politics, foreign policy
Dr. So Hoeun Development Partner Governance
Mr. Hou Chhut Government Aid effectiveness
Mr. Han Phal Research community Economic
Ms Yan Nary Research community Politics, foreign policy
15
