The efforts to attract Chinese financiers to directly invest in Cambodia and a growing friendship have contributed to a continuous rise in trade volume between the two nations.

In the first nine months of 2024, total bilateral trade exceeded $11 billion, marking an increase of over 20% compared to the same period in 2023.

According to the General Department of Customs and Excise (GDCE), China remains Cambodia's largest trading partner. 

From January to September 2024, total trade between the two countries reached $11.15 billion, reflecting a 22.5% increase compared to $9.1 billion during the same interval in 2023. 

Exports to China amounted to $1.28 billion, up 20.8%, while imports from China totalled $9.87 billion, an increase of 22.7%. Cambodia’s trade deficit stood at approximately $8.59 billion, a rise from $6.98 billion year-on-year in 2023.

In September alone, trade between the two countries reached $1.07 billion, up 6.4% compared to September 2023. Exports to China totalled $129.1 million, an 8.4% increase, while imports from China reached $941.62 million, a 6.1% rise.

Lor Vichet, vice-president of the Cambodia Chinese Commerce Association (CCCA), told The Post on October 14 that several factors have driven the growth in bilateral trade between the two countries. 

He said these include strong diplomatic ties, China's competitive supply of raw materials that meet Cambodia's needs and Cambodia’s attractiveness as an investment destination.

Vichet explained that the increase in trade has also been positively influenced by trade disputes between major powers (China, the US and the EU). He said these disputes have prompted some Chinese factories to relocate or expand operations to countries like Cambodia to avoid political pressure and tariffs.

“I foresee that the trade volume between the two countries will continue to grow in the future. China will remain a key supplier of raw materials for Cambodia’s manufacturing sector,” he added.

Regarding Cambodia’s high import volume from China, Vichet pointed out that since China joined the World Trade Organization (WTO) in 2001, its exports have expanded to nearly all global markets. He said Cambodia's large volume of imports from China is largely due to the country’s shortage of raw materials, which are essential for manufacturing finished products for international markets.

He noted that in addition to importing goods from China, Cambodia has attracted numerous Chinese to directly invest in various sectors.

Vichet concluded, “Geopolitical factors, Cambodia’s favourable location, investment laws and affordable skilled labour have helped attract a significant number of international, particularly Chinese, investors to set up factories in the country.”

Bilateral and multilateral trade agreements contribute to trade growth

Hong Vanak, an economist from the Royal Academy of Cambodia, attributed the increase in trade between Cambodia and China to strong diplomatic relations. 

He noted that both countries are part of the Cambodia-China Free Trade Agreement (CCFTA) and the Regional Comprehensive Economic Partnership (RCEP). 

Vanak said that China, as a major global supplier of raw materials and goods, will continue to play a crucial role in supplying materials to Cambodia, particularly for the textile industry, which processes these materials into finished products for export to international markets.

“For a long time, China has been a key source of raw materials and components for factories in Cambodia. The trade volume between the two countries will keep growing in the future,” he explained.

Regarding the country’s exports to China, Vanak pointed out that as a developing country, Cambodia mainly exports agricultural products and natural resources to China.

Most of Cambodia’s exports to China include agricultural and textile products, while imports from China consist of raw materials for the textile industry, construction materials, automobiles, machinery, electronic devices, electricity, pharmaceuticals, food and agricultural chemicals, according to Vanak.

Cambodia strives to attract more Chinese direct investment

Chea Vuthy, secretary-general of the Council for the Development of Cambodia’s (CDC) Cambodian Investment Board (CIB), met with a delegation of six Chinese companies involved in the energy, industrial, engineering consultancy and international trade sectors, along with representatives from the Xinyang Chamber of Commerce from China’s Henan province, at the CDC on October 11. 

Leaders of the Council for the Development of Cambodia (CDC) meet with Chinese investors at the CDC last weekend. CDC

The delegation was led by Heng Ti, advisor to Zhongjian Yongfeng New Energy Resources Technology Co Ltd.

During the meeting, Vuthy warmly welcomed the delegation, thanking them for taking the time to visit Cambodia and explore investment opportunities firsthand. He highlighted that China is currently the largest source of foreign investment in Cambodia.

Vuthy stressed the government’s strong support for direct investment, especially in clean energy. He encouraged the delegation to consider investing in the agro-industry, noting Cambodia’s significant agricultural potential, particularly in strategic crops like rice, cassava and cashew nuts. 

He also suggested exploring investment opportunities in the establishment of special economic zones (SEZs).

“The leadership and all officials at the CDC are pleased to provide facilitation at every step of the investment process for companies,” he said.

Chinese investment leads

According to the National Bank of Cambodia (NBC), Chinese investment accounted for approximately 45% of total direct investment in Cambodia as of the first quarter of 2023, amounting to 185.7 trillion riel ($45.67 billion). This was followed by investments from South Korea, Singapore, Japan, Vietnam, Malaysia and Thailand.

In 2023, total trade volume between Cambodia and China reached $12.26 billion, a 5% increase compared to 2022. Exports to China were valued at $1.48 billion, up 19.2%, while imports from China totalled $10.79 billion, up 3.3%, according to the GDCE.