Ly Sodeth, a senior economist at the World Bank, takes part in a panel discussion during the 2024 Cambodia Banking Conference, held in Phnom Penh on August 22. Hong Raksmey
As China grapples with an economic slowdown, its ripple effects are being felt across Southeast Asia, with Cambodia among the countries closely watching the developments.
Once a key driver of regional growth, China’s decelerating economy is raising concerns about its impact on Cambodia’s trade, investment and broader economic outlook.
For years, Cambodia has benefited from China's robust economic expansion, particularly through trade, investment and tourism.
However, as China’s growth continues to slow, questions are emerging about how this shift will affect Cambodia’s economic trajectory.
During a panel discussion at the 2024 Cambodia Banking Conference, held at the Sofitel Phnom Penh Phokeethra on August 22, Ly Sodeth, a senior economist at the World Bank, pointed out the significance of China's role in the region.
“China has been the main driver of growth in the region, especially for countries like Cambodia. However, now we see China facing slow growth, which raises big questions for the future,” he said.
Sodeth noted that China's economic deceleration has been ongoing for the past two years, creating a new dynamic in the regional economy.
The slowdown in China is particularly concerning for Cambodia, which has historically depended on Chinese investments and tourists.
Chinese foreign direct investment (FDI) has fuelled Cambodia's construction boom, while Chinese tourists have been a major source of revenue for the tourism sector. With fewer Chinese visitors and investors, these sectors are likely to experience a slowdown.
Kruy Narin, deputy director-general of the General Department of Policy at Cambodia's Ministry of Economy and Finance, emphasised the need for Cambodia to adapt to this new reality.
Kruy Narin (centre), deputy director-general of the finance ministry’s General Department of Policy, takes part in a panel discussion at the 2024 Cambodia Banking Conference, in Phnom Penh on August 22. Hong Raksmey
“Growth drivers in the coming years in Cambodia need to shift away from real estate towards more productive sectors. China's slowdown makes it clear that we cannot rely solely on one country or sector for our economic growth,” she said.
Despite the challenges, both experts suggested that Cambodia has several opportunities to diversify its economic base.
“This is a big shift,” said Sodeth. “How are we going to monitor and review financial proposals to make the business environment more conducive to exports? How do we link the export sector with SMEs to create more jobs for the economy?” he asked.
Narin echoed this sentiment, emphasising the importance of long-term reforms.
“Really entrenching these new growth drivers requires long-term important reforms that the government is, of course, thinking about,” she said.
She pointed to the need for improvements in education, infrastructure and the business environment as key areas that could help Cambodia navigate the economic challenges posed by China's slowdown.
