China to Help Cambodia If EU Pulls Tariff Agreement, PM Says

(Bloomberg) -- China has pledged to help Cambodia if the European Union moves forward with its threat to withdraw its lucrative tariff agreement, the Southeast Asian country’s leader said.

The announcement, posted to Cambodian Prime Minister Hun Sen’s Facebook page at the conclusion of a five-day visit to Beijing on Monday, followed meetings with both President Xi Jinping and Premier Li Keqiang. He did not specify what the agreement entails.

One of China’s biggest supporters in Asia, Cambodia has come under attack by its traditional western partners in recent years for undermining democracy and alleged human-rights violations.

China to Help Cambodia If EU Pulls Tariff Agreement, PM Says

Last year Hun Sen extended his 33-year-rule in what was widely regarded as a sham election, prompting the EU in February to trigger an 18-month process for withdrawing Cambodia’s tariff-free access for most goods under the “Everything But Arms” initiative. Hun Sen, meanwhile, blasted the EU for interfering in his country’s internal affairs.

If the EU follows through on its threat to withdraw from the trade agreement it could devastate Cambodia’s $5 billion garment sector, the country’s largest industry employing some 750,000 people.

In addition to the promise of protective aid, Hun Sen also returned home from China with an $89 million package to bolster Cambodia’s military and a preliminary contract with mobile telecommunications giant Huawei Technologies Co. to develop a 5G network.

China has invested vast sums of capital to bolster the Cambodian economy in recent years. By far the country’s largest foreign investor, China has provided $12.6 billion in foreign investment from 1994 to mid-2018, according to the Council for the Development of Cambodia.

Most recently, China funded a $2 billion expressway linking the capital Phnom Penh to coastal Sihanoukville as part of China’s ambitious Belt and Road infrastructure initiative. That project broke ground in March.

©2019 Bloomberg L.P.