22 ottobre 2020
Cambodia China free trade agreement

Cambodian and Chinese Minister of Commerce recently signed a free trade agreement, the first trade agreement of this type for Cambodia. Trade between the two countries already exceeds 9 billion US Dollars, however Cambodian exports to China are very limited and amounted to just over 900 million US Dollars compared to 8.3 billion of Dollars of imports.

Cambodia is trying to diversify its export markets in the face of strong dependence on the export of clothing products to the United States and the European Union (which represent respectively 26% and 25% of exports). Furthermore, it seems useful to report that the European Union recently sanctioned Cambodia for violating human rights, suspending part of the existing trade agreements. Therefore, the trade agreement with China (the main donor to Cambodia) is seen as a useful element, even if most of the tariffs had already been reduced with the ASEAN-China Free Trade Area 2010 and therefore could produce limited effects.

The free trade agreement should support a further increase in Chinese foreign direct investment (FDI) in the country, (already equal to 47% of Total FDI in Cambodia) and Chinese tourism in the country.