Backlash of Chinese Investments

Featured image: A snapshot of Kompongsom city in Sihanoukville. The establishment is frequented by Chinese tourists and workers after working hours. Casinos and hotels are a by-product of Chinese investments in Sihanoukville.

Amid massive Chinese investments, “Anti-Chinese” sentiments are breeding among the residents of Sihanoukville. Unregulated influx of foreign Chinese investment has come at a cost. Moral degradation, illicit activities, and strains on the infrastructural and environment of Sihanoukville prove to be an urgent issue in face of the poor regulations. Among locals, “anti-Chinese” rhetoric is increasingly commonplace.

By Lim Hong Jun, Alvan

Amid the torrential downpour, a Chinese bouncer with tattooed arms stands firmly outside the entrance of a night club along the streets near the Golden Lion roundabouts of Sihanoukville. He is an intimidating presence, ordering local security personnel to shelter party-goers from the rain as they alight from their vehicles. There is an apparent hierarchal difference between the locals and the Chinese bouncer who work in the same establishment. Upon entering the club, one is engulfed by the whisk of second-hand cigarette smoke and welcomed by the loud bass music on the dance floor. The DJ riles up the crowd, exclaiming in mandarin, “All those from Chongqing, raise your arms!” to which the majority of the party-goers excitedly follow. It is a common sight for mama-sans to bring a group of fair-skinned Chinese escorts to be chosen by the groups of young men who are drinking and smoking at their own tables. Sihanoukville is no stranger to the sex trade and services perpetrated by Chinese nationals.

Across the night club stood a KTV ( Karaoke television ) establishment run by a middle-aged Chinese man. However, the KTV seems to be a cover-up for more clandestine services. Upon entering the establishment, one is invited by scantily clad women who are waiting to be called into KTV rooms. The sex workers consist of an eclectic mix of Cambodians, Chinese, and other South East Asian women. One can find similar establishments around the corner, usually run by a Chinese manager. Despite the late hours, the city is bustling with traffic and lit up by neon signs across the skyline. In recent years, Chinese developers have erected more than 100 casinos and other entertainment centres around the area. Locals have regarded Sihanoukville as “The second Macau”. Sihanoukville, now, carries the reputation of being a haven for noth customers demanding sex services and for foreign gamblers – it is illegal for Cambodians to gamble. In an interview, a local taxi driver, Mr. San, expressed his disappointment over recent developments:

“Sihanoukville used to be a paradise for locals and Western foreigners, with clean beaches—and it was generally safer. Now, most of the tourists are usually from mainland China. They have little respect for the local rules and practices—driving recklessly, smoking and spitting wherever it suits them. It is unsafe at night with the Chinese mafias running the streets. It is sad but I can’t do anything.”

The fear of one’s safety amidst rising crimes and gang fights in the city extends beyond residents; one of the Chinese personnel working at the night club also expressed concern over his safety. Similar to many other Chinese nationals who flew from their homelands to Sihanoukville, he received news of job opportunities from a friend of his who has been working in Cambodia. The growth in Chinese investment in the area provided these individuals a hope of securing better employment in Sihanoukville. Another Chinese national has voiced out that Sihanoukville has been marketed to mainlanders as “the next Shenzhen”(a modern metropolis that was part of China’s special economic zone in its early developmental project). The cost of rapid urbanization and influx of Chinese investments goes beyond moral degradation or safety concerns; it has also raised infrastructural and environmental issues, as well as concerns over the loss of Cambodian identity.

Over the past year, out of the US$1.3 billion invested in Sihanoukville, US$1.1 billion was from China. The inflow of investment is part of China’s Belt and Road Initiative (BRI), and the projects are evidently revamping the city. Across the city, construction sites draped in banners displaying Mandarin and poorly translated Khmer characters fill the streets. Despite the massive influx of investment, the city is barely habitable. The roads are bumpy, undeveloped and prone to flooding during the monsoon season. Residents have also complained about the shortage of water and electricity caused by the excessive construction projects. Evidently, the city infrastructure lacks the essential capacity to handle the hasty inflow of foreign capital from China.

The beach and coastal areas are laden with plastic wastes from the sewage and emit a rancid smell. Most who visit the beach are Chinese men, meeting up with their co-workers. An activist named Ratha from the organization Mother Nature (an NGO committed to protecting Cambodia’s natural heritage), said on the issue: “A lot of casinos and establishments (local and Chinese alike) are causing pollution in Sihanoukville. It is a result of a lack of enforcement by the authorities.”

The director of the department of tourism in Sihanoukville, Mr. Seihasok, has also admitted to the urgency in repairing the city’s sewage system and he has voiced his determination to transform the city into an ideal “clean city and resort” in the next two years. This is an optimistic goal, and the city seems to be a far cry from his lofty ambitions. Authorities would have to quickly waste regulations and enforcements, as well as fervently reinforce the city’s failing infrastructure to meet these goals according Mr. Siehasok’s timeline.

Perhaps a more insidious issue is the loss of Cambodian identity in Sihanoukville. The social implications of the sudden influx of Chinese foreign investment have shifted the city’s demographics. Once a small coastal town frequented by Cambodians, it is now densely populated with Chinese foreigners. Even small local enterprises are threatened by Chinese foreigners who set up small businesses such as restaurants, convenience stores, and barbershops in the city. Though foreign investments tend to be beneficial to developing economies, the situation in Sihanoukville is worrying. Chinese companies prefer to hire Chinese workers due to the language barriers between Cambodians and mainland managers. Yet, this investments seem to have minimal benefits to the local workers.

Instead, there is a widening gulf between the Cambodians of Sihanoukville and Chinese migrants. Anti-Chinese sentiments are rising among Cambodians in the city due to the cultural indifference and the lack of respect for local practices they feel is exhibited by the Chinese migrants.  Additionally, the influx of Chinese investment has caused a rise in rental prices and the cost of living in the city. The burden of increasing rates is heavily borne by locals who receive minimum wages ranging from 100-150 USD per month. The low barriers to entry and tax-free initiative for affluent Chinese from mainland China have proven to create a divisive economy that put locals (especially those who are unfamiliar with Mandarin) at a disadvantage.

Furthermore, there is growing distress among locals that Cambodia will become a client state and lose its cultural essence. Surveying through the city, one can see that these concerns are not unwarranted. The oversaturation of Chinese foreigners and establishments has left many visitors bewildered, as there is little sense of Cambodian identity left in Sihanoukville.

According to a report by the Council for the Development of Cambodia, the fixed asset investment from China alone accounted for 20.2 percent of the total investment in Cambodia from 1994 to 2017. Just a month ago, China pledged to provide close to 90 million USD in military aid for Cambodia, along with other agreements signed by Cambodia’s Prime Minister Hun Sen. These agreements further reaffirm Cambodia’s ties with the superpower, moving away from its European Union (EU) counterparts. With the prospective suspension of the Everything But Arms (EBA) scheme by the EU,  Cambodia may soon face negative economic repercussions. In this regard, it is unlikely to see Phnom Penh distancing itself from its cozy ties with Beijing.

The backlash against Chinese investments stems from Cambodia’s inability to enforce legislative measures against illicit businesses and ecological degradation. Unfortunately, it seems unlikely that China will help to address these social and environmental issues, which have developed alongside Chinese business in Cambodia.

Sihanoukville provides a case study for other developing cities. The unregulated and rapid influx of investment and urbanization proved to be costly for locals and the city’s infrastructure. With increasing capital flow from China, Cambodia needs urgency in the enforcement of their ecological and legislative measures. With China’s desire to extend future BRI projects across South East Asia, more countries should also take note of the situation in Sihanoukville. China’s reputation as a superpower is at stake and money is not a solution.

Lim Hong Jun, Alvan is a junior at Yale-NUS College. You can contact him at