China business fails in crucial airport project in Cambodia.

 

A large airport project in Cambodia, in the eastern neighbourhood of India, that was sponsored by China has been put on hold since the Chinese company that was awarded the contract allegedly ran out of money.

The anticipated investment for the proposed airport on 300 hectares of land was more than $ 80 million, but ET has learned that the Chinese company apparently suffered significant losses because of Covid. According to insiders, this incident has highlighted some of the flaws of Chinese companies working on international projects.

The province of Mondulkiri in Cambodia was supposed to house the airport. Despite having the biggest land area in the nation, it has the fewest people per square mile.

A crucial component of the BRI to link Southern China with the Indian Ocean region, Cambodia is one of China's closest friends in the Indo-Pacific.

There have been many agreements between Cambodia and China since 2010, beginning with the Comprehensive Strategic Cooperative Partnership, including the BRI in 2016 and the Cambodia-China Free Trade Agreement in 2020.

All of these agreements cover a range of topics, including business and trade, travel and tourism, technology, and even the armed forces and law enforcement. China accounts for more than 50% of all foreign direct investments in Cambodia, making it the top source of capital.

The Council for the Development of Cambodia (CDC) authorised Chinese investments in fixed assets worth $2.32 billion in 2021, up 67% from $1.39 billion the previous year. 2021 saw a 38% increase in bilateral trade from the previous year to $11.2 billion, with Cambodia continuing to run substantial annual trade deficits.

According to sources, imports from China into Cambodia have been expanding "far more quickly than exports."

With a $4.05 billion outstanding loan as of December 31, 2021, China is the single largest bilateral lender in Cambodia in terms of credit and one of the main official development assistance (ODA) or aid partners.

Since 2004, China has funded numerous projects in Cambodia. The majority were financed with concessional loans; two were financed with non-concessional loans, while 66 were funded with grants.