How Will Cambodia's Trade Relationship with China Be Strengthened?

CGTN Europe

Dr. Yan Liang, an economics professor at Willamette University, speaks to CGTN Europe about the significance of China President Xi Jinping's visit to Southeast Asia.

Transcript

00:00Yan Yang is a professor of economics at Willamette University.

00:03Professor, welcome.

00:04How is this visit expected to improve trade between Cambodia and China?

00:10Yeah, good to talk to you, Jamie.

00:12So I think this is a very significant trip,

00:15as we know that China has been Cambodia's largest trade partner.

00:18Last year, the two-way trade reached $15 billion,

00:22but of course, with a very significant trade surplus on China's side.

00:26So as you just reported, and you talked about,

00:28that Cambodia is now in a very tricky position,

00:32as many of the Southeast Asian countries,

00:34where there's a 49% of tariff rate earlier was imposed by the United States.

00:38Now, of course, it's with a 90-day pause, but pause is a pause,

00:42so the future is still very uncertain.

00:43So I think this trip is really going to help to strengthen

00:47the trade relationships between these two countries.

00:50So I think China will continue to export some of the very essential machineries,

00:54raw materials for the industrialization for Cambodia.

00:58But at the same time, I think China will open up the markets more

01:01to import from Cambodia, you know, when it comes to agricultural products,

01:05jewelries, and many other products, I think, are in the plan.

01:10And also more cooperation on infrastructure,

01:12which I think are also very essential for Cambodia's economic development.

01:16You describe Cambodia as in a rather tricky position.

01:20That's something of an understatement, perhaps, in the middle of a global trade war.

01:25What about the timing of this visit?

01:28What should we make of it?

01:29Right, so I think you're absolutely right.

01:34It is an understatement.

01:35It's such uncertain, volatile times, and we know that many of the countries

01:39do rely on the integration into the global market, you know,

01:42being very small-sized, very resources-constrained domestically.

01:46But, of course, Trump is, you know, adamant in imposing tariffs

01:50and waging this trade war.

01:52So I think countries would have to find alternatives.

01:55On the one hand, you know, smaller countries may have to negotiate

01:58with the United States, which I think this is why China is saying,

02:02you know, we are working together with you.

02:04We want to have a collective response to enhance our bargaining power.

02:08And I think the ASEAN countries can definitely do a better job on that.

02:12On the other hand, I think China is also trying to forge

02:15this sort of regional integration in a more forceful manner, right,

02:21because China and other countries, South Korea and Japan,

02:25and also ASEAN countries have already panned the RCEP.

02:28And so the next step is really to improve the regional trade integration.

02:33So I think this would really help countries like Cambodia

02:36to diversify their export, you know, destinations

02:39and also improve their trade competitiveness.

02:44Diversifying is one thing, but many countries, for obvious reasons,

02:48will be considering pivoting away from exporting to the United States

02:53given these punitive tariffs.

02:56Do you think that's likely to be a temporary pivot,

03:00or will it be a permanent pivot away from U.S. markets?

03:05I think that's a great question.

03:09I think what these countries are, you know, sort of thinking about

03:13is that even this tariff is, you know, going from temporary to permanent,

03:18you know, there's still so much uncertainty, right?

03:21So even if this tariff troops, right, may be extended in the future,

03:25but I think that really creates a lot of uncertainty.

03:29And also the U.S. is essentially undermining, you know,

03:31its own credibility as a trade partner in this sort of so-called rule-based trading system.

03:36So I think either way, even if Trump tomorrow says,

03:40we are going to extend that the pause, we're going to make it permanent.

03:43Now, you know, Cambodia is going to only have 10% of tariff.

03:47I think that was still not going to ease the doubt and anxiety of the countries

03:52because we know that Donald Trump, you know, is being unpredictable.

03:55And, you know, so I think either way, countries will continue to diversify

04:00and, like you said, pivot away from the United States

04:02because that is clearly Trump's choice, right?

04:05He does want to decouple, I think, from the major trading system

04:10that we're seeing, you know, in the past 80 years.

04:12And so I think countries are prepared for that.

04:14Yan Liang, good to see you.

04:16Thanks so much for coming on the program.

04:17Yan Liang, Professor of Economics at Willamette University.

04:20Thank you for having me.

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