China to Increase Rice Imports from Cambodia

China has pledged to continue investing in Cambodia, promising to expand rice imports and increase flights between the two destinations once it reopens borders.
A rice worker in Phnom Penh on December 7, 2021. Picture: Sam
A rice worker in Phnom Penh on December 7, 2021. Picture: Sam

China will expand Cambodian rice imports and increase flights between the two countries, following bilateral talks between foreign ministers Prak Sokhonn and Wang Yi in Myanmar.

On Tuesday, the Chinese Embassy said in a statement posted on its Facebook page that State Councilor Yi and Sokhonn met on July 3 on the sidelines of the 7th Lancang - Mekong Cooperation Foreign Ministers' Meeting in Bagan, Myanmar.

The statement added that China will actively coordinate the return of the first batch of Cambodian students to China for their studies.

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“Both sides expressed willingness to continuously advance the synergy between the Belt and Road Initiative and Cambodia’s development strategy, build the Sihanoukville Special Economic Zone and solidly promote infrastructure projects, such as the Phnom Penh-Sihanoukville Expressway,” continued the statement.

Lun Yeng, Secretary General of Cambodian Rice Federation, said the announcement will be positive for the industry.

“It is a good sign for the rice sector in Cambodia. China currently accounts for 50 percent of total exports,” Yeng said, adding that the federation is hoping to increase exports up to 400,000 tons this year.

Andy Lay, CEO of City Rice Import Export, said China is a major rice buyer but factors, such as price, play a big role in trade.

“China always supports us in terms of volume. However, it is really dependent on price and volume we can offer to them. In the first semester of 2022, China bought most of the rice stock from Cambodia,” he said.

Cambodia has exported 283,675 tons of rice at a value of $173.47 million to international markets in the first five months of 2022. The majority of produce was exported to China followed by the European Union, according to Cambodia Rice Federation.

Exports to China, including Hong Kong and Macao Autonomous Region, was 149,447 tons, or 52.68 percent. This marks a 23.68 percent year-on-year increase compared with the same period in 2021, the rice federation said.

Exports to 23 European countries amounted to 88,167 tons or 31 percent, an increase of 49.26 percent.

China remains the top foreign investor in Cambodia, accounting for nearly half of the total Foreign Direct Investment (FDI) inflow in 2021, according to the Financial Stability Review 2021.

Other Asian contributors include Singapore at 8.3 percent, Korea at 8.1 percent, Japan at 5.9 percent, Thailand at 4.4 percent and Malaysia at 3.8 percent.

The investment from China mainly flowed into the manufacturing, finance, construction, and real estate and accommodation sectors, according to the review.

China’s opening up would give Cambodia some breath. In 2021, there were only 0.2 million visitors to the country, an 85 percent drop, the review said. This led net services to register a deficit of $1.4 billion (-5.4 percent of the GDP).