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Chinese President Hu Jintao’s four-day state visit to Cambodia this weekend marks the culmination of a massive surge in investment and trade that has transformed this impoverished nation. Take a drive along National Highway 3 or 4 out of the capital Phnom Penh and you will see vast tracks of new Chinese-owned factories and huge billboards advertising land for rent in Chinese.
China is now the single largest foreign investor in Cambodia, while trade between the two countries has soared over the last few years. Overall bi-lateral trade was valued at US$944 million in 2009, US$1.44 billion in 2010, and, according to China’s ambassador in Phnom Penh, Pan Guangxue, reached US$2.5 billion last year.
But while President Hu is being feted by Cambodia’s political elite, the workers employed in those Chinese-owned factories will have little to celebrate. Cambodia’s factory workers are among the poorest paid in Asia, garment workers, for example, earning around US$70 per month.
And this is precisely why Chinese factory owners are setting up shop on the outskirts of Phnom Penh rather than at home where wages are rising. This, and the fact that the Cambodian authorities are making it very easy for them to invest. Cambodia does have a strong trade union movement but there is no indication at the moment that the new Chinese factory bosses will listen to the workers’ demands. Nor is there much evidence the Cambodian government will put pressure on them to listen. Indeed, there is a real danger that Chinese businesses will simply try to replicate the exploitative model of labour relations that Chinese workers are now beginning to reject at home.
Cambodia has a small population of around 15 million, but it is a rapidly growing, very young (the median age is only 23 years) and predominately rural population. Much like their counterparts in rural China ten or 20 years ago, these young people have very few employment options but to work in the factories. There are jobs in the rapidly growing tourist industry of course but competition is intense and even young Cambodians with degrees from well-known universities in Phnom Penh are struggling to find employment.
China is approaching and may have already reached the so-called “Lewis turning point,” where the “unlimited labour supply” from a developing county’s rural labour surplus finally dries up and wage demands start to increase, but in Cambodia there is clearly still a long way to go. Cambodia’s workers are going to have a tough fight on their hands to push for a decent wage in a city where the cost of living is increasing all the time and new job applicants queue outside the factories every day.