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A Cambodian cement plant first donated by communists now faces crowding out by Chinese enterprise. (Photo by Akira Kodaka)
Cover Story

Cementing the China-Cambodia relationship

A 54-year-old factory reflects tumultuous history

KAMPOT, Cambodia -- Cambodia and China established diplomatic relations on July 19, 1958. Celebrations of the 60th anniversary have seen many flattering exchanges between their respective leaders, but the relationship has been anything but placid over the years.

A cement plant in the southwestern province of Kampot, with its rich limestone deposits, tells a tumultuous story. Cambodia Cement Chakrey Ting Factory was revived in August 2014 with Shanghai-listed Huaxin Cement as the majority shareholder. The modern facility represents a $100 million investment with a 1.2 million ton annual capacity.

Chakrey Ting dates from a meeting in 1955 between Chinese Premier Zhou Enlai and Cambodia’s prime minister, Prince Norodom Sihanouk, at the first Afro-Asian Conference, better known as the Bandung Conference.

China was mounting a charm offensive in Cambodia, which declared independence from France in 1953, and its intent was to prevent Cambodia entering the U.S. sphere. With the U.S. presence mounting in Southeast Asia, China provided “unconditional economic aid” to show its commitment to helping Cambodia stand on its own feet economically.

In June 1956, China pledged 8 million pounds sterling in aid, principally to build factories. Details were finalized in early 1958, and involved four plants to manufacture cement, textiles, paper and plywood. Chinese scholar Zhang Mianli records on an official history website in Beijing that of the four projects, the one Cambodia wanted the most was the cement plant, but it proved to be the most technically challenging. There was even talk of cancelling it. It was finally completed in 1964, and named the Queen Kossamak-Liu Shaoqi Cement Factory after Sihanouk’s mother and China’s then president. Liu was subsequently ousted and died five years later in the Cultural Revolution.

Domestic politics then intervened. The factory fell idle following a U.S.-backed coup in 1970 that installed Gen. Lon Nol and forced Sihanouk to take refuge in Beijing, where he became the nominal head of a front that included the Khmer Rouge. When the Khmer Rouge took power in 1975 and established Pol Pot's Democratic Kampuchea regime, the plant was restored to life -- but only briefly.  

Cambodia's Prince Norodom Sihanouk, left, was received by Chairman Mao at Beijing's Great Hall of the People on May 1, 1970, after being ousted in a U.S.-backed coup in March. (Photo by Xinhua/Kyodo)

After Vietnam invaded at the end of 1978, the plant was closed again. According to accounts of former workers published in the Chinese-language Khmer Times, machinery was removed by Vietnamese troops.

Huaxin, the plant’s latest owner, did not respond to interview requests from the Nikkei Asian Review, but its official website says the investment is a "response to the Belt and Road Initiative," which is being heavily promoted by President Xi Jinping.

The reopening also reflects the need to cut cement production in China, where there has been serious overcapacity, as with steel and aluminum. Li Yeqing, the president of Huaxin, said on the company’s website that China has been seeking a "new normal" since 2014 to address "earth-shaking changes" that have caused "long-term overall excess capacity" in the domestic cement market. The company has also built a plant in Tajikistan.

Cambodia has its own capacity issues, however. Thailand’s Siam Cement also has a plant in Kampot. SCG’s competitor Siam City Cement and Chip Mong Group, a local construction company, launched another there in February that can produce 1.7 million tons annually. It was built by Citic Heavy Industries, a Chinese state-owned contractor.

In May, Huaxin’s competitor Anhui Conch Cement started producing cement at a plant in the western province of Battambang that will have a 1.8 million ton capacity in its first phase. In its annual report released in March, Huaxin conceded that Cambodia "may have entered the phase of overcapacity in 2018."

It seems the plant first donated by communists now faces crowding out by Chinese enterprise.

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