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PacNet #46: China’s Coercive Economic Diplomacy—A New and Worrying Trend

When the 10 member nations of ASEAN failed to reach agreement on the wording of a joint communique; for the first time in 45 years, most pundits blamed this year’s ASEAN chair, Cambodia, for failing to forge a consensus. Behind Phnom Penh’s passivity, however, was pressure from Beijing to keep any mention of the South China Sea, especially the recent faceoff between China and the Philippines in the Scarborough Shoal, out of the final statement. That the Chinese had sway over Cambodia should not come as a surprise. Beijing has provided over $10 billion in aid to Cambodia. In 2011 alone the amount of foreign investment pledged to Phnom Penh by China was 10 times greater than that promised by the United States. Cambodia’s economic dependence on Beijing is symbolized by the Peace Palace, which was built with Chinese funding, and served as the venue for the ASEAN summit.