OP ED- EDITORIAL: Navigating Cambodia’s Path Amidst Economic Statecraft

In the current global landscape, economic statecraft is emerging as a dominant force, intertwined with the intricate geopolitics of supply chains. This practice, rooted in history since Greco-Roman times, involves leveraging economic prowess to advance foreign policy and national security objectives.

Recent events, notably the coordinated response of the Group of Seven (G7) and its allies to Russia’s war in Ukraine, underscore the growing significance of economic statecraft. Through targeted sanctions and export controls, these nations aimed to freeze assets, reduce dependency, and degrade military capabilities—a strategy increasingly employed to address security threats.

In parallel, currency warfare has become a notable tactic, with the preeminence of the US dollar giving the US significant control over global financial systems. This has prompted adversaries to pursue anti-dollar strategies, evident in Russia’s diversification away from the dollar and China’s gradual internationalization of the yuan.

In order to uphold its technological dominance, the United States has implemented strategies aimed at safeguarding its technological edge, primarily by adopting a more assertive stance on export controls. For instance, the US has unveiled comprehensive export control measures designed to restrict China-based entities’ access to cutting-edge semiconductors and related technologies crucial for manufacturing advanced microelectronics and supercomputers that rely on US technology.

These export controls represent just one facet of a multifaceted approach aimed at impeding China’s efforts to develop its own advanced semiconductor technology capabilities. In addition to export controls, the US government has bolstered its oversight and regulatory authority over Chinese investments in critical US technology firms, offered subsidies to encourage the reshoring of semiconductor manufacturing, and stimulated further research and development investments in emerging technologies through initiatives like the CHIPS and Science Act. Moreover, new regulations have been implemented regarding outbound investments to China, particularly in activities involving advanced dual-use technologies.

China has strategically wielded economic statecraft to extend its geopolitical influence, enticing neighboring nations with deepened trade, investment, and financial integration. Leveraging its burgeoning economic prowess, China has effectively employed various mechanisms of state control to steer its economy and economic agents towards objectives aligned with its national interests and overarching strategic agendas.

Through a concerted effort, China has intensified its sway over Southeast Asian countries, fostering deeper trade partnerships, facilitating substantial investment initiatives, and spearheading crucial infrastructure development projects, thereby solidifying its strategic leverage in the region.

For Cambodia, navigating this complex economic landscape requires strategic foresight and proactive measures, as its survival depends on the economic success and social progress. Moving forward, Cambodia should take the following measures.

First, actively seek to broaden its trade and investment relationships to reduce reliance on any single nation. Diversification not only mitigates risks posed by market volatility but also unlocks new avenues for growth.

Second, get access to larger markets and favorable trade terms which are essential for Cambodia’s economic resilience. This necessitates diplomatic efforts to negotiate beneficial agreements and attract foreign investment.

Third, strengthening domestic industries, including manufacturing, agriculture, and services, is crucial for reducing import dependency and enhancing export competitiveness. Investment in innovation and skills development is key.

Fourth reduce reliance on the US dollar by promoting the use of its local currency, the Riel, and exploring alternative currencies such as the Yuan for international trade settlement. This mitigates vulnerability to fluctuations in the dollar-dominated financial system.

Fifth, actively engage in South-South cooperation. Collaboration with other developing nations can provide valuable insights and support in navigating geopolitical challenges and countering negative economic statecraft measures. By sharing knowledge and best practices, Cambodia can bolster its resilience in an increasingly competitive global arena.

Sixth, develop national economic security strategy by focusing on the promotion of economic base and competitiveness, the enhancement of national capacity to respond to economic sanctions and coercion, the development of integrated and resilient supply chains, and the protection of critical infrastructure.

Seventh, invest in economic intelligence by collecting and analyzing risks associated with the resilience on supply chains, including energy security, industrial espionage, the physical and cyber security of critical infrastructure, the weaponization of economic dependencies or economic coercion.

Cambodia’s ability to adapt and thrive amidst the shifting currents of economic statecraft hinges on strategic diversification, bolstering domestic capabilities, proactive engagement with international partners, developing national economic security strategy, and investing in economic intelligence capacity..

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