Chinese companies are relocating to Cambodia’s Special Economic Zone to evade U.S. tariffs amid escalating trade tensions. This move has significantly boosted Cambodia’s economy; however, it raises concerns about the country’s dependence on the U.S. market and potential repercussions from any future trade policies. The pattern indicates a shift in manufacturing operations towards Southeast Asia as companies seek alternative bases.

A recent trend has emerged where some Chinese companies are relocating their operations to Cambodia’s Special Economic Zone. Our CBS News team witnessed the extensive construction of new industrial facilities, primarily by Chinese firms seeking to circumvent U.S. tariffs on imports. The economic zone is rapidly developing, with a significant presence of Chinese-owned factories due to the ongoing U.S.-China trade conflict.

The trade war initiated during President Donald Trump’s administration has notably influenced the surge in Chinese investments in Cambodia, which is proximate to China. In 2016, exports from Cambodia to the U.S. totaled around $3 billion; this figure dramatically increased to over $13 billion last year, equating to nearly 30% of Cambodia’s GDP. Currently, over half of the factories in Cambodia are Chinese-owned, with total investments amounting to approximately $9 billion.

As companies continue to migrate to Cambodia to evade U.S. tariffs, concerns regarding the potential repercussions on Cambodia’s economy have been raised. Casey Barnett, President of the American Chamber of Commerce in Cambodia, expressed worries about Cambodia becoming a vulnerable target due to its heavy reliance on exports to the U.S.

One factory owner, Mr. Huang, who has operated in Cambodia for over 20 years, is particularly apprehensive about possible new tariffs on goods produced in Cambodia that are originally from China. His business heavily depends on the U.S. market, with major clients such as Walmart and Costco.

The trade war has escalated since early February when President Trump imposed a 10% tariff on Chinese imports, leading to retaliatory measures from China. Recent threats of further tariffs of up to 20% on all imports indicate a continued escalation. Meanwhile, Chinese authorities are considering countermeasures, which are likely to target U.S. agricultural products.

As the situation develops, Huang anticipates that more Chinese manufacturers will continue to establish operations in Cambodia unless the tariffs on Cambodian exports escalate. He believes that Southeast Asia will increasingly become an attractive destination for Chinese manufacturing.

In summary, the relocation of Chinese companies to Cambodia’s Special Economic Zone is significantly driven by the desire to avoid U.S. tariffs amid the ongoing trade war. This has resulted in substantial economic growth for Cambodia, yet it raises concerns about potential vulnerabilities in its economy. The future might see more Chinese investments in the region as companies seek stability away from tariff implications.

Original Source: www.cbsnews.com

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