The once-sleepy beach town of Sihanoukville has been transformed by Chinese investment – and the sheer speed of development has divided locals

Inside a lavishly decorated casino where chandeliers hang from the ceiling, cigarette smoke lingers in the air and platters of mango are served to gamblers, a game of baccarat is getting heated. Cards are slammed down, $100 bills are brandished and the gathered crowd of Chinese tourists shout excitedly.

This is not Las Vegas, nor is it Macau. It is Sihanoukville, a once-sleepy city in Cambodia that has become a ballooning enclave for Chinese-run casinos – despite gambling being banned. These towering skyscrapers and vast domed structures covered in flashing neon signs have transformed Sihanoukville beyond recognition in less than two years. It will have more than 70 of them by the end of 2018.

Q&A Cities of the New Silk Road: what is China's Belt and Road project? Show Hide China’s Belt and Road Initiative is a huge, $1tn infrastructure project to better connect China – and Chinese goods – with the rest of the world. It is meant to be a 21st-century "silk road", made up of a "belt" of overland corridors (including roads, bridges and railways) and a maritime "road" of shipping lanes. Its wider ambitions are harder to pin down. Is it a bid by China for world domination, or simply a move to prop up Chinese companies at home? Is there a grand strategy, or is it just a rebranding of existing projects? In Cities of the New Silk Road we have endeavoured to find out, by exploring the project's tangible results so far – from the newly built city of Khorgos on the Kazakhstan border to Duisburg, dubbed “Germany’s China city”. Our correspondents have reported from the “next Dubai” rising out of the sea in Sri Lanka, the nascent port of Gwadar in a restive province of Pakistan, the sleepy Tanzanian village that could be transformed into Africa’s largest port, and more.

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As home to Cambodia’s only deep-water port – part of a vital trade route for President Xi Jinping’s Belt and Road development initiative – the city has become a focal point for Chinese investment. Vast Chinese-run construction projects are visible across almost every area of the city and its high streets are now lined with majority-Chinese businesses and restaurants. Prime minister Hun Sen’s willing embrace of Chinese investment, unlike neighbouring countries Thailand, Myanmar and Vietnam, has ensured Cambodia is at the core of belt and road plans in southeast Asia. The southern coast of Cambodia is now home to $4.2bn worth of power plants and offshore oil operations all owned by Chinese companies. Beyond Sihanoukville, belt and road money is financing a new highway to Phnom Penh and a bigger airport in the capital.

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The speed of development has left many locals unnerved. Some estimate that the Chinese make up almost 20% of the town’s population. Of the total number of foreign arrivals in 2017, nearly 120,000 were Chinese – an increase of 126% year-on-year. This fear has fuelled rising hostility among locals towards the new influx of Chinese residents. The two communities live side-by-side in Sihanoukville but rarely interact.

Facebook Twitter Pinterest The Sihanoukville port has become a vital trade route for the Belt and Road development. Photograph: Pring Samrang/Reuters

Sitting outside her family restaurant and guesthouse in Otres beach, 23-year-old Deu Dy gestures with concern to the huge Chinese resort complex being built next door. It has gone up in less than a year, with construction 24 hours a day.

“Everything has changed in Sihanoukville in just two years,” says Dy, who is learning Chinese to try to integrate better with the city’s new community. “Before it was really quiet here, but not any more with all the Chinese construction. I am worried that it’s very destructive to the environment, all this building … and what will happen when all the construction is finished and thousands more people come? There will be no Cambodia left in Sihanoukville.”

Before it was really quiet here, but not any more with all the Chinese construction Deu Dy

Like many local business owners in the city, she is regularly approached by Chinese investors wanting to buy her inn and offering her very good money. It is tempting, now she says that her family’s profits have collapsed: the 24-hour construction next door has driven away their European customers, while Chinese tourists prefer to stay in Chinese-run hotels and resorts.

While not directly funded by Belt and Road money, the casinos and condo complexes are a byproduct of a city that has given itself over entirely to Chinese investment. Of the $1.3bn (£1bn) invested in Sihanoukville over the past year, $1.1bn has come from China. Chinese casino owners have also taken advantage of the nonexistent gambling regulation and lax money-laundering laws to set up an empire that is accessible only to foreigners – because gambling is still illegal for Cambodian locals.

Facebook Twitter Pinterest An illustration of plans for Kai Bo Plaza in Sihanoukville.

Many of the new Chinese businesspeople arriving in Sihanoukville are here to take advantage of a new China-Cambodia tax-free economic zone. The majority of the 100-plus factories in the zone are run by Chinese companies, and a further 200 mainly Chinese companies - producing consumer goods and garments – will be part of its ongoing expansion. A four-lane highway is being built by a Chinese construction company to connect Sihanoukville to Cambodia’s capital, Phnom Penh.

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For the locals, this ongoing transformation is divisive. Some are benefiting from an influx of money the city has never seen before, but many are being driven out by the skyrocketing cost of living.

Kong Samol, 32, a tuk-tuk driver, is one of those losing out. “Because of all the Chinese businessmen here, my expenses have gone up but my earnings have gone down,” he says. “My rent has increased from $50 to $150 and it’s unaffordable for me. The owner wants to kick me out of my room so he can rent it to the Chinese who will pay so much more than I can afford. I know so many people who came here for work but have moved back to their villages because rent is impossible now.”

Facebook Twitter Pinterest Sihanoukville has changed dramatically in two years.

Hemming clothes outside his sewing shop in the shadow of a new Chinese casino, Seng Lim Huon says Chinese investment is widening the divide between rich and poor. “The people who own the land here and have houses to rent, they can live bigger and bigger because they can earn so much more than before,” he says, adding that rooms he would once rent out for $500 per month to local residents now go for $4,500 to Chinese visitors. “But for people who don’t own land, it is a terrible situation.”

Svay Sovana, 42, was among those overjoyed by Chinese investment in Sihanoukville. She used to earn $1,000 per month renting out a three-storey house to Europeans; she will earn $15,000 when her new Chinese tenants move in this month.

The Chinese have much more money than Cambodians, and that means they have the power here now Srey Mach

The transformation has also brought employment to the city. While a large number of Chinese workers have been brought in to staff casinos, there are also more jobs being offered to Cambodians, who earn between $120 and $200 a month (considered decent wages). Cambodian workers on Chinese construction sites earn three times what they used to on local projects.

More grandiose and divisive projects are cropping up by the day. This week saw the announcement of a new $1bn joint Chinese-Malaysian-run Sihanoukville resort Wisney World, which will feature water parks, hotels, casinos, malls, gardens and churches across 65 hectares of land. In a sign of the disconnect between Chinese investors and those in local government, Sihanoukville’s provincial governor, Yun Min, said he had never even heard of the project.

Facebook Twitter Pinterest Chinese investment has brought wealth to the city – but it hasn’t reached the whole community.

Sihanoukville is no stranger to foreign investment. Before the Chinese it was the Russians who pumped money into local resorts and restaurants. The relationship is memorialised by a large, fading billboard outside an abandoned resort building site, which pictures long-serving Cambodian prime minister Hun Sen shaking Vladimir Putin’s hand.

However, the key complaint for many in Sihanoukville is that even though Chinese investment brings wealth, it is mainly kept within their own community. Chinese residents and visitors buy from Chinese businesses and visit Chinese restaurants and hotels, ensuring the trickle-down effect is minimal.

I think the Chinese government and the Chinese embassy accepts there is rising anti-China rhetoric in Cambodia Vannarith ​Chheang

“Chinese products are very expensive, it is not good for us, and the Chinese buy only Chinese goods so we are very separate,” says Srey Mach, 43, shredding morning glory outside her shop while the sound of construction thunders all around. “Even the vegetables and fruits they export from China. The Chinese have money, much more money than the Cambodians, and that means they have the power here now.”

As one of south-east Asia’s poorest countries, suffering from basic power and sanitation issues, Cambodia has welcomed the hefty cheques, soft loans and infrastructure plans from China with open arms. Between 2013 and 2017, China invested $5.3bn in the country – that’s more money than the Cambodian government did. Cambodia’s reliance on China has become even more pronounced in recent months after the US and EU pulled funding in the light of recent authoritarian political measures.

The speed at which money is pouring in has also left local authorities in Sihanoukville with little time and resources to create regulation to manage either the dark underbelly of the Chinese casinos – sophisticated financial crime and money laundering – or the growing local discontentment.

Facebook Twitter Pinterest Deu Dy outside her family’s guest house in Otres beach.

Locals seethe when they discuss the problem of organised crime: there have been incidents of kidnappings as well as an increase in drink-driving accidents and prostitution. Earlier this year, the regional governor complained that the crime rate in the province was increasing, in part due to an influx of “Chinese mafia [who] disguise themselves to commit various crimes and kidnap Chinese investors … causing insecurity in the province”.

Yet with so much at stake in Cambodia, the Chinese are equally keen for the tide not to turn against Belt and Road. Sihanoukville is at the heart of this.

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“The image of China in Cambodia has been affected by what’s happened in Sihanoukville,” says Vannarith Chheang, co-founder of the Cambodian Institute for Strategic Studies. “I think the Chinese government and the Chinese embassy accepts there is rising anti-China rhetoric in Cambodia.”

Highlighting ongoing negotiations between the two governments in an effort to tackle crime and local ill feeling, he adds: “It is important for China to win the hearts of the Cambodian people. If China fails in Cambodia it will fail in the region.”

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