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Malaysia lobbies for Chinese help amid fiscal woes

August 20, 2018
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Malaysian Prime Minister Mahathir Mohamad speaks to reporters during a press conference at the Great Hall of the People in Beijing, Monday, Aug. 20, 2018. (How Hwee Young/Pool Photo via AP)

BEIJING (AP) — Malaysia’s leader said Monday that he hoped China would sympathize with his country’s fiscal problems as he met with the country’s leaders after suspending multibillion-dollar construction projects financed by Chinese loans.

Prime Minister Mahathir Mohamad said at a news briefing with Chinese Premier Li Keqiang that he was seeking support from China’s leaders over Malaysia’s situation as it deals with a mass of debt and other economic problems created under previous administrations.

“We hope also to get China to understand the problems we face ... and I hope that China, and I believe that China will look sympathetically toward the problems that we have to resolve and perhaps help us to resolve some of our internal fiscal problems,” Mahathir said.

Mahathir is a vocal critic of large-scale investment in his country backed by loans from Beijing and has tested Malaysia’s ties with China by suspending Chinese-financed infrastructure projects.

He was expected to attempt to renegotiate the terms of those contracts during his meetings with Chinese officials, including President Xi Jinping.

Without giving any specifics, Chinese state broadcaster CCTV quoted Xi as telling Mahathir that their nations should “properly handle the existing problems based on the principle of mutual respect and friendly consultation.”

Days before heading to Beijing, Mahathir said Malaysia wanted to cancel a Chinese-backed $20 billion East Coast Rail Link and two energy pipelines worth $2.3 billion.

Malaysia’s new government has called for drastic cuts to the projects’ ballooning cost, which it estimates at more than $22 billion. Some of that money has already been paid and could be difficult to recoup.

China has said the projects bring mutual benefits to the two sides and any disputes should be dealt with by the commercial parties involved.

The projects are key components in Xi’s signature “Belt and Road” initiative to construct ports, railways and other trade-related infrastructure across Asia, mostly built by Chinese contractors and financed by loans from Chinese state banks.

Belt and Road projects in Thailand, Sri Lanka, Pakistan and other countries have run into complaints that they are too costly, give too little work to local companies and possibly fuel corruption.

The cancellation of projects in Malaysia would create huge losses for the Chinese partners involved, said Jia Duqiang, a researcher at the Chinese Academy of Social Science’s Institute of Asia-Pacific Studies.

“Mahathir is worried about Malaysia’s ability to proceed with the projects, but there are also political factors because the projects had been decided by the former government,” Jia said.

Despite that, Mahathir’s government appears open to further Chinese investment, such as in high-tech industries, e-commerce and vehicle production, Jia said.

Mahathir courted Chinese e-commerce investment in his country at the start of his visit on Saturday.

Making his first trip to China since his stunning electoral victory three months ago, Mahathir toured the campus of Chinese online shopping giant Alibaba Group in the eastern city of Hangzhou. There he met with the company’s founder, Jack Ma, and stressed his hopes for further collaboration.

He also visited Geely, one of China’s biggest independent automakers. The company owns 49.9 percent of Proton, a Malaysian automaker.

Along with their economic frictions, China and Malaysia are parties to the dispute over waters and islands in the South China Sea.

Malaysian Foreign Minister Saifuddin Abdullah said last week that Malaysia’s new government would adopt a firmer stand in tackling the decades-old territorial row amid China’s aggressive expansion in the area.

Mahathir has said warships should be removed from the South China Sea.

Saifuddin said that Mahathir was “sending a signal that we want to be more firm, more serious” in handling the maritime dispute.

A 2002 declaration of conduct by claimants has “no fangs,” and China’s continued militarization of the area could escalate regional tensions, Saifuddin told Parliament.

Mahathir’s predecessors rarely criticized China, Malaysia’s top trading partner.

In speaking to the press, neither Mahathir nor Premier Li made reference to the case of fugitive Malaysian financier Low Taek Jho, who has reportedly been living freely in China despite being wanted for questioning by Malaysian and international authorities.

The U.S. Justice Department alleges Low was a key figure in the theft and international laundering of $4.5 billion from Malaysia’s 1MDB investment fund by associates of former Malaysian Prime Minister Najib Razak. Najib had worked to strengthen relations with China before his shock election loss to Mahathir and subsequent arrest last month for alleged illegal financial dealings.

Asked about the case at a daily news briefing, Foreign Ministry spokesman Lu Kang said he had no specific information, but that, “in principle, we would like to carry out normal judicial cooperation with other countries based on consultation.”

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