Malaysia's rejection of China projects emboldens others against BRI

Prime Minister Tun Dr Mahathir Mohamad and China’s Premier Li Keqiang speak during their meeting at the Great Hall of the People in Beijing August 20, 2018. — Reuters pic
Prime Minister Tun Dr Mahathir Mohamad and China’s Premier Li Keqiang speak during their meeting at the Great Hall of the People in Beijing August 20, 2018. — Reuters pic

KUALA LUMPUR, Sept 26 — More countries are taking Malaysia’s cue in reconsidering projects involving Chinese firms, as concerns grow over the ominous nature of Beijing’s ambitious Belt and Road Initiative (BRI).

Prime Minister Tun Dr Mahathir Mohamad moved quickly to try and cancel such projects shortly after coming to power in May, succeeding in terminating three gas pipeline projects worth billions owing to allegedly suspicious payment structures.

He has also suspended the East Coast Rail Link, which the Financial Times has billed as BRI’s flagship project in Malaysia.

The FT said this apparent defiance has encouraged others to relook their part in the BRI that is being viewed with suspicion after it left two benefactors, Sri Lanka and Pakistan, struggling under a mountain of debt.

“Other countries are watching to see how a newly elected government is able to potentially renegotiate deals,” Jonathan Hillman, director of the Reconnecting Asia Project at the Centre for Strategic and International Studies, told to the FT.

During his trip to Beijing, Dr Mahathir openly announced that several major infrastructure projects previously awarded to Chinese firms were cancelled; he subsequently clarified that these were deferred instead of terminated outright.

However, the backtracking has also been seen as a move to allow Beijing to save face — critical for the Asian superpower’s culture — as Putrajaya still proceeded with discontinuing the three pipeline projects and suspending the ECRL.

State-backed China Communications Construction Company (CCCC), the main contactor of the ECRL, has pushed Malaysia for a quick decision on its intentions for the rail link, but has largely been ignored.

Peter Mumford, Asia director at the Eurasia Group political risk consultancy, said the ramifications of Malaysia’s actions have more to do with diplomacy than finance, as both must find a way to ease out of the deals without harming the BRI.

On its part, Malaysia has repeatedly affirmed its commitment to the BRI, even if only in words.

“They need to give Mahathir something that he can sell to the Malaysian public ... but in a way that doesn’t encourage other countries to unilaterally threaten to cancel [BRI projects],” Mumford was quoted as saying.

Because of the way BRI is intertwined with the spread of Beijing’s influence, it has invited comparisons to the Marshall Plan, the US initiative that was as much to fund the post-Second World War reconstruction of Europe as it was to stymie the spread of the Soviet Union.

Dr Mahathir was also blunt about this during his trip to Beijing last month, when he broached the topic of “neo-colonialism” to set the tone ahead of his meeting with Chinese leaders.

Beijing has denied this view of the scheme, with China Foreign Minister Wang Yi expressly rejecting the allegation that the BRI was a form of the Marshall Plan or any kind of geostrategic concept.

Instead, China insists it is purely about trade.

The issue traces back to China President Xi Jinping’s effusive description of the BRI on its introduction in 2013, when he spoke of it in expansive terms that went beyond pure trade and touched on geopolitical considerations.

Five years on, China is still struggling with this view, forcing representatives to defend the BRI’s motives at every opportunity.

“People’s livelihoods and economic development [in host countries] have been boosted [by BRI],” Ning Jizhe, vice-minister of the National Development and Reform Commission, had said at a press conference to mark the BRI’s fifth anniversary this month.

“No so-called ‘debt traps’ have been created.”