Malaysia hopes China will sympathize with its fiscal woes
BEIJING вЂ” MalaysiaвЂ™s leader said Monday that he hoped China would sympathize with his countryвЂ™s fiscal problems as he met with the countryвЂ™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 ChinaвЂ™s leaders over MalaysiaвЂ™s situation as it deals with a mass of debt and other economic problems created under previous administrations.
вЂњWe hope also to get China to understand the problems we face вЂ¦ 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,вЂќ Mahathir said.
Mahathir is a vocal critic of large-scale investment in his country backed by loans from Beijing and has tested MalaysiaвЂ™s ties with China by suspending Chinese-financed infrastructure projects.
HeвЂ™s expected to attempt to renegotiate the terms of those contracts during his meetings with Chinese officials, including President Xi Jinping.
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.
MalaysiaвЂ™s new government has called for drastic cuts to the projectsвЂ™ 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 part of XiвЂ™s signature вЂњBelt-and-RoadвЂќ 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 ScienceвЂ™s Institute of Asia-Pacific Studies.
вЂњMahathir is worried about MalaysiaвЂ™s ability to proceed with the projects, but there are also political factors because the projects had been decided by the former government,вЂќ Jia said.
Despite that, MahathirвЂ™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 companyвЂ™s founder, Jack Ma, and stressed his hopes for further collaboration.
He also visited Geely, one of ChinaвЂ™s biggest independent automakers. The company owns 49.9 per cent of Proton, a Malaysian automaker.