On China– Civilization or State

October 13,2018

by Dr. Rais Hussin

http://www.malaysiakini.com

COMMENT | Take away the invention of paper, gunpowder and the abacus, three of the finest contributions of the Chinese civilisation to humankind, there is a motley collection of philosophical systems in China that makes China one of the most progressive and advanced entities in the world.

Indeed, it was the late Dr Lucian Pye, a political scientist at MIT, who famously said that “China was a civilisation pretending to be a state.” Pye wasn’t making the observation in jest. He was simply commenting in a matter-of-factly manner.

The problem with China is it switches on and off, with this civilisational awareness. To the outside world, China has urged at least 68 countries to be a part of its “Belt and Road Initiative” (BRI). Thus from October 2013 onwards, President Xi Jin Ping fired the first salvo in Almaty, Kazakhstan, followed by a second boost by urging Indonesia to be a part of the BRI too.

Surely, China could not have missed the plain fact that these were two Muslim countries that have renounced Communism in all its forms.

 

Yet, regardless of whether it was Kazakhstan or Indonesia, the leaders of these two countries dealt with China, alas, as a “state” even as a civilisation, too, since China was propagating the importance of restoring the ancient

For the lack of better word, these two countries, including Malaysia, adopted the Confucian concept of “Chung Yung” or “the Middle Way.”

Instead of trying to distance themselves from China or BRI, Kazakhstan, Indonesia, and Malaysia, three of the most progressive Muslim countries the Islamic world has yet witnessed, sought to engage China, indeed, to give President Xi Jin Ping’s grand strategy a huge boost.

While it is true that China has pledged close to US$100 billion to fund the Asian Infrastructure Investment Bank (AIIB) with another US$50 billion for the Silk Road Fund, it is also true that some countries who took the loans have found themselves unable to repay these debts.

Sri Lanka, Maldives, Pakistan, potentially and Tonga in the Pacific, are now on this list. Even Venezuela, which falls out of the scope of BRI, has faced immense headwinds. Caracas has had to make good on its debt commitments to China by way of bartering their oil exports back to China.

Beijing, for the lack of better word, isn’t giving cost-free financial assistance and loans. They carry a huge impact on the recipient countries.

Even the Philippines, which was promised a total of US$2.6 billion worth of Chinese development aid – largely to build up Mindanao and Manila – has yet to see the Chinese money rolling in. When the money does not come in, President Roberto Duterte is subsequently accused by his political opponents and the people of having been misled by the Chinese.

The political cost to Duterte, once again, is huge, as his support would begin to bleed as long as the Chinese financial support does not come flowing as had been promised.

In Malaysia, one of our own infamous citizens, Jho Low seems to be cowering under the protection of China. Some Chinese shell companies, if the accounts of the Ministry of Finance in Malaysia are to be taken at face value, have been used as a scheme to launder the money of 1MDB.

 

In spite of the high tolerance of China’s “dream”, “design” and “development” priorities, many Muslim countries are now expected to just sit and watch – with their mouths shut – when up to one million Uyghurs in China are subject to “re-education” camps.

‘Made in China’

The authorities in Xinjiang (known earlier as Urumqi) appear to challenge the habits and lifestyles of local Muslims wholesale, by fighting what they called “pan-halal” tendencies.

Muslims have heard of “kosher” which is Jewish dietary preparations consistent with Islamic standards but none have ever heard of “pan-halal” habits.

Thus it must surely come as a shock to more than 1.8 billion Muslims the world over that their potential sensitivity to the sources of their food and consumer items can now be regarded in China as something verging on “extremist tendencies.” Does this mean Muslims are not welcome in China?

This is odd because as Japan is preparing for the Tokyo Olympics 2020, the authorities in Japan have asked more Islamic countries, especially Malaysia, to guide them on how to serve halal food. Beijing has hosted the 2008 Olympics before and the 2010 Shanghai World Exhibition.

In fact, “Made in China” is practically the three word that keeps the world of manufacturing – which includes canned food – thriving and growing from 1976 onwards when China opened up to the rest of the world. How can China now be biting the hand that feeds it?

In all the confusion, Muslims are told to find the Middle Way. This is known as the Aristotelian Way of the Mean too. China, as mentioned, had earlier been ingrained with the concept in the form of “Chung Yung”. In fact, Jewish philosopher, Moses Maimonides once affirmed that when all laws failed, the one principle to guide anyone is “to not do others what you do not want others to do to you” – which again is a Confucian concept familiar to China.

“Pan-halal,” is befuddling and confusing, since it is an extra-judicial attempt to ask all Muslims in Xinjiang (Urumqi) and China to conform to the diktat of the Chinese Communist Party.

But how can those countries in the Islamic world, especially Turkey, that wants to help China in BRI, do exactly that when China isn’t friendly to its Muslim brethren? It is time for China to give the world some clear answers. And, the clarity cannot morph into scripted answers on how the campaign to stop “pan-halal” habits is a way to contain “separatism,” “secessionism,” and “splittism”; also known in China as “the three evils.”

The “three evils” are not a crucible supported by any member state in BRI, as all are aware of the extent to which these three tendencies will introduce chaos to the utmost degree. But no one wants to see Islamophobia in China too, especially one that is drummed up by the local party cadres in Xinjiang (Urumqi). The sooner China respects Muslims within its own confines and the larger Islamic world, the better.

By this token, contrary to what was reported in The Star Malaysia, that Malaysia is ‘defying’ China by releasing 11 Turkic Uyghur from detention, and allowing them to fly to Turkey, it should be stated that Malaysia is a country that follows the rule of law since the electoral turn over of the government on May 9, 2018.

If China should wish to challenge the release, they are welcome to do so in a court of law too in Malaysia.The world sure hopes we are not witnessing another Tibet in progress. This time in Urumqi or Xinjiang.

Dr. RAIS HUSSIN is a supreme council member of Bersatu. He also heads its policy and strategy bureau.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

 

In defence of Mat Sabu’s ‘18-wheeler’ diplomacy

October 1, 2018

Opinion

by Phar Kim Beng

http://www.malaysiakini.com

COMMENT |

Defense Minister Mohamad Sabu has reached a small milestone. He was in New York City between September 23-29, one of the longest trips ever by a Malaysian Defense Minister, and among the few to attend the United Nations General Assembly so soon after his appointment to cabinet.

The length and the early trip to the United States are key, even if it is his 10th visit in the last four months, from the Shangri-La Dialogue in Singapore – during which he emphasised the centrality of ASEAN and the importance of the ‘Mahathir doctrine’ – to his visit to Lebanon in June.

To those not in the know, southern Lebanon is one of those delicate areas where conflicts could erupt at any given time. Malaysian peacekeepers are there to help maintain some semblance of order as part of the UN Interim Force in Lebanon (Unifil).

Malaysians blue helmets have always been deeply respected. Be it in Congo in 1962 or Somalia in 1989, Malaysian soldiers have always been at the forefront of peacekeeping efforts.

Infamously, the book and movie Black Hawk Down got its details wrong. It wasn’t just the Pakistani blue helmets who retrieved the American rangers trapped in the fire fights in the centre of Mogadishu, Malaysians also saved the day.

Tariq Chaudhry, a UN diplomat, has always tipped his hat to the bravery of the Malaysian soldiers.

His doctorate thesis on the Organisation of Islamic Cooperation at Cambridge went as far as accrediting the Malaysian armed forces in maintaining the peace in Bosnia after the Dayton Agreement in 1995.

Mat Sabu is aware of this glowing legacy. He celebrates them, and is able to hit it off with Dr Mahathir Mohamed precisely because both agree peace is something which Malaysia can do and has done the world over.

Mohamad also believes that wars are a blight on humanity. One should avoid such aggressive behaviors. This is again a position not unlike the view of Mahathir, who also hates wars.

 

Just yesterday, Mahathir hinted that Malaysia is looking into following Japan’s constitution which prevents the country from entering armed conflicts.

Thus Malaysia has pulled out of the conflict in Yemen – which has now degenerated into a complex humanitarian emergency, where tens of thousands of people have died from dysentery, lack of clean water and medical services. The numbers are greater than the combatants who actually perished armed conflict between the Houthi rebels and Saudi-led coalition.

Preventive diplomacy

Since Malaysia has always had a policy of “active” neutrality starting from the 1960s – a concept enshrined by Malaysia’s participation in Non-Aligned Movement (NAM), further reinforced by the late Tun Ghazali Shafie’s concept of the Zone of Peace, Freedom and Neutrality (Zopfan) – our foreign policy has always focused on maintaining peace.

In the same month that Mohamad participated in the Shangri-La Dialogue, he hosted the Malaysia-Australia High Level Committee on Defence Cooperation in Butterworth. Australia is one of the members of the Five Power Defence Arrangements (FPDA) which Malaysian navy and armed forces still treasure deeply.

The next month(in July), Mohamad visited the Farnborough Airshow in the UK, an event which typically hosts the amazing acrobatic Red Arrows. The UK is also a member of the FPDA.

https://www.independent.co.uk/news/world/asia/uk-south-china-sea-royal-navy-warship-beijing-hms-sutherland-gavin-williamson-trump-us-australia-a8208016.html

Given the insistence of the UK of remaining a vital and active player in maintaining freedom of navigation in South China Sea, Mohamad’s trip reassured them that their role in FPDA is deeply cherished.

In July 2018, the minister also made it a point to visit Bangladesh in light of the country’s growing tensions with Myanmar over the influx and mistreatment of Rohingya Muslims, which neither side seems to acknowledge is facing one of the worst humanitarian disasters.

With his trip to Cox’s Bazar, Mohamad is engaging in preventive diplomacy. He is trying to prevent the issue from further enlarging into an explosive issue that can drag ASEAN and South Asia into a structural conflict over the millions of Rohingya facing near-certain death.

Indeed, having strengthened all the necessary pillars in FPDA – by visiting Singapore, hosting the Australia and later the New Zealand delegation, in addition his UK trip – it seems Mohamad is emphasising the backbone of Malaysian defence diplomacy through FDPA.

 

This is why the trip to Bangladesh happened in August. In that month, Mohamad strengthened the confidence of the Malaysian peacekeepers in Lebanon, and sent a powerful signal to Myanmar that peace and freedom to all must be of paramount importance.

The following month, Mohamad went one step further: he visited the ASEAN Defence Ministers’ Meeting-Plus with Japan. Japan is critical precisely because the country in 1994, under then Foreign Minister Taro Nakayama, created the ASEAN Regional Forum from the ASEAN Post Ministerial Conference.

In this particular trip to Nagoya, Mohamad signed an MOU with Japan to enhance mutual humanitarian assistance, civil military cooperation, in addition to strengthening the Malaysian peacekeeping operations in Port Dickson, which has been ongoing since 2005.

It should be added Japan immediately pledged a donation of USD1 million to reinforce peacekeeping facilities. These are all major achievements, as they reflect a strategic continuation of the dialogue and method of cooperation with Japan. How? It was Nakayama who suggested a multilateral forum where all countries in Southeast Asia and Northeast Asia could hold annual defence dialogues.

By 2005, the ASEAN Defence Ministers’ Meeting-Plus took place in Kuala Lumpur, with a goal of consolidating the defence diplomacy of ASEAN member states and expanding the ambit of ASEAN’s defence collaboration with external dialogue partners, including China, Japan, South Korea, the United States.

If one observes all of Mohamad’s frenzied activities and trips, including the current one to the US, it is clear that he knows how intricate the defence portfolio has been since the 1960s.

 

This is why every single trip can be related to either ASEAN, FPDA, ASEAN Defence Ministers’ Meeting-Plus, and the UN.

The ’18-wheeler’ strategy

I would term this Mohamad’s 18-wheeler defence diplomacy, the metaphorical large truck that he drives taking the previous cargo forward. The precious cargo is of course Malaysian sovereignty, regional equilibrium, and international peace.

And, this is all done in a way to further the parameters of the ‘Mahathir doctrine’, where battle ships should not linger in any parts of the South China Sea unless the goal is to jointly address the effects of piracy.

In this sense, Mohamad’s upcoming meetings with his counterparts in Manila and Malawi deserves more commendations.

Mohamad is trying to stabilise one of the world’s oldest conflicts that go all the way back to 16th century, when the Spanish conquistadors first arrived to upend the religious and racial balance of Mindanao and Manila.

One should remember that Mohamad is a humanitarian at heart. He knows that Philippines and Mindanao Autonomous Region are constantly hammered by natural disasters.

Unless Malaysia and Philippines can work together, complex humanitarian emergencies can lead to endemic poverty, and hopelessness, all of which are fuel of terrorism and kidnap for ransom groups, that can spill over into Sabah and Sarawak.

So to his critics in UMNO and PAS who said that Mohamad hasn’t been doing his homework, they must realise that it is they who have been sleeping on the job as the opposition.

---

PHAR KIM BENG was a multiple award-winning head teaching fellow on China and the Cultural Revolution in Harvard University.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

China & Malaysia: Co-Existing with Asia’s Leviathan

September 28, 2018 by Dennis Ignatius

China’s Dark Spots

Of course, China is far from perfect. Indeed, there is a dark and sinister side to the modern China of high-speed trains and gleaming skyscrapers.

For one thing, not everyone is enjoying the fruits of its progress. Forty million children, for example, still live in poverty. And each day, some part of China is rocked by angry, often violent protests as disaffected and marginalized groups rebel against injustice and governmental abuse of authority.

The lack of religious freedom, too, is appalling. According to UN reports, Xinjiang Province is home to vast gulags where thousands of Muslim Uighurs are incarcerated in “re-education” camps. Falun Gong followers are savagely repressed and yet another brutal crackdown on Christians is now underway.

The Communist Party of China is also entirely dismissive of  basic human rights in violation of its own constitution. Hundreds of human rights activists are routinely jailed, often tortured as well. The death of Nobel Peace Prize laureate Liu Xiaobo in a hospital prison last year was a potent reminder of Beijing’s utter contempt for basic human rights.

Thankfully, Malaysia has not seen the kind of brutal and repressive measures that are routine in China today. We can learn a lot of things from China but it is certainly not a country we want to emulate in everything.

China: Vision, Planning and Leadership equal rapid Progress

Perhaps the one lesson we can learn is that where there is vision, planning and leadership, countries can progress rapidly. Countries don’t have to get everything right; success in just a few critical areas can make a huge difference.

China did precisely that and in 33 years has become a behemoth that now challenges our own sovereignty. As I have noted elsewhere, few realize how close we came to compromising our sovereignty under former Prime Minister Najib. His reckless borrowing and lopsided infrastructure projects would have turned us into “a wholly-owned subsidiary” of China.

Whatever one may ascribe China’s rapid rise to, there’s no escaping the fact that we now have a leviathan  at our doorstep and we must, as a nation, rise to meet the challenge it poses.  China is going to cast a long shadow over Malaysia and the region. And we have to be ready for it.

Every Malaysian politician, certainly every Pakatan cabinet minister, would do well to spend time in China – to  learn, to see what’s possible and to understand what we are up against. Perhaps they may return home with a new realism and a fresh determination to prepare our nation for a future in which China is going to figure very significantly.

Preparing for the 4th Industrial Revolution

The other great challenge that we face is the rapid technological advances – the Forth Industrial Revolution – that is already gathering pace.

As Klaus Schwab, Executive Chairman of the Word Economic Forum (WEF) put it: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”

A recent WEF study estimates that some 65% of children entering primary school today will end up doing a job that does not even exist now. Artificial intelligence will make millions of existing jobs obsolete while many of the skills we now value will become redundant.

Naveen Menon, President of CISCO Southeast Asia, warns that those most at risk will be those “lacking IT skills and ‘interactive skills’ such as negotiation, persuasion and customer service skills….”

Are we ready for this new world? It’s going to require a massive effort on the part of government, business and educators to ensure that our workforce will have the skills to compete and prosper in the coming decades, not just against China (which is already making quantum leaps in technology)  but even against our immediate neighbours.

It is a sobering reminder that we can no longer afford to dissipate our energies in destructive and divisive arguments and policies that detract us from facing up to the real challenges we face.

Running out of time

Simply put, we are running out of time as a nation. We cannot continue to keep fighting old battles; we either fight amongst ourselves and be left behind or unite to compete with the rest of the world.

Whether we like it or not, we cannot turn back the clock of history:

Malaysia is a multicultural nation with a rich blend of ethnicities, languages, cultures and traditions. We can either make it our  greatest strength or allow it to become our greatest weakness.

 

Likewise, we can harness the power of our respective belief systems to inspire the kind of  unity, integrity and work ethic that is necessary to build a prosperous and peaceful nation or we can use it to justify exclusionary and extremist policies that diminish us all.

We are a nation of many that must become one to prosper, to face the challenges that confront us.

The Challenge of Leadership

Of course, the challenges are enormous. How do you change the mindset of a nation that has long been conditioned to think and act in racial terms, that has long been taught to view each other with suspicion and distrust? How do you even promote much-needed policies that, in the short-term at least, might be deeply unpopular?

How does the government persuade the nation to rise to its greatness when the opposition is trying to drag it down into the gutter of bigotry?

But that is the true challenge of political leadership: to take a nation where it must go, not where it necessarily wants to go. If anyone can do it, it is surely Dr Mahathir and this government.

Dr Mahathir has shown that he is not afraid to do what is unpopular if it’s good for the nation. And, at 93, he knows he doesn’t have the luxury of time to wait for evolutionary or incremental change; there must be a drastic reordering of the way we do things or nothing will change.

The greatest legacy he can give to our nation is to leave behind a nation with sound national institutions, a grand vision for the future and a reformatted mindset that pulls us together rather than drives us apart. It is perhaps no coincidence that circumstance has brought back the very man who dared to dream of “a Bangsa Malaysia” to lead us again when national unity is most needed.

We have perhaps a five-year window of opportunity (till the next election) to dramatically change our nation for the better. Fate has given us another chance to reinvent ourselves, learn from our mistakes and build that better nation we all long for. If China can do it, so can we.

Let us be that transformational generation  – the generation that makes the transition from the old Malaysia to the new Malaysia.

       

Political financing reforms should top PH Government’ s political agenda – Jomo

Koh Jun Lin  |  Published: September 27, 2018@ http://www.malaysiakini.com

Reforming how political activities are financed in Malaysia should be on top of the government’s political agenda, said the former Council of Eminent Persons member Jomo Kwame Sundaram.

He said Malaysia has a “very decadent” political system that had been abused, giving examples such as the 1MDB scandal and the inflated costs of the East Coast Rail Link (ECRL) project and two gas pipeline projects that have since been cancelled.

“It is important to recognise that we have a system of political financing which has been so abused that we cannot get ourselves out of this, unless we develop a legitimate, accountable, system of political financing. “So, I would put the whole system of political financing at the top of the list of political priorities that needs to be addressed by the current government,” he said.

He was speaking as a panellist at a talk titled “The Way Forward for Malaysia” last night together with Rembau MP Khairy Jamaluddin Abu Bakar in Kuala Lumpur last night. The event was organised by the Oxford and Cambridge Society of Malaysia and was attended by approximately 170 people.

Former Prime Minister Najib Abdul Razak has been accused of siphoning money from 1MDB and SRC International and using part of the money to fund political activities through his personal bank account. Najib had maintained that the money had come from foreign donors.

Malaysiakini set up a microsite in July detailing some of the outflows from one of his bank accounts to political entities.

After Najib was implicated in the 1MDB scandal in 2015, he set up the National Consultative Council on Political Financing (JKNMPP) that went on to produce 32 recommendations to reform political financing in Malaysia.

However, the reforms were not in place in time for the 14th General Election.

ECRL ‘a hoax’

As for the ECRL project, Jomo described it as a hoax that is not part of China’s Belt and Road Initiative projects, and would not be able to pay for itself even if its development expenses are written off.

The government has claimed the cost of the project is RM81 billion – compared to the previous administration’s estimate for RM55 billion – adding it is worth no more than RM30 billion.

China Communications Construction Company Limited (CCCC) Vice-President Sun Ziyu has defended the cost of the project.

Meanwhile, Jomo said there needs to be consensus involving all political parties in Malaysia on what needs to be done to tacklecorruption, where political financing is only a part of the problem.

Otherwise, he said there won’t be much progress in the area.

“I have a great deal of concern with addressing other sources of corruption, and this of course is very, very important and necessary to address. But we have a very decadent and corrupt economic system as well as a political system. In other words, we have been thoroughly compromised,” he said.

Read More: How political financing is done in other countries https://www.malaysiakini.com/news/444827

3 scenarios for post-election Malaysia

September 23, 2018

Yang Razali Kassim / Khmer Times Share:

 

The shocking fall of the UMNO-led Barisan Nasional government in the recent general election was not only historic but also game-changing. As Malaysians usher in a new era, three evolving scenarios are worth watching, writes Yang Razali Kassim.

The ruling juggernaut, the UMNO-led coalition, had never been defeated since independence in 1957. The coalition finally lost power at the hands of the country’s most potent political duo: Mahathir-Anwar. In the aftermath, at least three evolving scenarios are worth watching:

Scenario 1: A New Order?

If the newly-elected Pakatan Harapan (PH, Alliance of Hope) coalition government can last at least two terms, we will see a different political order take hold. The people’s rejection of the governing Barisan Nasional (BN) coalition and UMNO is a new phenomenon in Malaysian politics. Increasingly, the emerging narrative is that of a “New Malaysia”.

What this New Malaysia is, however, has yet to be clearly defined, as it seems to mean different things to different people. The popular view is that it is simply the antithesis of the old era; anything that was bad about the old must not be part of New Malaysia. Even Mr. Mahathir himself has called for a break from the past:

“The New Malaysia should even be an improvement on the period during which I was prime minister for 22 years.” The government should “have to go back to democracy and the rule of law and respect the wishes of the people.”–Mahathir Mohamad

Two wishes in particular: First is cleaning up the mess of corruption left behind by the Najib administration. Reformism will be the order of the day, possibly leading eventually to some form of systemic change. Ironically, Mr Mahathir, who was known as an autocrat, has become the “New Reformer,” embracing Anwar Ibrahim’s battle-cry of ‘Reformasi’.

Second, Mr Mahathir and his team will be under pressure to prove that the new government can fulfill the people’s expectations. The previously disparate alliance will have to demonstrate that it will not be a photocopy of the old regime.

Scenario 2: Existential Crisis

All that said, the power vehicle the PH alliance overthrew is not to be trifled with. At the core of the dethroned BN coalition is UMNO, the linchpin party that won independence from the British. Once thought to be invincible, BN disintegrated as soon as it lost power. Several partners deserted it, leaving only three original component parties, the pillar of which is UMNO.

UMNO itself is facing an existential crisis. It is under threat of being deregistered for failing to hold internal party elections, in breach of political regulations. Should it be struck off, this will not be the first time after surviving one in 1987, ironically when Mr. Mahathir was its president; but the political impact of a replay will be far-reaching, as the party, though out of power, still symbolises the aspirations of the majority ethnic group.

In this battle for survival, UMNO is going through an internal debate over direction and its own identity. The future of UMNO now depends very much on how far the younger generation will succeed in taking over the leadership and charting a new course. Nevertheless, the introspective search for a new identity for UMNO is unprecedented, reflecting the country’s new terrain.

The course taken by UMNO will partly be influenced, if not defined, by the broader political landscape now dominated by the Mahathir-Anwar leadership 2.0. Collectively, the deadly duo has come to symbolise a political ethos around “post-identity”. If PH succeeds, Malaysian politics may increasingly move away from primordial attachments towards a common centre, where greater acceptance and tolerance of each other will be the new norm. How far this will go will also depend on how effective the pushback is from a tentative UMNO alliance with the Islamist opposition PAS.

Scenario 3: Beyond the Border

The political shifts do not stop at Malaysia’s border. As one of the most developed economies in Southeast Asia, the country’s political dynamics – especially those that affect its stability and security – will be of importance to its neighbours in the region and beyond.

Nothing underscores this better than Mr Mahathir’s wooing of Indonesian President Jokowi for a partnership to stave off European pressures on their palm oil industry.

With neighbouring Singapore, Mr Mahathir also created some ripples when he threw a spanner in the works of a joint high-speed rail project signed by the Najib government, though this has been deferred for now. Mr Mahathir also suggested renegotiating the long-standing supply of water from Malaysia’s Johor state, a strategic resource for Singapore.

Mahathir’s biggest challenge is, however, further afield, in Beijing. China is at the heart of some financially troubling megaprojects initiated by Mr Najib. Mr Mahathir has taken issue with the Asian giant for financing these projects, which were placed under investigation in Kuala Lumpur following the defeat of the BN administration.

Mr Mahathir himself traveled to Beijing in August to re-negotiate with Chinese leaders the China-funded projects in Malaysia, part of a larger goal to cut down on the massive national debt inherited from the previous government.

At the end of his trip, Mr Mahathir announced at a press conference in Beijing that Malaysia would now cancel the frozen projects – only to tone it down later to “defer” them instead – a decision he said Chinese leaders had “agreed” on. “We do not want a situation where there is a new version of colonialism,” said Mr Mahathir after his meeting with Chinese Prime Minister Li Keqiang.

What is equally troubling Mr Mahathir is the Chinese model of economic collaboration. At issue is Beijing’s preference for extending loans with high interest rates rather than investing directly in the projects, and for payments to Chinese contractors based on timelines rather than project deliveries.

Another is the Chinese propensity to use their own resources, workforce and expertise for the projects, instead of relying on local firms and creating jobs domestically. This model that some call Beijing’s “debt trap diplomacy” has also been questioned in several countries in Asia and Africa for the problems and social tension they generate.

Mr Mahathir, however, is striking a careful balance in resolving the mountain of debt left behind by his predecessor. Important to him also is preserving good relations with a rising economic superpower that is a significant market for Malaysian products. “We do not blame the Chinese government because their companies signed an agreement or several agreements with Malaysian companies under the auspices of the government of the day,” Foreign Minister Saifuddin Abdullah told The Straits Times.

Unlike in the past, the political earthquake in Malaysia this time is clearly reverberating beyond Malaysia’s border. Before he finally calls it a day again expect Mr Mahathir to make more waves as he brings his assertive persona to the international stage, perhaps even to the United Nations. It’s in his DNA.

Yang Razali Kassim is senior fellow with the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. This is part of an RSIS series on Malaysia’s 14th general election and its aftermath.

The Perils of China’s “Debt-Trap Diplomacy”

September 10, 2018

Banyan

Malaysia-China Relations:The Perils of China’s “Debt-Trap Diplomacy”

Malaysia’s rethink of Chinese belt-and-road projects has lessons for other countries

 Print edition | Asia

IN AUGUST, three months after his opposition coalition trounced the Malaysian party that had ruled since independence, Mahathir Mohamad, the country’s 93-year-old new Prime Minister, travelled to Beijing. His aim was to tell President Xi Jinping that his country was now the Malaysia that can say no.

Dr Mahathir’s predecessor, Najib Razak, had hewed close to China. His loss at the polls resulted more than anything from the stench of corruption within his ruling United Malays National Organisation (UMNO). But his chumminess with China was also a factor. The two issues were entwined.

Najib Razak–Malaysia’s Voleur

During Mr Najib’s rule, huge holes appeared in the finances of a state investment vehicle, 1MDB, which Mr Najib chaired. America’s Justice Department estimates that $4.5bn was stolen from the fund by insiders. (Around the same time, nearly $700m turned up in Mr Najib’s own bank accounts.) As 1MDB teetered, Chinese state entities stepped in, taking stakes in 1MDB ventures.

The relationship with China grew ever cosier. Chinese-funded projects in Malaysia were packaged as part of China’s Belt and Road Initiative, a global infrastructure-building scheme close to Mr Xi’s heart. Jack Ma of Alibaba, a Chinese tech giant, won the right to turn a site near Kuala Lumpur’s main airport into a Digital Free Trade Zone. Malaysia’s government tried to silence criticism of its state-to-state dealings. And China showed its gratitude. In the run-up to Malaysia’s general election in May, the Chinese ambassador appeared to lend open support to the ruling coalition. Many people were surprised that Dr Mahathir managed to win, despite UMNO’s gerrymandering. Mr Xi had reason to be aghast.

China is not used to recipients of its largesse challenging the terms on which it is offered. Yet growing numbers of them are struggling with debts to Chinese entities taken on to fund Chinese-staffed projects. The Centre for Global Development in Washington reckons that eight belt-and-road countries are at “particular risk of debt distress”, among them ones that border on China: Laos, Mongolia and Pakistan. That is why Dr Mahathir’s progress in disentangling his country from Chinese-funded ventures is being closely watched.

 

In Beijing Dr Mahathir was plain-speaking and deft. He said that Malaysia was cancelling the $20bn East Coast Rail Link, a massive belt-and-road project, as well as two oil pipelines in Sabah province. His message, in essence, was: very sorry—lovely projects, but since coming to office we’ve discovered we can’t afford them. Implicit was another point: we can’t afford them because we now know how inflated the costs are, and how skewed the deals are in China’s favour—or plain fishy. It appears the Najib government paid nearly 90% of the $2bn price of the Sabah pipelines, although they were only 15% complete. Part of a Chinese loan for them appears to have plugged financing gaps at 1MDB.

Since Dr Mahathir’s return, he has gone further, taking aim at a large, Chinese-led housing scheme in Johor state intended for wealthy investors in China. This week the Prime Minister declared that foreigners would not be given visas to live there. Most Malaysians, he complained, could not afford to live in the new development. (The government in Johor makes more reassuring noises to foreigners who might be interested.)

China has a tendency to launch into tirades against countries that confront it. In this case the response from Beijing has been muted. That may be partly because of Dr Mahathir’s careful choice of words. But Malaysia is an influential country in South-East Asia, a region that China wants to draw closer into its orbit. And China does not want to make enemies among belt-and-road countries. One of the main points of the project is to boost China’s influence over them. For other countries badly needing to renegotiate their deals with China, that is a lesson worth learning.

Of these, Pakistan, which also has a new Prime Minister, Imran Khan, is by far the biggest debtor to China. The China-Pakistan Economic Corridor, a collection of energy and infrastructure projects supposedly worth $60bn, is the biggest plank of China’s belt-and-road strategy. Not for the first time, Pakistan faces a balance-of-payments crisis. It wants out of its debt.

Mr Khan ought to do a Mahathir. And he is in an even better position. Far more than with Malaysia, there is a strategic dimension to China’s relations with Pakistan, says Husain Haqqani, a former Pakistani diplomat who is now at the Hudson Institute, an American think-tank. Officials in Beijing see Pakistan as a counterweight to India, China’s geostrategic rival. China needs Pakistan’s help in keeping Islamist extremism at bay. And it regards its neighbour as a vital route to the Arabian Sea. Unlike Dr Mahathir, Mr Khan himself seems not to grasp the problems of China’s debt embrace. But at least critics in Pakistan of the economic corridor are beginning to find their voice.

Debt divisions

China has more than its political ties with belt-and-road countries to consider. Chinese banks are getting worried about the safety of their lending. Commercial banks have sharply cut new belt-and-road financing since 2015. (So-called policy banks continue to lend.) And now the Belt and Road Initiative faces strong popular criticism at home. In part, the initiative is a victim of the Communist Party’s own propaganda: what debtors see as hard-to-service loans, state media paint as beneficent “aid”. That is a touchy word. At a summit in Beijing this week with African leaders, Mr Xi promised $60bn for the continent. Why, Chinese people asked on social media, is an indebted China spending so much abroad when it has pressing requirements at home? Censors rapidly shut down their criticisms of Mr Xi’s gesture.

China is right that many countries need more roads, railways and other infrastructure. But it is evident that the scheme it touts as a defining one of Mr Xi’s rule is losing its shine. Dr Mahathir’s trip may have taught some valuable lessons.

This article appeared in the Asia section of the print edition under the headline “Can’t pay”