Malaysian Prime Minister Mahathir Mohamad has formally said he will cancel two costly Chinese infrastructure projects.
The cancellation of the projects, part of China’s Belt and Road Initiative (BRI), followed Mahathir’s meeting with Chinese President Xi Jinping on Monday, when they said they were “optimistic” about their shared future and pledged to “enhance mutual political trust.”
“At the moment, the priority is for us to reduce our debt. With that debt, if we are not careful, we can become bankrupt. That is the work of Najib,” Mahathir said, referring to former prime minister Najib Razak.
“I believe China itself does not want to see Malaysia become a bankrupt country,” the 93-year-old said. “China understands our problem and agreed.”
The East Coast Rail Link would have linked the South China Sea with Malaysia’s western ports, boosting trade links.
The rail project, launched last year and due for completion in 2024, was a showpiece of the BRI.
It would have connected ports on the east coast of peninsular Malaysia to those on the Straits of Malacca on the west, spanning 688km.
In June, the new Malaysian government said 20 billion ringgit (US$4.8 billion) had already been sent on the project. It was suspended last month after being 13-per-cent completed.
The other proposed project was a natural gas pipeline in Sabah on Borneo.
Mahathir said compensation had to be worked out.
A Chinese spokesman told the media that Xi was “deeply satisfied” with the visit. “China has always carried out economic and trade and investment cooperation with other countries on the principle of mutual benefit,” the spokesman said.
“Of course, cooperation between any two countries will inevitably lead to some problems, and different views may emerge at different times,” he said.
The new government’s decision was a significant blow for Beijing, said Marina Rudyak of Heidelberg University. “Xi Jinping frames BRI as China’s contribution in a ‘new era’ where China is a responsible global player,” she told Associated Press. “This means the cancelled projects signify a failure of China’s economic diplomacy.”
China thought Belt and Road could eclipse western projects “while at the same time helping Chinese companies to internationalise”, the Chinese foreign policy scholar said. “Turns out, there is a reason for all those bulky international standards China had frequently portrayed as obsolete and obstructing development.”
Much of Asia’s trade passes through Malaysian waters, which are part of shipping lanes between the Indian and Pacific oceans. The country has one of Asean’s most advanced economies, offering a stable vantage point for the region.
Port Klang. Malaysia controls key Asian sea routes. Picture credit: Flickr