BEIJING (Aug 20): It probably wasn’t the message Chinese Premier Li Keqiang expected to hear when he asked Malaysian leader Mahathir Mohamad for his views on trade during a press briefing Monday.
Mahathir, who’s visiting Beijing for the first time since he took shots at Chinese investment ahead of a May election win, told Li that he supports free trade as long as it’s fair. Everyone needed to remember that countries were at different stages of development, he said.
“You don’t want a situation where there’s a new version of colonialism happening because poor countries are unable to compete with rich countries in terms of just open, free trade,” Mahathir said. “It must also be fair trade. Then I support free trade together with Prime Minister Li, because I think this is the way to go for the whole world.”
The comments served as a reminder of Mahathir’s criticisms of Beijing on the campaign trail, when he said “ we gain nothing” from Chinese investment and warned of selling off the country to foreigners. Those broader concerns have stoked political tensions from Australia to Sri Lanka, where leaders are grappling with how to balance the need to tap China’s largesse without becoming overly dependent on Beijing.
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Mahathir’s trip to China was designed to mend fences between the nations, after he undertook a review of deals signed under his predecessor, Najib Razak. In July, his government suspended the East Coast Rail Link, which was being built by China Communications Construction Co with an estimated price tag of 81 billion ringgit (US$20 billion).
“China will not change its long-term friendly policies toward Malaysia, because of changes in domestic situations,” Li said during an earlier meeting with Mahathir on Monday. “I believe we will be able to show the world the next step in the process of Chinese-Malaysian relations.”
Mahathir also struck a friendly tone, and said he’d work to upgrade relations. He’s scheduled to meet President Xi Jinping later Monday.
“Our relationship is mutually beneficial,” Mahathir said. “I know there are ups and downs, but in relationship between nations, sometimes they are very strong and sometimes they are very weak.”
One of the main outcomes on Monday was a pledge by China to increase imports of Malaysian palm oil and other goods. The two governments signed agreements ranging from a two-way currency swap to exports of durian to technology development for palm oil.
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“We are ready to increase the imports to a fairly large extent of competitive Malaysian goods that meet the needs of Chinese people, especially palm oil products,” Li told reporters.
Mahathir said he was “glad to hear” China’s stance on palm oil, adding that he hoped Li would also help Malaysia with its debt burden. Mahathir is set to negotiate construction and funding terms on contracts for major infrastructure projects backed by Chinese state companies, including the $20 billion East Coast Rail Link.
“I believe and hope China will look sympathetically towards the problems we have to resolve and perhaps help us to resolve some of our internal fiscal problems,” Mahathir said.
Malaysia’s palm oil exports to China — the world’s second-largest buyer of the commodity — have declined this year. Shipments from January to July slumped 10% compared with last year, with the drop sharpening to 28% between June and July, according to data from the Malaysian Palm Oil Board.
The price of palm oil for November delivery extended gains for a third day to 2,246 ringgit a ton on Monday, set for the highest close since Aug 9.
“The market likes the positive news, but it is not underpinned by fundamentals at the moment,” said Sathia Varqa, owner of Palm Oil Analytics in Singapore.