The ball is in China’s court

This article first appeared in The Edge Malaysia Weekly, on August 27, 2018 - September 02, 2018.
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TUN Dr Mahathir Mohamad has returned home empty-handed, literally speaking, from his five-day official visit to China. The prime minister did not bring home a pair of pandas, nor did Tun Dr Siti Hasmah bring back a nice tea set after she spent the afternoon with Peng Liyuan — the wife of China’s President Xi Jinping — at Lao She teahouse in Beijing.

Furthermore, Mahathir announced the cancellation of three mega infrastructure projects in which state-owned Chinese enterprises were involved, citing the government’s current fiscal constraints as the reason.

“These projects will not go on now. We may consider them when we can afford them,” he told the Malaysian media the day after he met with Chinese leaders.

This has dashed hopes the government might proceed with the RM55 billion East Coast Rail Line (ECRL), the multi-product pipeline project in Melaka and the gas pipeline project in Sabah after discussions with the Chinese leaders.

In addition, it was pointed out that there was no joint press conference after the official meeting between Mahathir and Xi at Diaoyoutai State Guest House last Monday evening. However, he and China’s premier Li Keqiang did meet the media after their official dialogue earlier on Monday morning.

Against this backdrop, many, including former BN minister in the Prime Minister’s Department Datuk Seri Wee Ka Siong, have concluded that the Mahathir’s trip was a failure, and that it has jeopardised the Sino-Malaysia relationship.

But isn’t it too simplistic to draw such a conclusion?

Was the comment made that Mahathir’s visit was a failure based on the cancellation of the ECRL, which the previous government claimed would bring economic benefits to the undeveloped areas of the east coast — including job creation, development and investment?

Some are concerned that cancelling these projects, which cost over RM100 billion in total, would anger China — a superpower with the biggest consumer market in the world, which many countries are going after. Malaysia’s prospects would not be so bright without the huge Chinese market with its ever strengthening spending power.

These concerns are valid, to a point.

Mahathir’s five-day visit started in Hangzhou on a rainy night. Although the weather improved the following day, he did not have a chance to admire the blossoming lotuses at the West Lake because of his hectic schedule. Sightseeing was definitely not his priority, knowing that the journey to Beijing had started. He would have been aware that his every move would be closely watched by the Chinese, the rakyat at home and the whole world.

This was his eighth official visit to the vast country as Malaysia’s prime minister. However, this may have been the most stressful one considering that there is some tension between the two countries.

During his election campaign, Mahathir had repeatedly said that he did not welcome Chinese investments in real estate developments, which in his view would not generate much economic benefit for the country. Some quarters perceived this as Mahathir being anti-Chinese.

In addition, the new government’s exposé of how the previous administration had inflated the values of the projects that involve Chinese state-owned enterprises had put China in a bad light, although Finance Minister Lim Guan Eng has stressed that the decisions solely concern the contractors involved and relate to the provisions found in the agreements and are not aimed at any particular country.

Now, the thorny issue is that contracts were signed with Chinese companies to build a railway and pipelines at bloated costs, and a large portion of the money the country was to borrow under these agreements was siphoned off for other purposes. These loans are adding to the government’s heavy fiscal burden, and this is precisely the reason for the prime minister’s official trip to China.

 

Seeking understanding

Mahathir arrived in Beijing on Sunday night. The meetings with three Chinese leaders — Xi, Li Keqiang and Li Zhanshu, chairman of the standing committee of the National People’s Congress of China — were the highlights of the trip.

China rolled out the red carpet for the prime minister at the Great Hall of the People and he was driven around the capital in the Hongqi L5 — the most expensive car ever produced in China and the official state car that comes complete with bulletproof windows — with an escort of 12 motorcycles.

So, one could say a warm welcome was given to an old friend who has shared firm handshakes with a few former leaders, including the late Deng Xiaoping, Hu Jintao and Wen Jiabao.

However, sad to say, apart from the usual diplomacy speak about improving bilateral trade and reducing trade barriers,  Mahathir had to reveal to the Chinese leadership the serious fiscal problems the country is currently facing. Bluntly put, the 93-year-old prime minister had to wash our dirty linen in China as he sought China’s understanding.

He told the press conference, which the Malaysian, Chinese and foreign media attended, that he hoped the Chinese leaders would be “sympathetic” when they look at Malaysia’s fiscal problems.

He explained to Beijing the rationale behind the cancellation of the projects for now, to pave the way for negotiations later on the compensation that will have to be paid.

It is not difficult to understand how unpleasant it is to have to tell someone that your finances are so tight, you cannot afford to honour contracts that have been signed. And to make matters worse, he says these are agreements without a fair exit clause and he is unable to change them.

Despite the delicate situation, Mahathir is putting his foot down when he needs to. It is not his leadership style to bow down to someone and compromise the national interest, for which he has earned the respect of the developing nations.

And when Li Keqiang commented that the escalating US-China trade tensions would have global repercussions, Mahathir’s response was that he agrees with free trade, but free trade must be fair to all parties as well, otherwise it would be a “new form of colonialism”.

 

Up to China

Mahathir says Xi has invited him to Beijing in April next year for the Belt and Road conference while he has invited Xi to visit Malaysia too.

In fact, there were rumours last year that an official visit was on the cards. Talk was that Xi was planning to attend the groundbreaking ceremony for the ECRL in Kuantan and the opening of Xiamen University in Cyberjaya. But while Malaysians were awaiting the Chinese leader’s visit, the general election in May saw a change in government.

Whether Mahathir’s trip was a fruitful one or a failure, Xi’s visit will say it all.

 

 

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