Malaysia has axed $22 billion of Chinese-backed projects, in a blow to China's grand plan to dominate world trade
How Hwee Young/Getty
- Mahathir Mohamad has cancelled two major Chinese-funded projects to avoid his country going into further debt.
- The projects were a $20 billion rail link and two gas pipelines worth $2.3 billion.
- All three were part of China's Belt and Road Initiative (BRI), a massive project which aims to link more than 70 countries through trade.
- Several of China's partners are having trouble repaying their loans.
Mahathir Mohamad told reporters on Tuesday that he would axe two major infrastructure projects because "we don't need" them, and that the debt accumulated from them could bankrupt Malaysia.Advertisement
Malaysia's prime minister has cancelled two multibillion-dollar Chinese-funded projects to avoid his country going into debt - delivering a blow to China's plan to reshape global trade.
The projects were a $20 billion rail link connecting Malaysia's east coast and two gas pipelines worth $2.3 billion.
Mahathir said, according to the Associated Press: "It's all about pouring in too much money which we cannot afford, we cannot repay and also because we don't need these projects for Malaysia at this moment.""With that debt, if we are not careful we can become bankrupt," he added.
The projects had been suspended and were pending renegotiation until Mahathir cancelled them. Some of the money on the projects has already been paid, and could be difficult to recoup, the Associated Press reported last week.Mahathir added that Malaysia's current focus was on reducing national debt, and that the projects could be restarted in the future.
Roman Pilipey - Pool/Getty
The ventures had been part of China's Belt and Road Initiative (BRI), a massive project launched in 2013 to link China to more than 70 countries across Asia, Africa, Europe, and Oceania via railroads, shipping lanes, and other infrastructure projects.
China has already invested between $1 trillion and $8 trillion - the exact amount is not clear - in those projects, the Center for Strategic and International Studies said.Many BRI projects involve China giving massive loans to economies with bad credit, and several countries are already finding it difficult to pay the money back. Many projects have also been crippled by performance delays.Advertisement
Mahathir blamed Malaysia's national debt on his predecessor Najib Razak, who developed close ties to China while in office. Najib is currently being investigated over charges that he looted billions of dollars from the state investment fund.
Mahathir said, according to Malaysia's New Straits Times newspaper: "I have explained to them and they understood the situation and accepted them. Initially, there were some misunderstandings but now they understood why we do it. I don't think China wants us to be bankrupt."
Mahathir has taken a strong stance against China after taking office in May.At a joint press conference with Premier Li on Monday, Mahathir said in pointed remarks, according to the Financial Times: "We should always remember that the level of development of countries are not all the same.Advertisement
"We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries, therefore we need fair trade."
- Former RBI governor Patel pens book on dealing with NPA issue
- AIADMK MLA tests positive for COVID-19
- Dubai gurdwara reopens with precautionary measures after lifting of COVID restrictions
- COVID-19 impact: Indian exchanges see just 4 IPOs in Jun quarter, says report
- In Uttar Pradesh, out-of-work wedding band members have a new job – shooing locusts away