China wants Malaysia to pay $20 billion
For a new rail line
But Malaysia is fighting back.
Welcome back to China Uncensored.
I’m Chris Chappell.
Malaysia.
A country that's truly...what's the word for it?
"The soul of Asia,
the essence of Asia,
it's truly Asia…
That’s it, truly Asia.
Talk about a songwriter reaching for the low-hanging fruit.
Not so for Malaysia's Prime Minister Mahathir Mohamad.
He’s reaching for the sky.
Now 93 years old,
Mahathir holds the Guinness World Record
for being the world’s oldest Prime Minister.
And that’s a record he’s likely to hold onto for a while.
At least until our planet
is run by an immortal artificial intelligence.
On the plus side, I’ll have also been upgraded by then.
But the real reason to keep an eye on this 93-year-old
is that he’s just dodged a bullet...
at least when it comes to China’s Belt and Road.
The Belt and Road Initiative is the massive infrastructure plan
to build trade corridors between China and the rest of the world.
It’s also known as One Belt,
One Reason to Not Go into Debt.
That’s because it has been a convenient way
for the Chinese regime to saddle some small countries
with debt they can't pay back.
So in exchange,
these countries have to sign over
valuable resources or assets to China.
The poster child for this is of course, Sri Lanka.
When you can go from sun-kissed
to mountain mists in only four hours,
that’s so Sri Lanka.
When dolphins and whales swim around you all year,
so you can visit them at any time?
That’s so Sri Lanka.
And when you take a giant Chinese loan
to build a deep water port,
can’t pay the loan back,
and then have to give the port to China on a 99-year lease,
that’s so Sri Lanka.
The list of countries at risk
of falling into China's debt trap is long.
It includes places like Djibouti
Kenya
Pakistan.
And it looked like Malaysia, too…
But then came Malaysian Prime Minister Mahathir Mohamad.
After taking office in 2018,
he right away suspended 22 billion dollars worth of
China-backed infrastructure deals.
He also scrapped three China-backed pipeline projects
worth 3 billion dollars.
And there was also a railway project
called the East Coast Rail Link.
It was supposed to be built by
China Communications Construction Company—
for a price tag of nearly 20 billion dollars.
He scrapped that, too.
But he still wanted some of the infrastructure.
Just not at that price.
So he re-negotiated the price of the East Coast Rail Link—
from $20 billion to down to only about $11 billion.
Because the “economics of the original deal
did not make financial sense.”
As Mahathir's office said in a statement,
“This reduction will surely benefit Malaysia
and lighten the burden on the country’s financial position.”
Yeah, it’s a *bit* lighter of a burden now.
Like $9 billion dollars lighter.
I wonder if the same negotiating strategy
can be used for student loans.
Anyway, given Malaysia’s crushing debt load,
any breathing space is a sigh of relief.
A year ago,
everyone thought that Malaysia was around
$170 billion in debt.
But when Mahathir took office last year,
he discovered, nope!,
Malaysia was actually $250 billion in debt.
How did this happen?
A few months ago,
I spoke with investigative journalist Clare Rewcastle Brown—
who exposed the previous government’s
massive 1MDB corruption scandal.
She says the previous prime Minister, Najib Razak,
needed money to cover his tracks,
after he’d allegedly stolen around 700 million dollars.
And there’s not a lot of guys you can go
to help you fill a 700 million dollar hole.
Except China.
“What happened, because of Najib’s financial difficulty,
he nearly dropped his rich and independent country
like a ripe plum into the lap of China
because he needed someone to secretly
bail out his debts on 1MDB.”
The Chinese Communist Party:
The guy you call when you need to bury a body.
Or 700 million dollars.
Najib is now accused of wide-scale corruption
that includes skimming billions of dollars
off China-backed projects.
Najib went to trial last week in the first of
what is expected to be multiple trials.
He faces four counts of corruption.
Each one could land him in jail for up to 20 years.
And if he lives to see the end of it,
he could win the Guiness World Record
for the world’s oldest former Prime Minister in jail.
Anyway, after Mahathir Mohamad
won the election against Najib in 2018,
one of his first tasks was to be to pull Malaysia
back from the brink of a Chinese debt trap.
"He’s made it clear that he intends to revise
some of these deals that were made to bail out Najib.
And Malaysia has been looking
very critically and openly and frankly
at the corrupt nature of these deals
and challenging Chinato back off
given these deals were clearly laced with corruption."
It turns out, Najib had made a deal with China
that Malaysia would overpay for the East Coast Rail Link,
and then China would secretly top up the cash Najib stole.
Um, allegedly.
So Mahathir has begun to resolve this issue
by renegotiating the price of the project with China.
But Mahathir is doing more than that.
He’s also taking his
“beware of bad Chinese deals” show on the road.
On a recent visit to the Philippines,
he warned President Rodrigo Duterte to beware of China's debt trap—
saying “the Philippines should
‘regulate or limit influences from China.’”
But Mahathir is also making some people nervous.
That is, some people connected to the Chinese Communist Party.
Wang Yiwei, a professor at Renmin University of China in Beijing,
worries that "it sets a bad example for other projects,
that China can just lower the costs."
He says it could encourage other countries
to push China to cut prices on debt trap projects.
That would be terrible!
It would completely defeat the purpose of a debt trap.
And Malaysia’s new attitude is even pushing
the Chinese regime to re-evaluate its own actions.
“With pressures mounting at home and abroad,
Beijing has started to adjust its approach
to the Belt and Road Initiative —
trimming spending on projects and toning down what it says.”
So the Communist Party has really got to tone it down.
Or at least seem like they’re toning it down.
So what do you think?
Could this be the beginning of the end for
some of the more worst Belt and Road debt traps?
Leave your comments below.
And before I go,
now’s the time for me to answer a question from one of you—
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Steve Wilson asks,
“Chris, with your education in music composition,
do you have anything to do with the music
that's played with China Uncensored videos?”
Good question, Steve.
I do have a Masters degree from NYU
in Classical Music Composition.
But the main thing that’s done for me is...
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I didn’t personally create the awesome Chinese music
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They were created by a friend of mine,
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Thanks for your question, Steve.
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Once again, I’m Chris Chappell.
Thanks for watching China Uncensored.