During a five-day trip to Beijing this week, the prime minister of Malaysia, Mahathir Mohamad, took a strong stance against further Chinese investment in the Southeast Asian nation, canceling $22 billion worth of China-backed infrastructure projects. Malaysia is the latest country to adopt a cautious view of generous Chinese investments as poor countries fall into China’s debt trap.
“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,” the 93-year-old Mahathir said on Monday after meeting with Chinese Premier Li Keqiang.
Mahathir’s predecessor, Najib Razak, led Malaysia into $250 billion worth of debt. Najib had eagerly agreed to projects financed and built by China, including a deep-water port, a renovated harbor, a rail network, and four artificial islands. Mahathir after winning the May elections quickly halted two major Chinese projects in order to start pulling the country out of the red.
Chinese President Xi Jinping’s Belt and Road Initiative aims to invest up to $8 trillion in 68 countries to create a network of transportation, energy, and telecommunication infrastructure across Asia, Europe, and Africa. While cash-strapped countries initially cheered the inflow of Chinese cash, some are seeing their infrastructure fall into Chinese hands after they are unable to pay back the loans.
Take, for instance, Sri Lanka. Under the former pro-China President Mahinda Rajapaksa, China provided Sri Lanka hundreds of millions of dollars in loans to build the largely useless Hambantota Port, Rajapaksa’s pet project. The catch: A Chinese construction company would build it and Sri Lanka needed to share intelligence with China, according to The New York Times.
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Source: World Magazine