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Malaysia and Chinese colonialism

    TM, ®, Copyright © 2018 Piero Scaruffi All rights reserved.

  • (August 2018) Malaysia and Chinese colonialism.
    Malaysia's 93-year-old prime minister Mahathir Mohamad just met Chinese premier Li Keqiang in China and issued a stern warning to all countries that are accepting Chinese "aid": he said that he doesn't want Malaysia to succumb to "a new version of colonialism". He blamed his predecessor, former prime minister Najib Razak, for signing "unfair" infrastructure deals with China at inflated prices that Malaysia will not be able to pay. Najib Razak had enthusiastically signed up for China's Belt and Road Initiative, in particular the China-funded $27-billion East Coast Rail Link project. but Mahathir Mohamad stated that "free trade should also be fair trade" (this whole part of the press conference was omitted in Chinese media). Mahathir Mohamad suspended development of the railway as well as of two projects (worth more than $3 billion) awarded to the China Petroleum Pipeline Bureau. The oil pipeline was stopped after the new government discovered that Malaysia had already paid more than $2 billion for the project but the Chinese had built nothing. Low Taek Jho, a Malaysian financier, is now wanted for paying bribes (and is probably hiding in China). China is Malaysia's third-largest export market after India and the European Union.

    It is not only a matter of "fair" trade. It is also a matter of national security. Malaysia’s new finance minister, Lim Guan Eng, specifically mentioned the case of Sri Lanka, another country that built up debts with China to finance the construction of a new port (at Hambantota), and, when it couldn't pay its debt, it was forced to cede the port (and the surrounding land) for 99 years to China.

    Brief recapitulation of Malaysia's recent history. In 2008 the party of Malaysian prime minister Badawi (the party that had ruled Malaysia since independence) lost parliamentary elections, leading to his replacement with Najib Razak. In the following year the region was alarmed by rising Islamic attitudes in once moderate Malaysia: in 2010 Muslims attacked Christian churches in Malaysia, the government allowed the flogging of three women for extra-marital sex, and Malacca state legalized underage marriage. Then in 2014 Malaysia was in the news for two air tragedies: Malaysian Airlines flight MH370 mysteriously disappeared while en route to China as it entered Vietnamese airspace (the causes of the crash are still unknown) and Malaysian Airlines flight MH17, travelling from Amsterdam to Kuala Lumpur, was shot down in eastern Ukraine by a Russian missle. Malaysia seemed to be cursed with bad luck when in 2017 North Korean agents chose a Malaysian airport to assassinate Kim Jong-nam, half-brother (and potential rival) of North Korean dictator Kim Jong-un (recently called "a very honorable man" by Donald Trump).

    The "Chinese scandal" was actually unveiled by a US agency that discovered how Najib and his family and friends stole $3.5 billion from a state-owned fund called 1Malaysia Development Berhad (1MDB). The scandal brought down Najib this year, and it wasn't the only scandal: the nation has accumulated $250 billion in debt. Just before the elections, Najib Razak's government introduced a law aimed at curbing "fake news" (the latest in a series of laws restricting press freedom) that de facto muzzled critics of government corruption; in vain. Mahathir Mohamad, who had been prime minister for 22 years before Badawi, led the opposition to victory in national elections and became prime minister again. Mahathir Mohamad only recently joined the opposition. In 1999 he was the one who sent dissident Anwar Ibrahim to prison. Now that he is the leader of the opposition, Mahathir Mohamad promptly released Anwar Ibrahim from prison. Meanwhile, Najib Razak has been arrested on corruption charges and is now facing up to 125 years in jail if convicted. (For the first time in a decade, Malaysians can buy the books of a cartoonist called Zunar, who was threatened with jail for his satirical cartoons of Najib and his wife Rosmah Mansor).

    Public opinion in Malaysia is mesmerized by two mysteries. The first one is flight MH370: a government investigation found that Malaysian air-traffic control failed to properly follow the airplane. An inconclusive 495-page report only found that the course of the airplane was changed manually by the pilot (or someone acting as the pilot). Meanwhile, radioactive material has been stolen, most recently in august 2018 when a 23-kg medical device disappeared from the truck that was transporting it. This is material that could be used to produce a "dirty bomb". If the device were opened the wrong way, it could spread radiation to an area of more than one square km. Conspiracy theorists may note that one month earlier Malaysia launched a crackdown on ISIS sympathyzers after discovering a plot to assassinate both the king and the new prime minister, Mahathir Mohamad. This followed terrorist attacks in Indonesia's second-largest city Surabaya. (In 2016 ISIS bombed a nightclub in Malaysia's capital, although the bomb didn't kill anyone).

    But by far the man topic of discussion is the soft Chinese invasion. A century ago, the Portuguese, the Dutch and the British fought for control of this peninsula and in particular of the port of Malacca. Malaysia is strategically important for maritime routes: all African and Middle Eastern shipments to East Asia transit through the strait of Singapore. The Chinese are developing a new giant port in the city of Malacca, a port large enough to host an aircraft carrier. It doesn't take a geopolitical genius to figure out that, once the port is completed and if the railway to China is built, China will be able to bypass Singapore as well as the whole South China Sea where China is currently antagonized by Vietnam, Philippines and Japan. China has acquired a port in Sri Lanka (south of India) and a base in Djibouti (East Africa), besides building the port of Gwadar in Pakistan (at the mouth of the Persian Gulf). This port in Malaysia would complete China's maritime route ("the string of pearls", as the Chinese nicknamed it) to its suppliers of natural resources. (Another port is being developed by China at Kuantan on the South China Sea, together with a $1.43 billion steel plant, part of the first joint Malaysia-China industrial park).

    Another Chinese company is building four artificial islands with thousands of luxury condos (part of the $10 billion Melaka Gateway project). This "Forest City" is under development in Johor Bahru, the city across the bridge from Singapore. While nothing says so in the contract, the luxury condos are being marketed only to Chinese citizens: all the signs are in Chinese and the sales office has a giant map of China’s Belt and Road project. Malaysia has a vibrant and rich ethnic Chinese minority that has frequently clashed with the ethnic Malays (who are Muslims). This development has increased fears that China wants to create permanent settlements.

    Mahathir Mohamad gave an interview to the New York Times in which he reminded China of the "unequal treaties" to which it was subjected by Western powers: it looks like China is trying something similar on its Asian neighbors.

    Malaysia is not the only place where mainland China is learning the complexity of democratic systems, in which, overnight, public opinion can be shaped or reshaped by political rallies, television debates and social media. Chinese investments (and motives) have moved to the foreground in the political debates of many countries, from Africa to Indochina. Sri Lanka, again, led the way: Sri Lanka's president Mahinda Rajapaksa lost the elections of january 2015, and China's investment in the country was one big topic in the opposition's campaign. It has become fashionable in all developing countries to openly question Chinese-funded projects.

    China financed the construction of a controversial dam in Ecuador. By 2018, every top Ecuadorean official involved in the project (including a former vice president, a former minister and even the former anti-corruption czar) was accused of bribery and several of them were already in jail.

    China is becoming a world power, and it is also learning the price that comes with it.

    TM, ®, Copyright © 2018 Piero Scaruffi All rights reserved.
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TM, ®, Copyright © 2015 Piero Scaruffi All rights reserved.