Colorful shops and historic buildings draw millions of tourists each year to this ancient port city, once a principal stop on the ancient

Not far from the heart of the old town, a new road is taking shape, part of a $1 trillion Chinese plan to build a network of land and sea routes from Asia to the Middle East, Africa and Europe.

China’s ambitious Belt and Road Initiative aims to expand China’s political, economic and military clout as the United States withdraws economically from the region, leaving a vacuum that China has been more than eager to fill.

Earlier this year, President Trump pulled the United States out of the Trans-Pacific Partnership — a massive trade accord negotiated by 12 Pacific Rim nations that had excluded China. He argued the deal was not in the best interests of the U.S.

“We’ve done away with what was the vision we had, and we haven’t put anything new forward,” said Jonathan Hillman of the Center for Strategic and International Studies in Washington, D.C. “There’s something powerful about China putting forward this hugely ambitious economic initiative.”

Construction began in October on the Melaka Gateway, a $10 billion harbor project built on artificial islands that will include a new deep-sea port. Chinapower, a Chinese state-owned energy giant, is the project’s main investor, in partnership with local KAJ Development.

The project includes stores, a theme park, marina, free-trade zone and industrial park. But some question whether China has longer-term naval ambitions for the port located on the Malacca Strait, where about 80% of Chinese oil imports pass.“The strategic geography I think is an important part of this,” Hillman said. “China clearly has an interest in protecting its trade routes.”

Neighboring Singapore has long had a close defense relationship with the United States, which has deployed naval combat ships there since 2013. Analysts see China’s closer economic ties with Malaysia as an opportunity to strengthen its own maritime footprint in a crucial region.

“There’s the argument that China is not getting favorable treatment from Singapore, so why not try Malaysia?” said Johan Saravanamuttu, a Malaysia expert at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore. “With the Malacca Strait on one side and the South China Sea on the other, Malaysia is quite crucial.”

China is Malaysia’s largest trading partner and has become its No. 1 foreign investor. Malaysian Prime Minister Najib Razak returned from a visit to Beijing in November with $34 billion in deals, including an agreement to purchase four Chinese naval vessels.

Many in Melaka welcome the development and tourism pouring in from China, including several other commercial and residential projects being built on reclaimed land along the city’s beachfront.

“It’s a win-win,” said Eugene Lee, who runs a property management business. “They’re not conquering us. China is helping neighbor countries without any bullets and without any blood.”

Charles Cham, an artist who runs a gallery in the old quarter, said the Chinese-spurred development has been met with enthusiasm.

“I think most people are very excited about these big-scale projects in Melaka,” he said. “Some are even proud of the fact that a big country like China is interested to have such an investment to develop small-town Melaka. They’re not so concerned about the political motives, if any, behind these projects.”

A survey by Malaysian polling firm Merdeka Center in November found that almost 80% of Malaysians believed China has had a positive impact on Malaysia.

Former prime minister Mahathir Mohammad is among the minority of opponents, saying Malaysia is ceding its sovereignty to China.

“We already have big debt, now we are going to owe such a large sum from a single source,” he told reporters last year.

Other critics question the economic benefits from the Chinese projects, because most use Chinese contractors, construction companies and engineers.

“Chinese state-owned banks are giving loans to Malaysia so that the money can be paid back to Chinese state-owned enterprises,” said Wan Saiful Wan Jan, chief executive of the Institute for Democracy and Economic Affairs, a libertarian think tank in Kuala Lumpur, the Malaysian capital.

“At the end, we are the ones shouldering the burden of that bank loan, but the work is being done by Chinese companies. So what do we get from that?” he said.

Cautionary tales exist of Chinese-financed projects that have gone sour in other countries, such as Sri Lanka, where the $1 billion Hambantota Port has struggled to make money while saddling the country with debt.

Ratings agency Fitch warned in a January report that China’s initiative carries economic risks for partner countries because the main goal is to relieve overcapacity at home. “There is a risk that projects might not be aimed at addressing the most pressing infrastructure needs and could fail to deliver expected returns,” it said.

By Thomas Maresca


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