Malaysian prime minister Mahathir Mohamad has told China’s leaders he was cancelling a controversial rail project in order to reduce Malaysia’s debts.
Malaysian newspaper The New Straits Times reported that Dr Mahathir said the East Coast Rail Link and a gas pipeline project would be cancelled.
“I believe China itself does not want to see Malaysia become a bankrupt country,” he said during a press conference on Tuesday, a day after meeting with Chinese president Xi Jinping.
Mahathir blamed his predecessor Najb Razak, who is facing corruption charges, for entering into the lopsided deals with Chinese companies which had no exit clauses.
“If we have to pay compensation, we have to pay … We must find a way to exit these projects … this is our own people’s stupidity,” he was quoted as saying by the South China Post.
The statement comes after he dined with Chinese president Xi Jinping on Monday night and agreed with him to “enhance political mutual trust”.
Talking frankly at an earlier press conference with Chinese Premier Li Keqiang, Mahathir had called for “fair trade”, and warned against a new version of colonialism – an apparent reference to the debt burdens some countries were facing after accepting Chinese investment under the Belt and Road Initiative.
“Prime Minister Mahathir has always been known to say what others may be thinking but are afraid to say,” said Malcolm Cook, a senior fellow at ISEAS-Yusof Ishak Institute in Singapore.
Despite – or perhaps because of – Mahathir’s comments, the two sides later released a joint statement committing to “mutual respect and mutual benefit” in investments.
Upon taking office in May, Mahathir had swiftly suspended three massive Chinese-backed infrastructure projects costing US$23 billion ($31 billion), arguing they didn’t benefit Malaysia because they were too expensive and failed to create local employment.
The joint statement released on Monday night, after talks between Xi and Mahathir, was silent on the fate of the rail link and two gas pipelines, amid expectations Mahathir would seek to get a better deal. The East Coast Rail Link in particular is key to China’s Belt and Road plan to link Europe to Singapore by rail.
But the statement said Malaysia “welcomes, supports and will continue to actively participate in the Belt and Road Initiative”.
It said the two countries were “optimistic” about the prospect of bilateral relations.
A day earlier, Mahathir had been quizzed by Chinese business leaders for an hour on why he had cancelled the Chinese projects. He blamed his predecessor, Najib Razak, who is now facing corruption charges.
Mahathir, a political veteren who previously held the prime minister’s office for more than two decades, is an influential figure within ASEAN, an important regional bloc for China.
China is seeking to rebuff US criticism of its military activity within the South China Sea by completing a code of conduct with ASEAN that excludes so-called third parties such as the US.
Mahathir has previously criticised the presence of “warships” in the South China Sea.
Monday’s joint statement referred to the need for “all sovereign states directly concerned to resolve their differences by peaceful means through friendly consultations and negotiations, in accordance with universally recognised principles of international law, including the 1982 United Nations Convention on the Law of the Sea”.
By Kirsty Needham