On this episode of China Uncensored,
Hey Malaysia, that’s some nice
Chinese investment you got there.
It’d be a shame if it led to
massive government corruption.
Welcome back to China Uncensored,
I’m your host Chris Chappell.
The Chinese Communist Party has a plan for world domination.
And no, it’s not mass yoga sessions.
Hmm, although I think state-run media knows how to sell it.
What’s that Shelley?
Oh, right, the topic.
What was I talking about?
Ah, right.
The Communist Party’s plan for world domination.
And how are they going to carry this plan out?
“The Belt and Road is how, oh oh oh oh”
Yes, nothing says “innocent, peaceful development”
like children singing.
The Communist Party claims the Belt and Road Initiative,
also known as One Belt, One Road,
is a recreation of the global trade route,
the Silk Road.
What it means on the ground is that Chinese companies
will come into a small country
to build things like roads, bridges, or ports.
The Chinese companies are providing this “service”
in dozens of countries—to a tune of more than a trillion dollars.
Most of the investment is in less-developed countries
that can’t afford to build the roads,
bridges, or ports on their own—
so they take out a loan to pay the Chinese companies.
And that loan usually comes from a Chinese state-owned bank.
But unfortunately, it’s not all sunshine and catchy songs.
Because when you take out a loan, you have to pay it back.
And a lot of countries have been ending up
deeply in debt to Chinese banks,
while Chinese companies suck out the juicy resources
those countries have to offer.
For example, Malaysia.
For many years,
Malaysia was going all in
on Belt and Road investment from China.
That’s thanks to Najib Razak,
who was Malaysia’s prime minister for nearly a decade.
“Malaysia's prime minister has made a habit
of attending announcements of new Chinese investments
in his country.
And he’s had plenty of events to attend lately.”
Wait, did you hear that?
Was that just...a glitch in the matrix?
But Chinese state-run media were right—
Najib Razak had a lot of Chinese events to attend.
Over the past several years, Malaysia secured
$34 billion dollars worth of
Belt and Road infrastructure projects.
So why was Najib so into Chinese investment?
You’ll find out in a bit.
But to the Malaysian public,
it eventually seemed like the Belt and Road
was turning into a noose.
But then, during Malaysia’s elections this past May,
Najib was kicked out of office, and replaced
by 92-year-old former prime minister Mahathir Mohamad.
That ended six decades of one-party rule in Malaysia.
And Mahathir didn’t feel the same way
about the Belt and Road Initiative.
“None of our people are employed as workers.
None of our companies are used for designing
and planning and supervising, et cetera.
We gain nothing.”
His criticism of investment from the Chinese Communist Party—
and his promise to halt or review Chinese investments—
was one of the factors that helped him
win his surprise election victory.
But there was another surprise:
A politician actually made good on his word.
Last week, Mahathir suspended four Chinese linked projects
worth about a total of 23 billion dollars.
That’s already more than two-thirds
of all the current Belt and Road projects.
Now, Mahatir’s government will be reviewing
each of these contracts,
which the new finance minister has called
“completely lopsided.”
They’ll be either canceling them
or re-negotiating those contracts.
Among the projects suspended
are several oil and gas pipelines
built by the state-backed China Petroleum Pipeline Bureau.
But the biggest project that’s been suspended
is the East Coast Rail Link.
The construction was being handled by China’s state-owned
China Communication Construction Company.
And “85% of the financing was provided
by the Export Import Bank of China.”
The 430-mile rail line would connect
a northeastern port on the South China Sea
with strategic shipping ports on Malaysia’s west coast.
This is a key route linking the Belt and Road
through Southeast Asia.
At least until the project got suspended.
One of the reasons Mahathir's government suspended it
is that the ministry of finance
calculated the true cost of the project
to be 20 billion dollars,
which is 3.5 billion more
than the previous government’s estimates.”
And that’s just too much money for Malaysia—
a country that already has a problem with national debt.
Also, corruption.
Remember how I said Najib was super into Chinese investment?
Well that’s because he was able to use it to finance
his massively corrupt projects.
You know those oil and gas pipeline projects
that got shut down?
They had links to a Malaysian development company
called 1Malaysia Development Berhad,
or 1MDB for short.
That company is owned entirely
by the Malaysian Finance Ministry.
And guess what?
Under Najib, 4.5 billion dollars went missing.
And 700 million of that money flowed directly
into Najib’s personal bank accounts.
Huge mistake.
If you’re going to steal public money,
at least do a better job of hiding it!
Using your own personal bank accounts?
Rookie move, Najib.
Anyway, the new finance minister has been looking into that.
And what he thinks happened is that Najib’s government
used money from the Export-Import Bank of China
to buy land owned by its own 1MDB company,
so it could pay off its debts.
And that’s not the only Chinese company that was a little shady.
China Petroleum Pipeline Bureau that was building
those oil and gas pipelines I talked about earlier
also got a little perk.
Najib’s government was paying them for construction
that didn’t actually take place.
“Only an average of 13 per cent of the pipelines’ construction
has been completed,
while almost 90 per cent of the projects’ value
has been paid to CPPB.”
Hmm, very interesting.
Najib, by the way, was arrested last Wednesday.
He’s been charged with “criminal breach of trust and corruption.”
He pled not guilty.
So Mahathir goes after Najib for corruption
and hits the Chinese investments
that may have played a big old role in it.
But this isn’t just a problem for Najib.
It’s also a problem for the Chinese Communist Party.
The current Malaysian government
wants to dramatically reduce construction costs.
And they want to renegotiate or cancel
a lot of their contracts with Chinese companies.
Mahathir has said that he’s not against
the Belt and Road Initiative,
but that he wants to renegotiate some of the terms.
And he’s headed to China next month to do that.
This has become a big test of Beijing’s flexibility.
The Chinese Communist Party has always tried
to leverage the size of China and its economy
to “help” it’s smaller neighbors in Southeast Asia.
And by “help,” I mean help them go into debt
so they become dependent on Chinese money,
while building infrastructure with Chinese companies
that shut out local workers.
But now, that pesky new Malaysian government is saying,
wait a minute, not so fast.
And the Communist Party may be finding out
it’s not quite as powerful as all the bluster.
And what’s “Worse for China,
other governments along its lengthy trade passages
may get similar ideas.
Some might push to use more domestic contractors
or seek better debt terms.
A combative Malaysia could easily be
just one of many bumps to come.”
Of course, my favorite Chinese state-run media,
the Global Times, is very concerned
that this move to suspend Chinese investment
could be very tough... for Malaysia.
Particularly “the inconsistency and capriciousness”
of the Malaysian government.
But just when you think you’ve got
Chinese state-run media figured out,
they throw you a curveball—
and actually tell the truth.
Like when they said that “Malaysia is a key point
along the routes of the Belt and Road initiative.”
Yes, it sure is.
And I think the Chinese Communist Party
has just figured that out.
So what do you think about how Chinese investment
may or may not have played a role in corruption in Malaysia?
And is this a turning point
in the Party’s quest for world domination?
Leave your comments below.
And now is the time when we answer questions from fans
who support China Uncensored
on the crowd funding website Patreon.
Wesley Brewer asks,
“What is your opinion on how China (PRC)
and China (ROC) [meaning Taiwan]
should be recognized in global politics?
Two China Policy?
One?”
Good question.
Once upon a time,
most countries recognized Taiwan,
the Republic of China, or ROC,
as the legitimate government of China.
It wasn’t until 1971 that the UN
switched to the People’s Republic of China,
which is run by the Chinese Communist Party.
The US made the switch in 1979,
and 90% of other countries have followed suit.
The Chinese Communist Party has basically
made the entire world pick:
“You can only recognize one China,
so will it be us,
the big China with a billion people?
Or will it be the puny island of Taiwan?”
But I believe that’s a false choice.
More and more, in Taiwan,
the people see themselves as a completely separate nation,
an already independent country
with their own identity that should be recognized
by the international community.
It’s just that other countries
have all agreed to the false choice,
that there can only be one China.
So they’ve all picked only one China
to have diplomatic relations with.
In theory, the United States could officially recognize
both the PRC and Taiwan as individual countries.
And if they did that,
then other countries would probably do that too.
But that would be a dramatic change in US foreign policy,
and it would anger the Communist Party
to an extraordinary degree.
The alternative is to continue pretending
that Taiwan isn’t really a country,
but that’s also...
not a great long-term solution,
since it means constantly pretending
something isn’t the way it really is.
I don’t have the answer here.
But there’s another possible scenario, too.
If the Chinese Communist Party collapses someday,
there might be a new government
that doesn’t care so much about claiming
Taiwan as a province of China.
And then the situation would resolve itself.
Wait...if the Chinese Communist Party collapses,
then what would I be uncensoring on this show?
I’d be out of a job!
I guess there’s always Russia Uncensored.
Thanks for your question, Wesley.
And remember,
if you want to have me answer your question on the show,
become a supporter of China Uncensored on Patreon.
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You’ll help keep the show going,
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So thanks for watching.
Once again I’m Chris Chappell,
see you next time.
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