Is China colonising Malaysia?

Colonialism, contrary to what some may believe, did not begin with any decisive bang in history. The British colonialism, one of the most aggressive forms of colonialism ever witnessed in history, began in an innocent manner.  

It started with coal stations being built around the coast of various continents around the world. When local conflicts started sprouting up in Africa, India, Southeast Asia and elsewhere, the British East India Company began calling for intervention and help. 

The next thing one knows, British Empire had acquired its form and shape by the middle of 18th century - necessitating London to defend all the coal stations at all costs. The reason? To allow British mercantile interest to reign supreme in world trade.

There is every reason to believe that Chinese colonialism - if and when it gains its final shape -would begin as an "accidental" empire too. Why?

The "One Belt One Road" (Obor) seeks to connect China with more than 62 countries, some as far away as Kenya and Djibouti, with the latter having the facilities to host Chinese naval vessels. In all, China is expected to spend no less than US$5 trillion on all its assets.

With US$3 trillion in the reserves of China, anything one-third or above, would compel China to defend it. If the spending of Obor, in the decades and years to come, do continue to head north, why should China not defend all the US$5 trillion that it is spending?

It is only natural that it does. Otherwise, how would it justify to the people its profligate cheque book diplomacy? It can't. The only way China can defend Obor - instead of relying exclusively on soft power - is indeed hard power.

Yet, as of now, there is nothing final and nefarious about China and Obor. Malaysia welcomes all its foreign direct investments without fail. 

In fact, one welcomes its role as a major Asiatic power in the United Nations (UN) too, especially the UN security council, where it is the lone Asian representative since the end of World War II.

Indeed, when Mahathir could not get Tokyo to represent Malaysia and Asean's interest in G7, where Japan was the only Asian representative, it was Mahathir who floated the idea of an East Asian Economic Group (EAEG) to Chinese Prime Minister Li Peng. Mahathir's goal then, as it is now, was to allow China to take the lead in the region.

Secretary of State James Baker made strenuous effort to stop Mahathir, too, even going as far as warning South Korea and Japan not to accept Mahathir's overture.

Indeed, Baker warned these two countries that it was the US that supported them "with blood and sweat" since the end of Second World War.

Baker was of course correct. But so was Mahathir. In urging Asia to create a common economic group, with China donning a leading role, he was merely reacting to the forces in Europe. 

By 1990, efforts were well under way to form the European Union (EU) anyway. If China and East Asia do not stand up collectively, the region would be exposed to the vagaries of their policies. True enough, the Asian financial crisis in 1997-1998, proved his vision right.

By 1998, Asean, China, Japan and South Korea, had circled their wagons finally to defend themselves against the forces of international financial speculations. In the same vein, if China keeps expanding Obor, at a rate faster than what Asean and East Asia can accommodate, Beijing too would have to look after its regional and global interest first.

This is where the possibility of an "accidental" Chinese empire is high. To be sure, inklings of it can be seen in Malaysia - with the complicity of Umno. 

The East Coast Railway Link (ECRL) is pegged at RM55 billion. This is allegedly RM25 billion well above budget. There is every indication that China has allegedly allowed Umno and the local Umno contractors to inflate the budget to pad their own pockets. 

With Malaysia owning the project, the project must succeed, without which the Malaysian taxpayers would have to assume the entirety of the debt, after a grace period of seven years at 3.25 percent interest rate, not a very government-to-government ‘bilateral’ arrangement.

At 3.25 percent, the interest rate is damning and high too. If not enough traffic and tonnage are generated, the whole project will collapse and fail. Indeed, studies by economist Jomo Kwame Sundaram showed that the entire project has to increase its tonnage from six million tonnes right now to 60 million tonnes. And that is on eastern corridor!

Only China can support such a large increase in tonnage. If China does not lift its finger to support the train traffic of Malaysia, then Malaysia would be in a perilous position. Not unlike Hambantota in Sri Lanka, which could not repay its loan of US$301 million with a high interest of 6.3 percent, nor has a business that is sustainable, it has had to convert its facilities, which is twice the size of Macao, to a 99-year lease with an 80 percent ownership by Chinese firms effectively swapping debts for equity.

Sri Lanka’s estimated national debt is US$64.9 billion of which US$8 billion is owed to China with very high-interest rates compared to soft loans from the World Bank or the Asian Development Bank (ADB) that charges only between 0.25 to 3 percent, with a lot more governance structure in place compared to suspicious China’s loan deals.

'Debt entrapment program'

Elsewhere, Venezuela has faced the same. When it could not repay the US$63 billion loan, Caracas has had to pay back with its oil. When the price of oil was US$100 per barrel, the repayment would have been easy. But since 2014, the price of oil had fallen to half its original price. Venezuela's pay back to China now involves doubling its barrels of oil to China. Either way, China gains.

In the case of Sri Lanka, it has acquired the port to run as it pleases. While it is written down in the lease that China cannot use it for any military purposes, one cannot prevent China from using it as a counter intelligence centre against India in the Indian Ocean too. Thus, Sri Lanka, like it or not, has become entwined in the Sino-Indian conflict for the century to come.

In the case of Venezuela, the collapse of its economy has consigned it to becoming a Chinese colony no less. In fact, further away, Zimbabwe, too, has become a Chinese colony - the renminbi has become the currency of choice - effectively losing its sovereignty, for some time to come.

In all three cases, one can see that Chinese generosity - and loans - come with a price, especially if the local authorities do not know how to manage them.

In the case of Malaysia, the 1MDB has shown the decrepit manner by which the government of Umno runs its international investment. It leans on lots and lots of debts, almost without fail. And, Umno suffers no guilt in excusing its behaviour anyway. 

The political economy practiced by Umno, where vested interest of the top members of the Umno supreme council reigns, bodes ill for the national interest of Malaysia. The more Chinese dollars are funneled into Malaysia, the more Umno will use the money to strangulate the voices of the people on the ground - not unlike how Baker sought to prevent Japan and Korea from supporting Mahathir.

In current Umno, Mahathir is of course, no longer there. And, with Najib at the helm, where "cash is king", the benefits from China will allegedly end up lining the pocket of his inner circle and his coterie of advisors.

When Chinese influence is all strong and ubiquitous throughout the country, overwhelming the local Chinese and Malay interest too, there is a limit to how much all of Malaysia can gain and benefit from it. Thus, Chinese investment can and must be welcomed. But Malaysians of all background must be careful and wary of it too. Too much of anything is never good.

Colonialism began with greed. But it is also driven by the greed of those who are "colonisable", according to Algerian philosopher Malek Ben Nabi.

China seems to have developed five criteria in their “debt entrapment program” disguised as “foreign direct investment” into the countries it has chosen to enter in a big way and as part of Obor: firstly, the leadership must be corrupt; secondly, the democratic or government institutions must be corrupt or easily manipulated; thirdly, the target country must be rich in natural resources; fourthly, the target country must be in need of fast money and fifthly, the target country must be an important component of its geo-political interests including but not limited to Obor.

So the next question will be, have Malaysia fulfilled all those criteria? Barely fulfil the criteria? Over fulfilled the criteria? Think and reflect intensely.

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DR RAIS HUSSIN is a supreme council member and head of policy and strategy of Parti Pribumi Bersatu Malaysia (Bersatu). - Mkini