The BRI in Malaysia

Yeseong writes*

China’s influence on other countries is hard to grasp so this post focuses on President Xi’s biggest and most ambitious foreign policy: The Belt and Road Initiative, or BRI. The BRI is an effort to link some 70 countries through a trillion dollars of investment in roads, ports, pipelines, roads, and other infrastructure. Xi claims that this initiative will work magic like the ancient silk routes, opening “windows of friendly engagement among nations, adding a splendid chapter to the history of human progress.”

Malaysia supported BRI under the rule of the former Prime Minister Najib Razak. Malaysia signed deals for infrastructure to be funded by the Chinese state-owned and commercial banks. The people of Malaysia supported these deals as they had nothing to lose from more jobs, and better infrastructure. They believed the BRI would help the economy and raise their quality of life.

Yet, the new government, led by PM Mahathir Mohamad, did not feel this way. The former government was corrupt, and Mahathir believed that Najib began unnecessary ventures the country could not sustain, which led to the cancellation of $22 billion of BRI projects for rail links and gas pipelines. As a cautionary tale, consider that Pakistan borrowed from Chinese commercial banks until it needed an IMF bailout.

There are clear opportunities and risks involved with the Chinese effort to bring countries together. A successful BRI would improve Eurasian trade connectivity, boost the economies of developing countries, and raise living standards for millions of people. On the other hand, trade processes might be hindered by cumbersome policies; large infrastructure projects may be ineffective due to many reasons including corruption (which is the case of Malaysia under Najib Razak); and accumulating debts in developing participants may be on an unsustainable level. Some also worry that the BRI is an excuse “to establish a comprehensive system to shape the world according to China’s interests.

Bottom Line: China’s BRI promises investments to link numerous countries. It would be wonderful if the BRI’s promises materialized, but the reality is different. Thus, countries need to be careful of BRI risk, as Malaysia discovered with corruption and excessive debts from unnecessary projects.

* Please help my Growth & Development Economics students by commenting on unclear analysis, alternative perspectives, better data sources, etc. (Or you can just say something nice 🙂

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

2 thoughts on “The BRI in Malaysia”

  1. I’m also looking into BRI so I’m happy to read your post! As you have also mentioned, the framing of the BRI project in Chinese and many Western media sources is very different, as one can expect. Of course, debts and influence of Chinese foreign policy are very real risks, but I wonder how much of this framing is also a kind of fear-mongering, in the same fashion as all those pop non-fic ‘The West is cancelled, China is going to rule the world’ books. I wonder how BRI infrastructure financing is actually different from IMF/World Bank loans, or US FDI? If you, or anyone else, have any insights on this I’d love to hear.

    1. Thought-provoking blogpost! Hmm yes there is a quite a lot of attraction for many economically underperforming countries in Asia, like Malaysia, to take on the investments and projects of China’s BRI. I agree, like you mentioned it us easy for these countries to fall into debt when they become greedy and take on too much investment. This could be down to a lack of government transparency on what sort of deals they are taking on from China. Whether or not China is playing a fair game with the countries it is installing its BRI infrastructure within, in terms of knowingly investing in projects where countries won’t be able to pay them back for example or exploiting the corruption of its leaders could be another question. I don’t think China will care about this, the more countries of political and economic interest that they have in debt, the more power and authority China will have.

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