China says will ‘take care of’ debt issues of ‘Belt and Road’ projects, respects Malaysia pull-out

October 13, 2018

NUSA DUA, Indonesia (Reuters) – China’s vice finance minister Zou Jiayi on Saturday acknowledged debt issues with some of its ‘Belt and Road’ projects, saying the government will strengthen macro-supervision on the debt sustainability aspect of its overseas investments.

China has been promoting an ambitious Belt and Road initiative since 2013, as President Xi Jinping expands trade corridors along a modern-day Silk Road linking Asia, Europe and Africa, pumping credit into building roads, railways and ports in a trillion-dollar infrastructure initiative

“The debt sustainability issue of Belt and Road (projects) is a complicated issue, but we will take care of it,” Zou told a panel on the sidelines of annual International Monetary Fund and World Bank meetings in the Indonesian island of Bali.

The senior finance official said China could optimize and diversify its Belt and Road debt financing with more foreign direct investment, public-private partnerships, and equity investment, as opposed to commercial loans that could be more expensive.

But the initiative has been met with growing scepticism as some countries, such as Sri Lanka, became saddled with debt that they had difficulty in repaying.

One of the top recipients of China’s largesse, Malaysia, has recently stopped work on a $20 billion rail link between its east and west coasts, a rare setback for the Belt and Road initiative.

Zou said the Chinese government fully respects Malaysia’s decision-making and judgment, stressing the projects were inked on a commercial basis, and countries are free to vet and evaluate the terms of the projects.

“Malaysia adequately communicated with the China side on the issue. We respect Malaysia’s decision based on their debt sustainability analysis,” she said.

Reporting by Yawen Chen; Editing by Kenneth Maxwell

Source: Reuters “China says will ‘take care of’ debt issues of ‘Belt and Road’ projects, respects Malaysia pull-out”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China’s Malaysia OBOR Project Suspended to Be Replaced by Myanmar’s

China’s US$20 billion East Coast Railway Link in Malaysia has been suspended SCMP reports today. SCMP says that the project owner has told its main Chinese contractor China Communications Construction Company (CCCC) to suspend work as Malaysia’s new government seeks to renegotiate the terms of the deal with China.
The railway is part of the railway that provides land connection of southwestern China to Malacca Strait. It may facilitate development of western China. However, there will be an alternative route through the China-Pakistan Economic Corridor to the Indian Ocean. Moreover, China may skip Malacca Strait by building a canal in Kra Isthmus, Thailand or the China-Myanmar Economic Corridor and the developmmt of Myanmar’s Kyaukpyu port.

The Myanmar alternative is a viable better shortcut to Indian Ocean without passing through Malacca Strait as shown in the following map:

Route to Indian Ocean through Myanmar. SCMP map

SCMP says in its report “There’s no Chinese ‘debt trap’, says Myanmar minister, as government pushes for joint port project to go ahead”, “Myanmar’s government is eager to begin work on a Chinese-backed deep water port project in Kyaukpyu, and a decision is expected soon, the country’s union minister and security adviser Thaung Tun said.”

Thaung Tun said Myanmar said that Myanmar will focus on the China-Myanmar economic corridor to connect China’s Yunan with Mandalay in central Myanmar introduced when Aung San Suu Kyi visited China last year.

SCMP quotes him as saying that a railway connecting Ruili in Yunnan province to Mandalay “would start quite soon” and “in all likelihood it would be extended to Yangon and Kyaukpyu” in Myanmar.

China had better give up the Malaysian railway project though CCCC have some problems in dealing with its more than 2,250 local staff members and other indirect hires.

Comments on SCMP’s reports, full text of which can be found at and

DSA 2018: Chinese LHD design contends for RMN’s MRSS programme

China’s CSOC displayed a model of an LHD with amphibious capabilities at DSA 2018. The company is offering the design to Malaysia to meet the RMN’s MRSS requirement. Source: Richard D Fisher Jr

Richard D Fisher Jr, Kuala Lumpur – IHS Jane’s Defence Weekly 17 April 2018

A Chinese landing helicopter dock (LHD) with amphibious capabilities is one of the designs being considered for the Royal Malaysian Navy’s (RMN’s) multirole support ship (MRSS) programme, officials told Jane’s at the 16-19 Defence Services Asia 2018 (DSA 2018) exhibition in Kuala Lumpur.

The design being considered appears to be a smaller version of the 23,000-tonne LHD design unveiled by the China Shipbuilding and Offshore International Company (CSOC) at the 2012 Defense and Security exhibition in Bangkok. RMN officials said that the Chinese design could carry up to eight helicopters and would be equipped with a well-deck for deploying amphibious vehicles.

While officials at DSA 2018 stressed that the RMN has yet to select a final design, the experiences made with China’s different production and ship standards as part of the ongoing Sino-Malaysian co-operation to build littoral mission ships (LMSs) for the RMN has led to concerns about the desirability of China’s MRSS proposal. However, the officials also stressed that Beijing’s proposal could remain competitive if it becomes the low-cost option.

Malaysian officials indicated they expect the 15,000-tonne three-ship MRSS programme to be funded in 2018, with a final design expected to be selected in 2019.

The MRSS is part of the RMN’s ’15-to-5’ fleet transformation programme, which seeks to reduce operational costs and increase efficiency in logistics management, while bolstering vessel numbers.

Source: Jane’s 360 “DSA 2018: Chinese LHD design contends for RMN’s MRSS programme”

Note: This is Jane’s 360’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Philippines, China, Malaysia’s Jointly Exploit South China Sea Energy

China’s deep sea oil rig. photo

China’s says in its report “Philippines promotes Philippine-China joint exploitation in the South China Sea: Draft Contract has been submitted to Philippine President” yesterday that Philippines’ ABS-CBN news website says in its report on September 28 that Philippine government is promoting a win-win scheme with other South China Sea claimants to jointly explore oil and gas in disputed waters.

In addition “Philippine Star” reported on the same day that Philippine side’s draft contract on joint exploration of the oil and gas resources in Palawan has been submitted to President Duterte for examination and approval. The exploration will be conducted by a joint venture between China, the Philippines and Malaysia in an area to the northwest of Palawan.

This blogger’s comment:
The disputes among China, the Philippines, Malaysia, Vietnam and Brunei in the South China Sea are mainly over the oil and gas resourced there, the above-mentioned model of win-win cooperation among China, the Philippines and Malaysia will set an example for the peaceful solution of the disputes. As a result, countries outside the region will have no excuse to interfere with the disputes.

That is China’s victory as China has all along advocated putting aside the dispute to jointly exploit the resources. Philippine ex-president Aquino wanted to exploit the resources alone. Instigated by the US, he started and won an arbitration but got nothing as the US does not want to fight a war with China to impose the arbitration award.

Seeing that China is capable of exploiting all the resources while the Philippines can get nothing if it is so greedy as to get the resources alone, Aquino’s successor is wise to cooperate with China and other claimants to exploit the resources jointly.

Comment by Chan Kai Yee on’s report, summary translation of which is provided here. Full text of the report in Chinese can be viewed at

South China Sea disputes: China Advances, US Retreats

A Chinese coastguard vessel sprays a water cannon at Philippine fishermen near the Scarborough Shoal in the South China Sea in September 2015. Photo: AP

SCMP says in its report “China’s coastguard staking claim to contested reefs in South China Sea” today that China has intensified patrols of the sea area claimed by it within its nine-dash line. It said, “These South China Sea claims were also denied by the Permanent Court of Arbitration in The Hague last July” to hint that China is wrong in carrying out such patrols.

However, SCMP seems to forget that after the arbitration award China sent its air force to conduct combat patrol of the area it claims with its best fighter jets and bombers. The US sent two aircraft battle groups to force China to accept the arbitration award, but China responded with its firm resolution to fight a war to protect its rights and interests in the South China Sea.

Patrol by coast guard vessels are really not worth mentioning compared with combat patrol by advanced warplanes.

The US is wise not to fight China in the South China Sea as China has geographical advantages there especially when it has built large artificial islands with three airports there.

Moreover, Obama and Hillary Clinton created trouble in the South China Sea in order but to contain China. The US has no interests there for it to fight a war with a military power.

Trump’s priority is to bring jobs back home and make the US great. He certainly will not waste US resources in a conflict that will not benefit the US.

Other claimants may be unhappy with China’s patrols in the disputed areas but who shall they blame? The Philippines that filed the arbitration, the arbitration court that gave an entirely unacceptable arbitration award and the US that instigated the arbitration but has failed to enforce the arbitration award.

We see the stupidity of the arbitration. Without the arbitration, China did not actively patrol the disputed area, but after the arbitration that utterly denies China’s rights and interests, unless China is weak and easily bullied as it was a century ago, it will certainly advance into the area. Without sufficient military power to counter China’s advance, the US can do nothing but avoid military conflict with China there no matter who is US president.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at

Is Vietnam Reigniting a Fire in the South China Sea?

Vietnamese troops. Image Credit: Wikimedia Commons/ Ha petit

Vietnamese troops. Image Credit: Wikimedia Commons/ Ha petit

Hanoi is starting to feel more and more isolated as its regional neighbors reconcile with China.

By Nguyen Quoc-Thanh November 29, 2016

With Philippine President Rodrigo Duterte’s decision to reset ties with China, and Malaysian Prime Minister Najib Razak’s decision to put his country in the Chinese orbit, the situation all around Vietnam is evolving very rapidly. China also signed agreements for the 21st Century Maritime Silk Road with Cambodia in mid-October, not to mention their joint military exercise scheduled for December. Together, these rapprochements are seen by the Vietnamese as coming at the expense of their country, which is now “isolated” by land and sea.

Things have gotten worse and worse for Hanoi only five months after The Hague international tribunal’s verdict; the latest developments in the South China Sea (SCS) have shifted in Beijing’s favor. One by one, Vietnam’s neighbors have looked toward China and now seek conciliation. The legacy of U.S. President Barack Obama’s “pivot to Asia” seems distant, especially since President-elect Donald Trump has declared his intention to cut back the U.S. role as “world policeman.” At this time, no one can predict anything about Washington’s future role in Asia. Trump criticized Obama’s Asia policy during his campaign and now, Asian leaders are still waiting to see the U.S roadmap for the region under the next president. Will Trump lead America to an isolationist foreign policy? A year ago, Harry Kazianis imagined the consequences for U.S allies if America walked away from Asia. This scenario seems now potentially realistic.

In this context, it seems that Vietnam prefers to anticipate and plan to protect itself, including militarily. But by extending an airplane runway and building hangars for housing combat aircraft in the Spratly Islands, Vietnam has raised tensions. In August, the country already deployed rocket launchers to its bases in the SCS. Is such an offensive stance justifiable?

In the past years, Vietnam has notably increased its military spending. The trauma caused by the battle of the Paracel Islands in 1974, when ships of the People’s Republic of China sunk those of the Republic of Vietnam (South Vietnam), runs deep. The Vietnamese requested assistance from the U.S Seventh Fleet but their request was denied. As Vietnam doesn’t want to repeat the experience of relying on foreign help that may not come, the country has forged a defensive army for deterrence. For months, Hanoi has waited for a strong signal from Washington, especially since the lifting of arms embargo. But with the end of Obama’s presidency and, most likely, the end of his “pivot to Asia policy,” the future is uncertain for Vietnam, even if the partnership between U.S and Vietnam remains strong.

Under a Trump presidency, U.S. withdrawal from Asia is an unlikely but possible scenario. The European Union could have helped to disentangle regional conflicts in Washington’s stead, but European unity has been wracked since the Brexit – not to mention domestic factors such as the coming French presidential election and the next German federal election. In any case, Europe is busy dealing with tension over migrants and the Syrian civil war issue.

Help will not come from the outside and all indications are that the Vietnamese are now on their own. The solution could have been ASEAN unity but it has shattered lately, most recently during the 49th ASEAN Foreign Ministers meeting. Together, these factors contribute to increase Vietnam’s sense of insecurity. “We must react now or later would be too late,” said an officer of Vietnam People’s Navy.

The 1974 battle resulted in Chinese control of the entire Paracel Islands group and Vietnam clearly does not want history to repeat itself in the Spratly archipelago. A list of national possessions in the Spratly archipelago has been published on former Prime Minister Nguyen Tan Dung’s website. It is a way of showing that Vietnam is clearly determined to defend its claims.

No country in Southeast Asia knows China as well as Vietnam, which shares both maritime and land frontiers with this giant neighbor. China rising power in Asia is a worrying issue for Hanoi, and not even bilateral dialogues with Beijing have succeeded in reassuring the Vietnamese. For 2015, Vietnam’s defense budget was $5 billion and it may rise again as long as the Vietnamese feel insecure.

At the 8th SCS International Conference in Nha Trang, participants insisted on respect for international law and their desire for peace. But even with Duterte’s apparent allegiance to China, peace remains precarious in the South China Sea. A fire can reignite at any time with just a spark.

Nguyen Quoc-Thanh holds a Ph.D. in Maritime Studies. IrAsia, Aix-Marseille University.

Source: The Diplomat “Is Vietnam Reigniting a Fire in the South China Sea?”

Note: This is The Diplomat’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

Malaysia’s Najib risks backlash at home after deals with China

Malaysia's Prime Minister Najib Razak and China's Premier Li Keqiang attend a signing ceremony at the Great Hall of the People, in Beijing, China, November 1, 2016. REUTERS/Jason Lee/File Photo

Malaysia’s Prime Minister Najib Razak and China’s Premier Li Keqiang attend a signing ceremony at the Great Hall of the People, in Beijing, China, November 1, 2016. REUTERS/Jason Lee/File Photo

By Joseph Sipalan | KUALA LUMPUR Mon Nov 7, 2016 | 12:38am EST

Malaysian Prime Minister Najib Razak is facing grumblings back home that he is “selling off” his country after returning from China with about $34 billion worth of deals, which could help lift the economy ahead of elections.

The concerns emerge from a deep-seated distrust of the Chinese among Malaysia’s Malay-Muslim majority, who form the support base for the ruling United Malay National Organisation (UMNO).

Najib was quick to dismiss the concerns after concluding his six-day visit to China.

“Some have scaremongered that Malaysia is being sold off. This is absurd and absolutely false,” Najib said in a statement on Friday, insisting the projects will be owned and run by Malaysians.

The deals include Malaysia’s first significant defense deal with China, an agreement to buy four Chinese naval vessels.

Najib’s visit followed that of Philippines President Rodrigo Duterte, who announced his country’s “separation” from the United States and signed agreements and loan pledges worth an estimated $24 billion with Beijing.

UMNO leaders expect Najib to brief them soon so the party can start allaying any fears about China’s rising influence in Malaysia, said Shahidan Kassim, a senior member of the party’s supreme council and a federal minister.

“All of this has its pros and cons, but in UMNO we must have a policy statement on this,” he told Reuters.


Ethnicity and religion are sensitive issues in Malaysia, where Muslim Malays form a little over 50 percent of the population of 31 million. Ethnic Chinese make up about 25 percent and ethnic Indians about 7 percent.

Malaysia’s ethnic Chinese have long been a scapegoat for the Malay community, with UMNO leaders pointing to ethnic Chinese economic dominance to unite Malays and keep a firm grip on political power.

Last year, ethnic ties became strained under the weight of two opposing demonstrations largely split along racial lines. A ‘Malay pride’ rally blocked off Chinatown in Kuala Lumpur in a show of strength following an anti-government rally dominated by Malaysian-Chinese. Najib’s government summoned China’s ambassador over his remarks ahead of the “Malay pride’ rally.

Clashes are expected again this year as thousands of anti-government demonstrators plan to protest in Kuala Lumpur on Nov. 19, calling for Najib to resign over the money-laundering scandal linked to Malaysian state investment fund, One Malaysia Development Berhad (1MDB).

A member of UMNO’s policy-making Supreme Council, Irmohizam Ibrahim, said Najib’s deals with China have stoked concerns among party leaders.

“We’re expecting the prime minister to address these issues at our next Supreme Council meeting,” Irmohizam told Reuters.

“We will then need to go down and explain to the grassroots that … the deals are purely for the economy and trade,” said Irmohizam, who also serves as Najib’s strategic director in the party.

Malaysia’s opposition is questioning the China agreements but for different reasons, saying it is tilting the country toward Beijing.

“Malaysia’s economic dependence on any single nation is unreasonable and will affect the country’s freedom and geo-political strategy and foreign policy,” jailed opposition leader Anwar Ibrahim said in a statement issued from prison.


Najib is planning elections in the second half of 2017, a government source has told Reuters.

The investments from China could help the prime minister pump-prime Malaysia’s economy before then. A 2017 national budget Najib announced last month calls for only a modest spending rise, amid a continuing slump in commodity prices.

Senior UMNO leaders and urban Malays, however, are uncomfortable that Chinese money will drive the development of strategic assets, according to James Chin, director at the University of Tasmania’s Asia Institute.

Chin says the Malay elite welcomes Chinese investment in purely commercial deals such as property purchases, but are more wary about agreements such as a 55 billion ringgit ($13.11 billion) deal for the Chinese to develop a rail network.

“The problem with these deals is that they are seen as selling the country’s golden jewelry,” Chin said.

Ties between Malaysia and China reached a high point last December when Beijing came to Najib’s rescue with a $2.3 billion deal to buy 1MDB assets, helping ease concerns over its mounting debt.

Relations with Washington became strained after the U.S. Department of Justice filed lawsuits in July implicating the prime minister in the money-laundering probe at 1MDB, the advisory board of which Najib chaired until recently.


China and Malaysia agreed to enhance naval cooperation, after sealing the deal to buy four Littoral Mission ships, fast patrol vessels that can be equipped with a helicopter flight deck and carry missiles.

Malaysia, along with three other members of the Association of Southeast Asian Nations (ASEAN) – the Philippines, Vietnam and Brunei – are among the countries contesting territorial claims with China over the South China Sea. China claims nearly the entire body of water as its territory.

Najib said last month the disputes should be resolved through dialogue with Beijing.

Duterte during his visit persuaded the Chinese to let Philippine fishermen operate around a disputed shoal, before declaring his unhappiness with Washington over its criticism of his lethal antidrug campaign.

ASEAN, meanwhile, has struggled to come up with a unified position on the South China Sea disputes at its meetings.

“ASEAN will not go away… but increasingly the idea of the multilateral track will be downgraded as now we see a swing from two key claimants to a more bilateral approach,” said Euan Graham, director of the international security program at the Lowy Institute, a Sydney-based think-tank.

(Editing by Praveen Menon and Bill Tarrant)

Source: Reuters “Malaysia’s Najib risks backlash at home after deals with China”

Note: This is Reuters report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.