Chinese investments must not come with strings attached, says analyst

FMT:

Chinese investments must not come with strings attached, says analyst

Samirul Ariff Othman says countries such as Sri Lanka are now paying the price for accepting billions in unsustainable loans from China, a practice critics of Beijing refer to as ‘debt-trap diplomacy’.

Prime Minister Anwar Ibrahim and his Chinese counterpart, Li Qiang, at the Great Hall of the People during a recent visit to China. Anwar said Beijing had agreed to invest RM170 billion in Malaysia. (Bernama pic)


KUALA LUMPUR: An economist has urged the government to thoroughly scrutinise the RM170 billion investment coming in from China to ensure it does not undermine Malaysia’s sovereignty.

Former Malaysian Institute of Economic Research senior research officer Samirul Ariff Othman said transparency over the investment was crucial.

“Looking at this astronomical sum of RM170 billion, we really have to ask what we have to give up in exchange for such an extraordinary amount of investment,” he told FMT Business.

He said a number of countries, including Sri Lanka, Pakistan and Cambodia were paying the price for accepting billions in unsustainable loans from China, a practice critics of Beijing refer to as “debt-trap diplomacy”.

“Even a layman will understand that these kinds of investments will not come without strings attached,” he said, adding that Malaysia and other developing countries were “battlegrounds” for major powers with geopolitical interests.

Samirul also said the government must ensure that the acceptance of these investments did not hamper its ability to speak up on issues, including the plight of the Uyghurs and the South China Sea territorial disputes.

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“The terms and conditions (of the investments) must be spelled out clearly,” he added.

Economist Geoffrey Williams said the investments should be welcomed “with caution”.

He said a strong Chinese presence could pose challenges if companies from the country dominated or crowded out local firms.

The Malaysia University of Science and Technology lecturer also said the government must be careful about taking on too much debt to prevent the country falling into a debt trap.

“So it should be welcomed cautiously and the full implications should be examined to ensure it is net positive for Malaysia,” Williams told FMT Business.

He also said the investments were only pledged and that they might not necessarily materialise.

Even if they did materialise, the investments from China are likely to be spread over many years, Williams added.

Last Saturday, Prime Minister Anwar Ibrahim said Beijing had agreed to invest RM170 billion in Malaysia, which is said to be the highest investment commitment from the republic.

China has been Malaysia’s largest trading partner since 2009, and total trade between the two nations touched RM487.1 billion in 2022. It was also the top investor in Malaysia last year, contributing 21% of the RM264.6 billion in investments the country approved in 2022.