When Mahathir Mohamad visited China for the first time in 1985 – making stops in Beijing and Hangzhou – the Malaysian prime minster brought a 200-strong delegation with him looking to sell goods and services, and invest. It was not an especially fruitful tour: Mahathir was said to be put off by Beijing’s reluctance to sever ties with the Malayan communists, who still provided pockets of resistance along the Malaysian border.
Fast forward 33 years, and the 93 year-old was back in China again this month, once more as Malaysia’s prime minister. The circumstances were very different, however. Now Malaysia is looking to secure Chinese technological knowhow, as well as the kind of investment preferred by his newly elected administration.
Mahathir started his five-day trip in Hangzhou, deepening his rapport with local resident Jack Ma, the boss of Alibaba (see WiC417). Their friendly repartee began in Mahathir’s office in June after Ma opened a regional logistics hub near Kuala Lumpur. Visiting Alibaba’s Hangzhou headquarters, Mahathir focused on how the internet giant was helping to reshape the Chinese economy. “What you have achieved is quite fantastic … we’d like to tap your idea of modern technology for the benefit of the people,” he told Ma after an hour-long briefing.
Mahathir seemed particularly impressed by how Alibaba’s payments arm was being used for cross-border trade. “Chinese tourists come to Malaysia all using Alipay. They don’t bring cash with them,” he marvelled, according to the People’s Daily. The state-run newspaper noted that Mahathir had also shown interest in another technology that the Chinese government takes pride in – high-speed rail. Indeed, in a departure from his official arrangements, Mahathir ditched his flight and took a bullet train to Shanghai from Hangzhou.
However, the train ride doesn’t seem to have softened his resolve on cancelling some of China’s Belt and Road investments in Malaysia. Concluding his trip in Beijing on Tuesday, and almost immediately after a high-level meeting with Chinese President Xi Jinping, Mahathir said his government had decided not to go ahead with the China-funded East Coast Rail Link and a proposed natural gas pipeline (see WiC417). The projects, estimated to be worth around $20 billion, are currently unaffordable for Malaysia, Mahathir told reporters, adding that he believed that “China itself does not want to see Malaysia become a bankrupt country”.
Mahathir hinted that the projects could resume in the future but that it depended on a renegotiation of the financial terms.
Beijing is reluctant to go down this road, New York-based Douwei News pointed out, because it doesn’t want to set a precedent for other countries to demand similar concessions. The fact that Xi decided to meet Mahathir just a day before his flight back to Malaysia also pointed to frostier Sino-Malaysian relations, the political news website suggests.
But Mahathir did not return home entirely empty handed. According to Malaysia’s New Straits Times, he pulled off a deal to export Malaysian durians – frozen and in whole fruit form – to China. And while in Hangzhou he also witnessed the signing of an agreement by Geely to sell more cars from Malaysian carmaker Proton in China. The deal allows Proton to tap Geely’s technologies – jointly developed with its subsidiary Volvo.
According to the Financial Times, Geely is pressing ahead with an IPO of Volvo later this year. It bought Volvo for $1.8 billion in 2010 and is said to be targeting a valuation of more than $30 billion for its Swedish-based unit, with the FT reporting that bankers had confirmed the price tag to be achievable. News this week may have boosted investor appetite as Geely was named China’s third biggest carmaker (behind GM and Volkswagen) selling 44% more cars in the first half than in the same period in 2017.
Geely now owns 49.9% of Proton and Mahathir will be hoping that its successes with Volvo can be replicated at the Malaysian carmaker – a company that he helped to establish during his first period in office.
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