China's Belt and Road Initiative gets major jolt

Citing bankruptcy and current fiscal issues, Malaysian Prime Minister Mahathir Mohamad on Tuesday announced cancellation of the China-funded East Coast Rail Link and two gas pipelines projects. The rail project was key to China's Belt and Road Initiative (BRI).

Mahathir is on a five-day visit to China. In a press conference, Mahathir expressed concerns about the project saying: "I believe China itself does not want to see Malaysia become a bankrupt country," reported the Sydney Morning Herald.

In another press conference held earlier with his Chinese counterpart Li Keqiang, Mahathir called for 'fair trade', and warned China against the new form of 'colonialism' which was a reference to the debts garnered by the countries after accepting Chinese investment under the BRI.

"The projects will not go on. At the moment, the priority is reducing our debt . it will be deferred until such time when we can afford, then maybe we will reduce the cost...If we have to pay compensation, we have to pay. This is the stupidity of the negotiations before. We must find a way to exit these projects . this is our own people's stupidity," South China Morning Post (SCMP) quoted Mahathir before his departure for Kuala Lumpur.

Mahathir put the blame on his predecessor Najib for the economic crisis in the country. "We had no problems with foreign direct investment before. But this happened because the government of Dato Seri Najib overlooked all the previous practices and entered into agreements which are very detrimental to our interests," Mahathir said according to SCMP. According to media reports from Malaysia, the country is currently facing a debt of about 1 Trillion Ringgit.

The cancellation comes following a joint statement released on Monday night in which Mahathir and Chinese President Xi Jinping refrained from commenting on the rail link and the two gas pipelines, amid the speculations that Mahathir would seek a better deal.