Posts Tagged ‘Malaysia’

China’s The Belt and Road Initiative Is a Corruption Bonanza

January 17, 2019

Despots and crooks are using China’s infrastructure project to stay in power—with Beijing’s help.

Malaysian Prime Minister Najib Razak (left) shakes hands with Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (Kenzaburo Fukuhara-Pool/Getty Images)

Malaysian Prime Minister Najib Razak (left) shakes hands with Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (Kenzaburo Fukuhara-Pool/Getty Images)

When former Malaysian Prime Minister Najib Razak was ousted from office in May 2018, it’s possible that no one was more dismayed than officials in Beijing.

After all, Najib had granted China extraordinary access to Malaysia. Across the country, huge China-backed infrastructure projects were being planned or breaking ground. But as China’s presence in Malaysia swelled, a scandal was engulfing the prime minister’s office. Najib was accused of massive corruption linked to the development fund known as 1MDB. As the election neared, his opponent, Mahathir Mohamad, alleged that some of the Chinese money pouring into Malaysia was being used to refill the fund’s graft-depleted coffers.

Now, Malaysia’s anti-corruption commission is investigating those claims. And last week, an explosive Wall Street Journal report exposed the most damning evidence yet: minutes from a series of meetings at which Malaysian officials suggested to their Chinese counterparts that China finance infrastructure projects in Malaysia at inflated costs. The implication was that the extra cash could be used to settle 1MDB’s debts. According to the report, Najib, who has denied any part in corruption, was well aware of the meetings.

If true, the report puts tangible proof behind widely held suspicions that China exploits corrupt regimes to propel its Belt and Road Initiative (BRI). The BRI requires China to build infrastructure in other countries—a process that’s fraught with official approvals, feasibility studies, stakeholder engagement, and other bothersome procedures. In corrupt countries, however, many of these obstacles can be bypassed with bribes and back-room dealing—in fact, some of the red tape exists primarily to extort money from businesses. For this reason, it’s easy to understand why China might prefer working with corrupt regimes.

But not just China benefits from corruption in BRI projects. In many cases, the leaders of BRI-recipient countries see the projects as opportunities to sustain and legitimize their own corruption, as well.

Many countries that receive BRI investments suffer from high levels of corruption. On the TRACE Bribery Risk Matrix, most rank in the lower 50 percent, and 10 are among the riskiest 25 countries in the world. They often have opaque legislative processes, weak accountability mechanisms, compliant media organizations, and authoritarian governments that don’t permit dissent.

For politicians in these countries, the BRI offers an array of tools for enabling corruption: injections of easily diverted cash, dazzling infrastructure to placate the citizenry, and the imprimatur of a cozy relationship with one of the world’s most powerful nations—all of it wrapped up in a virtual guarantee that their wealthy benefactor will, at the very least, look the other way if any improprieties should surface, so long as the project in question gets built.

Malaysia has come to embody this dynamic. The new government has unearthed what it says are numerous abnormalities embedded in the previous administration’s deals with China. For instance, a Chinese state-owned enterprise was paid $2 billion in advance for two Malaysian pipeline projects that it had barely started construction on. Another BRI project, Malaysia’s East Coast Rail Link, was so expensive that authorities suspect its cost was artificially inflated. All of these projects have been suspended while the new administration reviews them.

The excess money generated by these projects was allegedly siphoned off by the Najib administration to pay down 1MDB’s debts. But while Chinese largesse may have kept these deals in the dark for a while, Malaysian voters were ultimately able to hold their prime minister accountable at the ballot box.

Not every country has that option. China’s investments in oil- and gas-rich Central Asia have allowed autocratic regimes in that region to flourish. A prime example is Kazakhstan. The Kazakh government, a veritable kleptocracy, is extremely corrupt. On Transparency International’s 2017 Corruption Perceptions Index, Kazakhstan ranked in the bottom third of 180 countries.

Not only have BRI projects financed this government, but they’ve helped make its leadership genuinely popular as ordinary Kazakhs interpret the flashy new infrastructure as a symbol of progress. This has been crucial for the country’s rulers, since the health of the Kazakh economy is highly dependent on oil prices and economic fluctuations in Russia. In an analysis of Chinese investment in Kazakhstan, a study from the George Washington University found that “Chinese aid, loans, and partnerships … enhance the Kazakh leadership’s ability to stay in power.”

China, of course, struggles with its own share of corruption. In fact, some of China’s own infrastructural marvels have been built through means that were less than scrupulous. President Xi Jinping’s anti-corruption purges have frozen some of that at home. In its construction projects abroad, however, Beijing’s approach seems to be “whatever works.” In no part of China’s lengthy declaration of the BRI’s principles is any attempt made to discourage corruption. And according to a report by Transparency International, no charges have ever been brought in China against a company, citizen, or resident for corrupt practices committed overseas.

If anything, the BRI has revealed that, for Chinese officials acclimated to corrupt environments at home, executing overseas projects through unsavory means comes somewhat naturally. Like many undertakings in China, BRI projects are subject to the slippery Chinese concept of guanxi—systems of mutually beneficial relationships that grease the wheels of many a business transaction. In China, bringing a sprawling, unwieldy infrastructure project to completion without guanxi can seem an impossible task.

But without proper policing, these mutually beneficial relationships are ripe for corruption. A recent study found that “guanxi has profound influence on almost all social interactions in China, whether it is in the government or in business. As such, it blurs the line between normal guanxi relationships and corrupt practices, making corruption an intrinsic characteristic of the Chinese government, as well as the Chinese society.”

While Chinese corruption at home doesn’t threaten to bankrupt the government, Chinese corruption in smaller, poorer countries sometimes does. For some of these countries, China’s BRI project is the biggest infrastructural endeavor they’ve ever attempted—a high-stakes gamble collateralized with mountains of debt. When such projects are approved by local leaders more interested in enriching themselves than in weighing the cost for their country, locals can find themselves crushed beneath the weight of white elephants.

Laos may face this fate. At China’s behest, Laos is building a railway from its northern border to Thailand with a large loan from a Chinese bank. The $6 billion project was championed by the country’s former deputy prime minister, Somsavat Lengsavad, a fluent Mandarin speaker with close ties to Beijing. Somsavat almost single-handedly ushered the project through the Lao bureaucracy, despite warnings from the International Monetary Fund that it threatened the country’s ability to service its debts.

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Chinese President Xi Jinping, right, shows the way to Philippine President Rodrigo Duterte during a welcome ceremony outside the Great Hall of the People in Beijing, China.   AP/Ng Han Guan, File

Why Somsavat was so keen on the railway remains unknown, though corruption is rife in Laos, and bribery in foreign-built Lao development projects is common. One foreign diplomat working in Laos says the regular visits to Vientiane by Chinese emissaries “don’t just flatter Lao officials—concrete things get exchanged between Chinese and Lao delegates at these meetings.”

Laos should look to Sri Lanka, where Hambantota Port was built by China under former President Mahinda Rajapaksa. When Rajapaksa faced an electoral challenge in 2015, money earmarked for the port’s construction somehow found its way into the president’s campaign coffers. In the end, Rajapaksa lost the election, and the port proved so unprofitable that the new government was forced to hand it over to China in a debt-for-equity swap.

Deals such as this are a reminder that, for China, the BRI is as much a foreign-policy instrument—and sometimes a domestic political move—as it is an economic program. BRI projects that are aimed at advancing China’s strategic goals, or that are launched by party officials chiefly interested in signaling their loyalty to Xi, will often not produce the kind of economic returns that would pass muster in a cost-benefit analysis. This is why China needs leaders like Najib, Somsavat, and Rajapaksa to get such projects approved, despite their dubious value to the country they’re built in.

But just as China needs these politicians, they need China, too. The relationship between China and corrupt BRI partners is symbiotic and, often, more complex than simple bribery. In Malaysia’s case, it increasingly appears that the Najib administration’s defining aspect, the 1MDB fraud and its subsequent cover-up, relied heavily on infusions of BRI cash. Indeed, if Najib had not been voted out of office last May, his alleged rerouting of Chinese investments might be ongoing to this day. But the problem with leveraging BRI projects to enable homegrown corruption is that once you’re caught, you’re on your own, and China is on to the next big thing.

Will Doig is a journalist covering urban development, transportation, and infrastructure. He is the author of “High Speed Empire: Chinese Expansion and the Future of Southeast Asia.

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Xi Jinping (R) is discussing ways to improve bilateral ties with Tanzanian President Jakaya

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President Xi Jinping met in Xiamen with President Jacob Zuma of South Africa

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China’s loan policy under scrutiny — Belt and Road “Debt Trap”

January 17, 2019

The German development minister has warned African businesses against taking out loans from China. At the same time, the German Finance Ministry is hoping Beijing will be using more financial services from overseas.

    
German Development Minister Gerd Müller talking to Zambian miners

It’s not exactly true to say that the German government has been speaking with one voice when it comes to assessing the chances and the downsides of China’s growing financial and economic might. And perhaps, speaking with one voice has never been Berlin’s intention anyway.

When German Finance Minister Olaf Scholz visits China on Thursday, he will be skating on thin ice.

Germany’s largest trading partner used to be a good customer, but now China has turned into one of its strongest competitors on the global market and has been protecting its own market rigorously.

During his two-day visit, the German minister wants to help the finance sector in his country get a foot in the door in the Asian nation. “The German government wants to enhance bilateral cooperation in the finance sector,” a spokesman for the Finance Ministry told reporters in Berlin ahead of Scholz’s visit.

“We’ll need to debate how to open the Chinese market for our banks and insurance companies,” the spokesman added. Scholz is hoping for a constructive round of discussions, which are also to focus on credit rules set by the Paris Club. This is to make sure that loans granted by China for building projects in poorer nations do not turn into huge debt traps.

The Paris Club is a group of officials from major creditor nations that have agreed to find sustainable solutions to payment difficulties experienced by debtor countries, with a focus on transparency.

Hidden costs

Transparency in financial dealings was also high on the agenda of German Development Minister Gerd Müller when he visited Africa last week. He warned emerging economies against becoming too dependent on loans from China.

“Chinese investments in developing nations and emerging economies are often rather untransparent with regard to the strings attached to granted loans,” Müller told the news agency DPA. But he, too, reserved some praise for China, saying it was good to see the country showing such a great interest in Africa. But that interest had to result in sustainable investments, he demanded during his visit to Zambia.

Zambia, he added, had profited from a debt cancellation scheme, but was now highly indebted again, the minister pointed out, saying he was worried about this development.

Chinese-funded bridge building project in MaliChinese-funded bridge building project gets underway in Mali

According to unconfirmed reports, Zambia had used its state-owned electricity supplier Zesco as collateral in its loan deals with China. Back in 2014, Zambia’s debt amounted to 36 percent of its gross domestic product. The International Monetary Fund (IMF) estimates that the figure will rise to 77 percent by the end of this year.

China has invested heavily in African infrastructure projects over the past few years. More often than not, those projects were carried out by Chinese firms and staff. Sometimes China granted loans which were contingent on the fixed-price sale of natural resources. Experts have frequently branded such deals as being detrimental to the credit recipients.

A mind-boggling sum

It’s not that easy to find out exactly how much money the Chinese have pumped into Africa. This is because Beijing doesn’t transfer loans from banks or companies through any established channels such as the Creditor Reporting System, the OECD or the International Aid Transparency Initiative. In addition, Chinese banks are usually cagey about any credit agreement details.

However, John Hopkins University researchers estimate that between 2000 and 2017 credits worth $143 billion (€125.5 billion) have been pumped into Africa — provided by Chinese government offices, lenders and companies. Chinese loans peaked in 2016, the researchers said.

Angola alone received almost $43 billion in loans from China in the 17 years under review.

Port in a storm

The German development minister mentioned Sri Lanka where the government had agreed to make a new port a Chinese-owned property for 99 years in a debt-balancing maneuver.

Warning voices are now also being heard from African leaders themselves, and the message has reached Beijing. During his trip to Ethiopia earlier this year, Chinese Foreign Minister Wang Yi emphasized that “we know about some African nations’ financing difficulties,” adding that his country had nothing to do with them, though.

“Africa’s debt issue dates far back in history — neither is it a new phenomenon, nor is China to blame for it.”

Between 2000 and 2014, Ethiopia borrowed $12 billion from China, and counting. During last year’s China-Africa summit, President Xi Jinping said in Beijing his country would invest another $60 billion in Africa in the next three years. A good proportion of this sum is bound to be loans again.

https://www.dw.com/en/chinas-loan-policy-under-scrutiny/a-47118123

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Kenyan fisherman pull up their nets in the early morning as they fish on Lake Victoria.

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Nearly 140 million Christians persecuted in Asia — China seems to be forcing Christians into ‘the North Korean model’

January 16, 2019

Asia is ‘new hotbed of Christian persecution’ with situation in China worst since Cultural Revolution, report claims

Nearly 140 million Christians suffered high levels of hostility in Asia last year, a region the report describes as ‘the new hotbed of persecution’

Experts say China seems to be forcing Christians into ‘the North Korean model – weak, small and invisible in the deep underground’

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Christians in China — China Photos/Getty

PUBLISHED : Wednesday, 16 January, 2019, 11:01am
UPDATED : Wednesday, 16 January, 2019, 11:48am

South China Morning Post

Nearly 140 million Christians suffered high levels of persecution in Asia last year, according to a new report, which described the situation facing the faith in China as the worst since the Cultural Revolution.

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Christians in China

The annual Open Doors World Watch List, released on Wednesday, said Asia is “the new hotbed of persecution for Christians”.

It noted a sharp increase in the persecution of Christians in Asia over the past five years – but with a dramatic spike in 2018, driven by the likes of a rise in Hindu ultra-nationalism in India, radical Islamism in Indonesia and tougher religious regulations in China.

North Korea was ranked as the world’s most anti-Christian country for the 18th consecutive year. Pakistan and India were determined to have “extreme” levels of Christian persecution, with the Maldives, MyanmarLaos and Vietnam rounding out Asian countries in the top 20.

An aerial view shows members of hardline Muslim groups attending a protest against Jakarta’s incumbent governor Basuki Tjahaja Purnama, an ethnic Chinese Christian running in the upcoming election, in Jakarta, Indonesia, November 4, 2016. REUTERS/Beawiharta
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Indonesia has become anti-Christian

Open Doors defines persecution, in simple terms, as “any hostility experienced as a result of one’s Christian faith. This can include hostile attitudes, words, and actions towards Christians”.

China and Indonesia, both entering the top 30, were singled out for a drastic deterioration in the treatment of Christians.

A protester holds a placard during a rally in Mumbai by hundreds of Christians against attacks on churches nationwide.Danish Siddiqui/ReutersA protester holds a placard during a rally in Mumbai by hundreds of Christians against attacks on churches nationwide.

“The report confirms my impression of what’s going on around the world and confirms my knowledge of what has been happening in China,” said Yang Fenggang, the founder of the Centre on Religion and Chinese Society at Purdue University in the United States.

“Under Xi Jinping, the suppression of Christian churches and other religious organisations is being carried out nationwide with unprecedented determination.”

Of about 403 million Christians from Afghanistan to the Korean peninsula, an estimated 139 million – or one in three – were found to live under “high persecution”, or where “prominent Christians are targeted, churches themselves subject to significant restrictions, and the culture remains largely hostile to a Christian presence”.

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‘ALL AT ONCE’

Militant atheism, radical Islamism and nationalism are three basic motives for Christian persecution, said Nina Shea, the director of the Centre for Religious Freedom at the Hudson Institute, a US think tank. Asia, in her words, is exhibiting all three.

“There are different reasons for it in each country. It’s baffling that they have all come at once,” said Shea, a former head of the US Commission on International Religious Freedom. “Intolerance is gaining strength, but these trends are not consistent with each other or any pattern. You certainly can’t say it’s from one source.”

Ahmed Shaheed, the United Nations’ Special Rapporteur on freedom of religion, said he was “very concerned” about the rise of religious intolerance. “Freedom of religion is routinely violated across much of Asia,” he said in a speech in Bangkok in August.

“In many countries, the civic space is closing and restrictions on expression and other civil liberties are rising. The persecution of religious minorities is increasing, a worrying trend confirmed by the 2019 World Watch List report,” Shaheed, a former Maldivian foreign minister, told the South China Morning Post. “Governments need to recognise the close links between respect for freedom of religion or belief, and societal peace and economic prosperity.”

Open Doors, a Britain-based charity, was founded in 1955. In 1981, the group smuggled 1 million outlawed Chinese Bibles to a beach in southern China. Its yearly watch list compiles field interviews and reports, questionnaires and news reports, scoring countries out of 100 for “persecution points” to determine their rank on the list. The watch list is independently audited by International Institute of Religious Freedom.

NATIONALISM AND IDENTITY

Myanmar, home to more than 4 million Christians, went up six places due to Buddhist-led sectarian repression, and Laos rose one spot but increased on the persecution scale by four points out of 100. Indonesia, which suffered a triple bombing of churches in May, jumped eight places, with the report citing intolerance linked to the upcoming election.

Other Southeast Asian nations fared better. Malaysia improved dramatically, dropping 19 places. Vietnam dropped two places and Brunei fell 10 spots.

Terence Chong, deputy director of the Singapore-based ISEAS-Yusof Ishak Institute, said that in some parts of Southeast Asia nationalism was synonymous with ethnicity.

Such “exclusivism”, in his words, becomes problematic in multicultural societies, and he cast doubt on the methodology of the Open Doors watch list.

“Christian persecution is nowhere as intense in Southeast Asia as it is in China or some parts of Africa,” Chong said.

“For the most part Christians and Muslims coexist in harmony. There are occasional tensions, but it’s hardly persecution. It would be a mistake to identify single incidents, such as the persecution of [Christian ex-mayor of Jakarta] Ahok in Indonesia, and extrapolate from it.

“Many such incidents are triggered by local politics and forces resistant to a personality who happens to be a Christian. As such, religion becomes embroiled by way of local politics and may not signal a concerted persecution of Christianity.”

Papang Hidayat, an analyst for Amnesty International in Indonesia, agreed persecution in the country had become politicised.

“I would not say the Christians being ‘persecuted’ because of their belief in the country,” he said. “It is more that politicians use religious identity as their arsenal for their political campaigns. In many districts and some provinces, it is the logic of majority against minority, although in most cases it is Muslims being the majority.”

Even so, he conceded that the harassment, discrimination and attacks against religious minorities were troubling.

“The situation is clearly worsening,” he said.

A faded photo of Chinese President Xi Jinping is seen near a Christian poster with the word “Grace” outside a house church near Nanyang in central China’s Henan province. Experts and activists say that as he consolidates his power, Xi is waging the most severe systematic suppression of Christianity in the country since religious freedom was written into the Chinese constitution in 1982. Photo: AP

‘HALF EMPTY OR HALF FULL?’

The report’s toughest comments were aimed at China, where by some estimates the country’s 97 million Christians outnumber the membership of the Communist Party.

By Open Doors’ reckoning, more than 20 million Christians experienced persecution last year, and it forecasts that number to increase to 50 million in 2019. It cited the country’s revised Religious Affairs Regulations, which have governed the practice of all religions since the 1980s; an array of crackdowns and raids; and a wave of church closures such as that of Beijing’s Zion Church in September.

“In China, our figures indicate persecution is the worst it’s been in more than a decade – alarmingly, some church leaders are saying it’s the worst since the Cultural Revolution ended in 1976,” said Henrietta Blyth, chief executive of Open Doors UK and Ireland, in a statement.

Shea, of the Hudson Institute, called the situation in China a turning point.

“China had been on the trajectory of being the biggest Christian country in the world in a decade or two. It now seems headed towards forcing its Christians into the North Korean model – weak, small and invisible in the deep underground,” Shea said.

“Remnants will survive but the community will be vastly diminished and facing an existential threat. The officially tolerated Christianity will conform with the teachings of Xi and the Communist Party.”

Yang said persecution reached Chinese Christians worshipping in both official and unsanctioned churches – but that it’s important to look at the other side. Beijing has also worked to mend relations with Chinese Catholics, as evidenced last month when it recognised two previously excommunicated Chinese bishops.

“Is the bottle half empty or half full? Almost half of the estimated 90 million Chinese Protestant Christians did not feel the persecution,” Yang said.

Open Doors, a Britain-based charity, was founded in 1955. In 1981, the group smuggled 1 million outlawed Chinese Bibles to a beach in southern China. Its yearly watch list compiles field interviews and reports, questionnaires and news reports, scoring countries out of a possible 100 persecution points to determine their rank on the list. Photo: AFP

He also that he believed the intensity of the Chinese crackdown against Christians had reached its peak and was unlikely to be sustained because of its astronomical costs.

“It is simply impossible to return to the Cultural Revolution to completely eradicate religions, because there are simply too many Christians today,” he said.

Pastor Eric Foley is the chief executive of Voice of the Martyrs Korea, the Asian sister mission to Release International – which monitors and reports international persecution of Christians – and a member of the International Christian Association (ICA).

The missions of the ICA, called the Voice of the Martyrs (VOM), work with persecuted Christians. For 18 years, VOM Korea has worked with underground Christians in North Korea and China.

“For governments and activists, religious freedom is a kind of ‘canary in the coal mine’ for human rights issues overall,” he said.

“In wealthy nations, religion is often regarded as simply as a matter of private devotion, and so religious persecution can seem only to affect zealots. But careful studies, like the UN Commission of Inquiry on Human Rights in North Korea, continue to demonstrate a correlation between failure to protect religious liberty and systematic human rights abuses.

“So where Christian persecution occurs and certainly where it is on the upswing, even non-Christians should be motivated to take notice.”

Additional reporting by Mimi Lau

https://www.scmp.com/news/asia/southeast-asia/article/2182260/asia-new-hotbed-christian-persecution-situation-china-worst

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South China Sea: Vietnam leans toward U.S., risks Beijing’s ire

January 13, 2019

Hanoi typically performs a balancing act in its relations with Beijing and Washington, but opportunity presented by row over USS McCampbell was too good to miss

PUBLISHED : Monday, 14 January, 2019, 2:04am
UPDATED : Monday, 14 January, 2019, 2:03am

South China Morning Post

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As China and the United States continue to wrestle over trade disputes and geopolitics, Vietnam is performing a balancing act in the stormy South China Sea as it seeks to maintain its strong ties with Washington while not upsetting Beijing, experts said.

Earlier this week, Hanoi used the latest row over a US freedom of navigation operation in the disputed waterway to not only show its support for its Western ally but also reaffirm its territorial claims there.

“Vietnam has sufficient legal grounds and historical evidence testifying to its sovereignty over the Hoàng Sa [Paracel] and Truong Sa [Spratly] archipelagoes in conformity with international law,” foreign ministry spokeswoman Le Thi Thu Hang said on Wednesday.

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Derek Grossman, a senior defence analyst at Rand Corporation, said that while the statement was fairly typical of the way Vietnam tended to align itself with Washington on issues like freedom of navigation, its timing was surprising given the current high levels of tension between the US and China.

“The growing closeness of US-Vietnam defence ties is remarkable as Hanoi typically likes to remain below the radar to avoid unnecessarily antagonising Beijing,” he said.

On Monday, Beijing slammed Washington after the USS McCampbell, a guided missile destroyer, sailed near the disputed Paracel Islands, which are claimed not only by Vietnam, but also mainland China and Taiwan.

Foreign ministry spokesman Lu Kang told a regular briefing that Beijing had issued “stern representations” to Washington as a result of the US operation which, he said, violated China’s law.

US Pacific Fleet spokeswoman Rachel McMarr said in a statement that the freedom of navigation operation, which saw the McCampbell sail within 12 nautical miles of the Paracel chain, was intended to “challenge excessive maritime claims”.

Collin Koh, a maritime security specialist at Nanyang Technological University in Singapore, said that while Hanoi’s support for the US freedom of navigation exercise came as no surprise, it was influenced by the fact that it took place close to islands it claims.

“Vietnam’s response to exercises in the Spratlys, for example, tend to be more muted, in part because the disputes [over them] are multilateral and Hanoi doesn’t want to get involved in a complicated situation.”

The Spratly Islands are claimed by Vietnam, China, the Philippines and Malaysia.

While Hanoi had used the McCampbell incident to restate its claims in the South China Sea, it did not want to antagonise or upset China, its largest trading partner, said Carl Thayer, emeritus professor at the University of New South Wales and an expert on the Vietnam.

Hanoi wanted to remain “equidistant in its relations with the major powers”, he said

A recent study by the ISEAS-Yusof Ishak Institute in Singapore found that among Southeast Asian nations, Vietnam was the biggest supporter of US power in the region.

Of the 1,000 academics, analysts and other experts polled, more than half of the respondents from Vietnam expressed either “strong” or “some” confidence in the US as a strategic partner and provider of regional security.

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Pham Binh Minh

On Tuesday, Washington’s ambassador to Vietnam Daniel Kritenbrink met Vietnam’s deputy prime minister Pham Binh Minh and Foreign Minister Pham Binh Minh to discuss trade, diplomacy and security cooperation.

He said the US hoped to strengthen collaboration on freedom of navigation in the South China Sea.

https://www.scmp.com/news/china/diplomacy/article/2181896/vietnam-risks-beijings-ire-it-uses-us-freedom-navigation

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Admiral John Richardson

Indonesian President Joko Widodo looks out to sea in a December 2018 government handout photo.

Indonesian President Joko Widodo looks out to sea in a December 2018 government handout photo.
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Above chart shows China’a “Nine Dash Line.” China says it owns all ocean territory north of the Nine Dash Line. There is no international legal precedent for this claim. On July 12, 2016, the Permanent Court of Arbitration in The Hague said this claim by China was not valid and is not recognized under international law.

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A fighter jet from Taiwan keeps a close watch on a Chinese bomber. Xinhua photo
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Philippine fisherfolk in the South China Sea
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China’s Digital Silk Road Is Looking More Like an Iron Curtain — “We have sold ourselves to the Chinese.”

January 10, 2019

The funding of tech projects in dozens of countries may well divide the world.

The first billboard that greets passengers arriving at the airport in Lusaka, before Pepsi’s “Welcome to Zambia,” is an advertisement for Bank of China. Nearby, a Chinese company is building a sleek terminal. On the road into the capital city, near the office of Chinese telecom company ZTE Corp., another billboard features surveillance cameras made by Hangzhou Hikvision Digital Technology Co. At the national data center built by Huawei Technologies Co., a Chinese man in a bright orange vest walks toward a building that houses government servers.

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Ads for China’s telecommunications and tech-infrastructure companies appear prominently in developing countries such as Zambia.   PHOTOGRAPHER: WALDO SWIEGERS/BLOOMBERG

This southern African nation, a former British colony rich in copper and cobalt, is spending $1 billion on Chinese-made telecommunications, broadcasting, and surveillance technology. It’s all part of China’s “Digital Silk Road,” a subset of its “Belt and Road” initiative that contributes an estimated $79 billion in projects around the world, according to RWR Advisory Group, a Washington consulting firm that tracks Chinese investment. That funding has boosted development in Zambia and many other countries, but it comes at a price.

Most of the digital infrastructure projects in Zambia, like the more visible airport terminals and highways, are being built and financed by China, putting the country at what the International Monetary Fund calls a high risk of debt distress. It’s also given rise to fears that what has long been a thriving and stable multiparty democracy is veering toward a Chinese model of repression.

“We have sold ourselves to the Chinese,” says Gregory Chifire, the director of an anticorruption organization who fled the country after being sentenced in November to six years in prison on what Amnesty International calls trumped-up charges. “People’s freedom to express themselves—their freedom of thought, their freedom of speech—is shrinking by the day.”

Zambian government officials defend their reliance on Chinese technology and deny it’s being used for political purposes. “The government has the responsibility to invest in infrastructure,” says Dora Siliya, the information minister. “Zambia’s model for development is neither the West’s nor China’s but an attempt to take the best from both. We have a Zambia model.” The Chinese Embassy in Lusaka didn’t respond to requests for an interview.

What’s playing out in Zambia is part of a larger contest between the U.S. and China for dominance over the future of technology and global influence. Companies from both countries sell tech products around the world, but Chinese businesses are offering a wide range of gear and relatively cheap financing in countries from Zimbabwe to Vietnam. They have an advantage in developing nations such as Zambia, which are looking to modernize their technology infrastructure.

The rivalry risks dividing the world with a digital iron curtain. The potential for bifurcation is already noticeable, as U.S. allies including Australia and New Zealand have banned Huawei and ZTE from providing equipment for 5G wireless technology on national security grounds and Canada arrested Huawei Chief Financial Officer Meng Wanzhou in December on allegations she defrauded banks to violate Iranian sanctions. Huawei and ZTE are both private companies and have pushed back against allegations that they’re pawns of the Chinese government.

China is exporting to at least 18 countries sophisticated surveillance systems capable of identifying threats to public order and has made it easier to repress free speech in 36 others, according to an October report published by Washington watchdog Freedom House. “They are passing on their norms for how technology should govern society,” says Adrian Shahbaz, the author of the report, which found that Zambia had slipped in the group’s ranking of national internet and media freedoms for the past two years. Nadège Rolland, a senior fellow at the National Bureau of Asian Research, a Washington think tank, says, “There’s a 1984 component to it that’s kind of scary.”

Discussions with government officials in Lusaka often begin with a history lesson. First comes the what-did-the-West-ever-do-besides-exploit-us part, followed by a version of the China-has-always-been-our-friend speech. It’s a convenient way to defend the growing reliance on Chinese projects that’s raised Zambia’s debt to that country to $3.1 billion, about one-third of its total foreign debt, according to government estimates.

That’s the way it plays during a December interview with Brian Mushimba, Zambia’s minister in charge of transport and communications. He’s from Zambia’s Copperbelt, one of 16 children. He studied engineering at the University of Arizona, worked at Pratt & Whitney in Hartford, and has an American wife. But he’s a firm defender of China’s development agenda, saying it’s lifted millions of people out of poverty and offers the same to Zambia. “China has not only done this but is willing to share and give cheap financing for us to also do it,” he says, sitting in his office in a one-story colonial-era building with peeling pale-peach paint. “Their model is very interesting, very different from how the Western world interacted with Africa. China serves as a model worth replicating.”

A Bank of China billboard greets travelers at the airport in Lusaka.
A Bank of China billboard greets travelers at the airport in Lusaka.
PHOTOGRAPHER: WALDO SWIEGERS/BLOOMBERG

The 44-year-old minister has invoked the “China way” of dealing with the internet when threatening to ban Google and Facebook, which has provided a platform for disinformation campaigns in Myanmar and other countries. He’s called “fake news” a threat to national security and urged self-censorship, saying the government has the ability to monitor all digital devices in the country. A draft cyberlaw scheduled for debate in the National Assembly this year would create an agency with the power to determine whether information published online threatens national security, punishable by jail time, something free-press advocates say could be applied to news organizations that expose corruption. Criticizing President Edgar Lungu in social media posts has already landed several people in prison on charges of defamation.

While Mushimba acknowledges that the idea of governance “with less dissenting views” is in conflict with Zambia’s democracy and free press, he denies the government is trying to stifle expression and says it’s just enforcing the law. “The internet is a powerful tool that can’t be left to run wild,” he says. “The government has good intentions—the good intention to keep peace, order, and security in the country.

Talk of restrictions doesn’t sit well with Richard Mulonga, the 39-year-old founder of Bloggers of Zambia, a group that’s been urging the government to follow European standards of cyberlaw. Mulonga, a photojournalist fired from his job at a state-run newspaper after he posted pictures on his blog that the paper wouldn’t publish, says free-speech advocates are fearful. “Citizens have the right to hold power to account,” Mulonga says, sipping coffee in a Lusaka hotel lobby, a Facebook pen clipped to the collar of his black T-shirt. “Only through free expression can we participate in democracy.”

In 2013 and 2014 the government blocked at least four websites by using a technique typically associated with censorship in China, according to the Open Observatory of Network Interference, a global network that collects data on internet tampering. It couldn’t prove Chinese equipment was involved, but its report cited information that Zambia had installed internet monitoring and blocking equipment from ZTE and Huawei. State-run Zambia Telecommunications Co.and its regulator declined to answer questions. A Huawei spokesman in Lusaka says he’s unaware of the company’s technology being used for such purposes.

Zambian Watchdog, which focuses on corruption, was one of the websites blocked. Today, its posts are regularly called “fake news” by government officials. Representatives of the group didn’t respond to requests for comment. But editors of the Mast, a newspaper often critical of the government, were willing to talk about the climate of fear engendered by new technologies.

“Being a newspaper, if you’re going to call a source, it means they know who you’re calling,” says editor Larry Moonze, sitting at a conference table in one bedroom of the two-bedroom house where the newspaper is produced. “Media institutions are working under fear of the government, with the help of the Chinese,” adds Chief Executive Officer Likezo Kayongo, whose brother founded a predecessor publication that was raided and shut down in 2016.

ZTE is also installing cameras in public spaces in Lusaka as part of a $210 million “Safe City” project. The contract was canceled in 2013, over irregularities in how it was awarded, then reinstated in 2015, government officials confirm. The project is designed to increase policing power in a city that’s already one of the safest in southern Africa.

Zambia has seen a lot of Chinese investment in recent years. Pictures taken in Lusaka, Zambia
Outside Huawei’s office in Lusaka.
PHOTOGRAPHER: WALDO SWIEGERS/BLOOMBERG

In China, authorities use surveillance systems with facial recognition software to compare citizens against government databases, allowing them to track those with dissenting viewsas well as criminals. In Zambia, “there will be no political uses,” says Chileshe Mulenga, permanent secretary at the Ministry of Home Affairs, which is in charge of the project. “We are not passive. We are defending our interests.”

Representatives of ZTE in Zambia and China declined to talk about the company’s projects. Huawei spokesman Hansen He was more talkative. He says his company’s “Smart Zambia” initiative, which includes plans to bring mobile and broadband connectivity to rural villages without coverage and to put government functions online, is supplying technology for what Zambia wants to do and the support to make sure it works. “We just provide the solutions,” he says. “They are the operators to run it.”

Huawei also built Zambia’s national data center, which handles all government data and storage. Zeko Mbumwae, the center’s general manager, says officials have no concerns that the gear could be used for Chinese intelligence or data-gathering purposes. “Once someone’s built you a home, you change the locks,” he says. “That’s what we did.”

Another Chinese-funded project is the migration from analog to digital TV, which is being handled by TopStar Communications Co., a 60-40 venture between Beijing-based StarTimes Group and Zambia’s state-owned broadcaster, ZNBC. Chifire, the anticorruption activist, has called it “one of the biggest financial scandals in modern-day Zambia.”

The country of about 17 million people is spending $282 million on the switch, or about $16.60 a person. That’s 46 percent more on a per-person basis than South Africa is spending. Zambia borrowed almost all of the funding from the Export-Import Bank of China. Independent stations complained that they were being turned into content providers for the government’s network and protested the $72,000 in monthly fees for TopStar to carry their channels. They said the fees would put them out of business, leaving only a Chinese company and its state-run partner as the nation’s primary TV outlet. “We’re not refusing to pay,” says Costa Mwansa, CEO of Diamond TV. “What we are refusing is figures that will kick us out of business.”

Data: RWR Advisory Group. Includes projects completed or initiated outside China since 2012 that enhance the digital infrastructure of the target country. Does not include mergers or acquisitions. Dollar values for some projects are unavailable and therefore aren’t reflected in country totals.

The government says Zambia’s digital migration is expensive because the project includes eight new studios, broadcasting vans, and trips to China to train hundreds of ZNBC journalists. Anyone who criticizes the cost is comparing apples to oranges, says Siliya, the information minister. “The corruption assumption being perpetuated is wrong.”

Similar debates are going on across Africa and other continents as Chinese digital infrastructure spreads its roots. In neighboring Zimbabwe, where Hikvision surveillance cameras are being installed in the capital, Guangzhou-based CloudWalk Technology Co. won a contract last year for Africa’s first artificial intelligence project. It stalled when the government asked for a discount after learning that facial data would be transmitted to China to help the company perfect its technology, says Shingi Magada, a China-based Zimbabwean consultant who helped broker the deal. “We were just giving away our data,” he says. Hikvision has come in with a competing offer, and the Zimbabwean government is keen to go ahead at the right price, he adds. Neither Hikvision nor CloudWalk responded to requests for comment.

In Mauritius, off Africa’s east coast, Huawei is installing 4,000 cameras. Opposition politicians fear an increase in monitoring and surveillance. “It’s really Big Brother,” says Xavier-Luc Duval, a former deputy prime minister who now leads the opposition at the National Assembly. “They’ll be able to spy on all political opponents and control all the political activity. The potential for misuse is enormous.”

Zambia has seen a lot of Chinese investment in recent years. Pictures taken in Lusaka, Zambia
An ad in Lusaka for China’s Hikvision, the world’s largest surveillance-camera company.
PHOTOGRAPHER: WALDO SWIEGERS/BLOOMBERG

Concerns that Chinese technology could be used for spying flared last year when Le Monde reported that data had been transmitted from the African Union’s headquarters in Addis Ababa, Ethiopia, to China nightly for years. The $200 million building was built by a Chinese company with Chinese funding. China dismissed the allegations. The organization, after accusing China of spying, backtracked.

In Vietnam, hackers took over screens and audio communications in the country’s two major airports in 2016 to broadcast propaganda supporting China’s claims in the South China Sea. The incident caused an alarmed Vietnamese government to warn its agencies and companies to reduce their reliance on Chinese equipment, which was believed to have played a role.

Potential threats to national security like these have prompted the U.S., Australia, and Japan to take countermeasures against the spread of Chinese technology. The three have opposed plans by Huawei to lay submarine cable connecting Australia to Papua New Guinea and the Solomon Islands in the South Pacific. But a Huawei cable project within Papua New Guinea is going forward despite efforts by Western governments to supplant it.

The U.S. is having better success blocking the rollout of Huawei’s 5G telecommunications systems, with Australia, New Zealand, and Japan among countries going along with a ban. “All this is leading to a pretty contested environment and a growing sense of heading toward an us-vs.-them mentality,” says Jonathan Pryke, director of the Pacific Islands program at the Lowy Institute in Sydney. “It’s risky to go back to the Cold War mentality.”

The U.S. recently moved to inject $60 billion into the Overseas Private Investment Corp. to increase funding for projects in the developing world to counter China’s spending. And on Dec. 13, U.S. national security adviser John Bolton announced a new strategy for Africa to fund infrastructure projects, saying that Chinese influence has put the continent at risk. The U.S. is the largest donor to Africa, but most of its money goes toward health, agriculture, and clean-water projects. Bolton said the U.S. will try to ramp up funding for other projects. He cited Zambia as being particularly at risk.

To activists like Chifire who have suffered or fled the country, the China model appears ascendant. “What is remaining about democracy in Zambia,” he says on a phone call from a location he wouldn’t disclose, “is the name.” —With Taonga Clifford Mitimingi, Kamlesh Bhuckory, Matthew Hill, and Yuan Gao

https://www.bloomberg.com/news/features/2019-01-10/china-s-digital-silk-road-is-looking-more-like-an-iron-curtain

Pakistan, Saudi Arabia may ink $10bn MoUs this month

January 10, 2019
ISLAMABAD: Prime Minister Imran Khan presides over a meeting at the Prime Minister Office on Wednesday.—INP
ISLAMABAD: Prime Minister Imran Khan presides over a meeting at the Prime Minister Office on Wednesday.—INP

Talking to Dawn after the meeting, Finance Minister Asad Umar said Saudi Prince Mohammad bin Salman bin Abdulaziz would visit Pakistan next month and most of the MoUs were expected to be signed during his trip.

PM briefed about similar agreements that will be signed with China, UAE and Malaysia in next two months

When contacted, Board of Investment (BoI) Chairman Haroon Sharif said Saudi Arabia was interested in Pakistan’s four sectors — oil refinery, petrochemicals, renewable energy and mining. “We are expecting $10bn plus Saudi investment and the MoUs to be signed in this regard will not be common or vague but concrete agreements,” he added.

The $10bn investment will be in addition to the $6bn bailout package given by Riyadh to Islamabad during Prime Minister Khan’s visit to Saudi Arabia in October last year. “According to a survey, 65 per cent of the investments will take place in the country’s commercial hub Karachi and 35pc in Lahore. Therefore, better law and order situation and ease-of-doing-business opportunities were prerequisite for foreign investment,” the BoI chairman added.

He said the government had made it mandatory for all foreign firms to invest in joint ventures with Pakistani firms so that local companies could also get boost and deal with local issues in a better way.

He said Saudi firm Aramco would invest in an oil refinery and was likely to set up its own refinery in Pakistan. “Saudi Arabia is also interested in petrochemicals and will make investment in this sector as well,” he added.

Mr Sharif said there was a big room for renewable energy in Sindh, Balochistan and central Punjab and, therefore, Saudi firm Aqua Power, which controls renewable energy business in Tunisia, the UAE and Jordon, had a comprehensive plan on renewable energy projects in Pakistan.

He said he had recently visited China and signed MoUs on industrial cooperation under the China-Pakistan Economic Corridor (CEPC). “Now we have to build economic zones along the corridor.”

The BoI chief said the UAE was interested in agriculture, housing and other sectors. He added that four Malaysian firms were also due this month and would invest in four sectors — halal meat, gemstone, information technology and hi-tech education.

An official press release issued by the Prime Minister Office said: “Briefing the meeting about various positive developments with regards to investment facilitation, it was informed that an MoU on industrial cooperation has been signed with China last month. The MoU with Kingdom of Saudi Arabia is expected to be signed this month whereas investment framework MoU with the UAE is expected in February 2019.”

The meeting was attended by the finance minister, Adviser to the PM on Commerce Abdul Razak Dawood, PM’s adviser Dr Ishrat Hussain and the BoI chairman.

The BoI chairman briefed the prime minister about the progress on various indicators related to ease of doing business.

The meeting was informed that the number of taxes had been brought down from 47 to 21. “We have clubbed together many taxes to facilitate the business community,” Mr Sharif added.

He said a new system of value added tax refund would be in place by March 31 which would significantly reduce time in obtaining the VAT refund, adding that efforts were also being made to improve the risk-management system to reduce the number of physical audits.

About the ease of starting business, the prime minister was informed that integration of the Securities and Exchange Commission of Pakistan with provincial portals and Employees Old-Age Benefits Institution (EOBI) had been completed in Punjab and efforts were being made to expedite launch of such portal in Sindh.

The meeting was informed that significant progress had been made to facilitate provision of electricity and timely information to the businesses. Besides availability of required documents on website, a full online application system is being rolled out and advance notifications are being ensured about change in tariff, etc.

In the area of getting credit, the meeting was informed that registrar would be appointed by the end of this month and rules under the Secured Transaction Act were being finalised by the Ministry of Finance.

The prime minister emphasised the need for greater focus on addressing issues relating to ease of doing business in Sindh since Karachi was financial hub of the country.

It was decided that regular meetings on EoDB would be chaired by the prime minister with participation of the chief ministers and chief secretaries. It was also decided that dedicated EoDB offices would be set up at federal and provincial levels for the purpose of removing bottlenecks and facilitating investors for smooth business operations.

Published in Dawn, January 10th, 2019

https://www.dawn.com/news/1456638/pakistan-s-arabia-may-ink-10bn-mous-this-month

Malaysia examining whether China offered to bail out 1MDB

January 8, 2019

Malaysia is looking into allegations that China offered to help deter probes into 1MDB in exchange for infrastructure projects, after the Wall Street Journal reported that senior Chinese leaders offered to help bail out the troubled state fund in 2016.

Image result for Najib Razak, malaysia, photos

The government is unaware of the discussions detailed in the Journal report, which cited minutes from meetings the newspaper reviewed, and is examining the matter, said Finance Minister Lim Guan Eng.

The cost of China-backed projects was certainly enlarged and Malaysia will check whether that was due to 1Malaysia Development Berhad (1MDB) links, Mr Lim said near Kuala Lumpur on Tuesday (Jan 8).

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Jho Low, a central figure in a multibillion-dollar scandal at a Malaysian development fund. A now-suspended Chinese ‘Belt and Road’ project in Malaysia might have partially bailed out the fund’s debts. Malaysian officials certainly knew of his extravagant life style, the expensive yacht, Equanimity and money spending. PHOTO: KRISTIN CALLAHAN/ZUMA PRESS

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Image result for Jho Low, pictures
 “Billionaire” Jho Low Threw Insane Parties for Celebs

Image result for Leissner, Goldman, photos

Kimora Lee Simmons and Tim Leissner enjoy the high life in Beverly Hills California. Tim Leissner  was involved in 1MDB while working for Goldman (Getty )

“But I have to refer back to see if there are details or thing explicitly said,” he said. “If this is said, this is something we will pursue.”

Chinese officials told visiting Malaysians that China would use its influence to try and get the United States and other countries to drop probes of allegations that allies of then Prime Minister Najib Razak and others plundered the fund, according to the newspaper.

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Yacht Equanimity

In return, Malaysia offered stakes in railway and pipeline projects as part of China’s Belt and Road Initiative. The Chinese government information office did not respond to requests for comment, the WSJ said, adding that China’s Foreign Ministry had earlier denied that money in the programme was used to help bail out the 1MDB fund.

1MDB is at the centre of a global scandal involving claims of embezzlement and money laundering, with jurisdictions from the US, Malaysia and Singapore probing cases related to the fund. Najib has been charged with dozens of counts of corruption, criminal breach of trust and money laundering involving 1MDB-related monies.

He also stands accused of altering the report on a government audit into the fund to protect himself from criminal, civil or regulatory action. He has denied wrongdoing and pleaded not guilty to all charges.

China also offered to bug the homes and offices of Wall Street Journal reporters in Hong Kong who were investigating 1MDB, to learn who was leaking information to them, the newspaper said, citing the minutes of the meetings. It could not be determined whether China provided any such information, the newspaper added.

Bloomberg

https://www.straitstimes.com/asia/se-asia/china-offered-to-bail-out-malaysias-1mdb-fund-says-a-report

Related:

China Offered to Bail Out Troubled Malaysian Fund in Return for Deals — How China Influences The World

January 8, 2019

The secret discussions show how China uses its political and financial clout to bolster its position overseas

Image result for malaysia Prime Minister Najib Razak reviews a model of a railway China agreed to build, pictures

Former Malaysian Prime Minister Najib Razak  arrives in court in Kuala Lumpur, following his arrest in connection with a corruption probe

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By Tom Wright and Bradly Hope
The Wall Street Journal
January 7, 2019

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Senior Chinese leaders offered in 2016 to help bail out a Malaysian government fund at the center of a swelling, multibillion-dollar graft scandal, according to minutes from a series of previously undisclosed meetings reviewed by The Wall Street Journal.

Chinese officials told visiting Malaysians that China would use its influence to try to get the U.S. and other countries to drop their probes of allegations that allies of then-Prime Minister Najib Razak and others plundered the fund known as 1MDB, the minutes show.

The Chinese also offered to bug the homes and offices of Journal reporters in Hong Kong who were investigating the fund, to learn who was leaking information to them, according to the minutes.

In return, Malaysia offered lucrative stakes in railway and pipeline projects for China’s One Belt, One Road program of building infrastructure abroad. Within months, Mr. Najib—who has denied any wrongdoing in the 1MDB matter—signed $34 billion of rail, pipeline and other deals with Chinese state companies, to be funded by Chinese banks and built by Chinese workers.

Image result for one belt one road map

Mr. Najib also embarked on secret talks with China’s leadership to let Chinese navy ships dock at two Malaysian ports, say two people familiar with the discussions. Such permission would have been a significant concession to Beijing, which seeks greater influence across contested waters of the South China Sea, but it didn’t come to pass.

A Journal examination of the China-Malaysia projects, based on documents and interviews with current and former Malaysian officials, offers one of the most detailed accounts to date of the political forces at work behind China’s Belt and Road program, a signature initiative of building ports, railways, roads and pipelines in some 70 countries to generate trade and business for Chinese companies.

U.S. officials say China is using the program to increase its sway over developing nations and trap them in debt while advancing its military aims. Several countries, including Pakistan and the Maldives, have been reviewing One Belt, One Road projects amid allegations some deals unfairly advanced Beijing’s interests.

American national-security officials regard the Chinese efforts in Malaysia as Beijing’s most ambitious attempt to leverage the program for geostrategic gain, said a person familiar with U.S. discussions.

Minutes of the Chinese-Malaysian meetings say that although the projects’ purposes were “political in nature”—to shore up Mr. Najib’s government, settle the 1MDB debts and deepen Chinese influence in Malaysia—it was imperative the public see them as market-driven.

The Chinese government information office didn’t respond to requests for comment.

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Former Malaysian Prime Minister Najib Razak (left) and Current Malaysian Prime Minister Mahathir Mohamad (right)

China has said its Belt and Road projects promote development that benefits all sides. Nations wouldn’t welcome the program as they have if it carried the financial and geopolitical risks asserted by critics, China’s Foreign Ministry has said. It has denied that money in the program was used to help bail out the troubled Malaysian fund.

Documents reviewed by the Journal show Malaysian officials suggested that some of the infrastructure projects be financed at above-market values, generating excess cash for other needs. Investigators from the current Malaysian government, which replaced Mr. Najib’s last year, believe some of the money helped Mr. Najib finance his political activities and cover maturing debts of 1MDB, a fund he set up in 2009 to finance local development.

Mr. Najib was aware of the 2016 Malaysian-Chinese meetings, according to people familiar with them. Asked about them, the former prime minister issued a statement saying the rail project would have brought tens of thousands of jobs to Malaysia and stating that under his leadership, the country experienced nine years of continuous economic growth.

Current Malaysian Prime Minister Mahathir Mohamad, who ousted Mr. Najib in an election last May, put the Chinese projects on holdMalaysia has since charged Mr. Najib with crimes that include money laundering and breach of trust. He has denied them, is free on bail and faces trial this year.

Image result for Low Taek Jho, photos

Low Taek Jho

Malaysia, rich in natural resources and on a sea lane, is a prized ally in the U.S.-China contest for influence in Asia. The U.S. once courted Mr. Najib as it sought alliances in the region.

In July 2015, the Journal reported that $681 million of funds originating with 1MDB, known formally as 1Malaysia Development Bhd., had flowed into Mr. Najib’s personal bank accounts. Mr. Najib’s office said the money was a gift from a Saudi Arabian it didn’t identify and said most of it was eventually returned.

The U.S. Justice Department began investigating. Its probe damaged Washington’s relationship with Mr. Najib, according to officials in both countries, helping drive Malaysia into Beijing’s arms.

By 2016, Mr. Najib was in a bind because the fund had borrowed $13 billion it couldn’t repay. He turned to Jho Low—a Malaysian financier the U.S. Justice Department has alleged was the mastermind of a multibillion-dollar theft of 1MDB funds—to negotiate with China to resolve the crisis, according to current and former Malaysian officials.

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Jho Low, a central figure in a multibillion-dollar scandal at a Malaysian development fund. A now-suspended Chinese ‘Belt and Road’ project in Malaysia might have partially bailed out the fund’s debts. PHOTO: KRISTIN CALLAHAN/ZUMA PRESS
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Mr. Low faces criminal charges in both Malaysia and the U.S. related to the Malaysian fund. The U.S. has sought to seize hundreds of millions of dollars of his luxury assets it alleges were acquired with the fund’s money. Mr. Low has denied wrongdoing. He is a fugitive, living in China under Beijing’s protection, according to Malaysian officials. Chinese officials have declined to comment on that.

Mr. Low drew up plans for Malaysian meetings with Chinese officials and attended some of them, according to current and former Malaysian officials.

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Image result for Jho Low, pictures
 “Billionaire” Jho Low Threw Insane Parties for Celebs

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Kimora Lee Simmons and Tim Leissner enjoy the high life in Beverly Hills California. Tim was involved in 1MDB while working for Goldman (Getty )

A spokesman for Mr. Low said he denies the allegations, calling them “baseless political accusations” and “a selection of half-truths, mixed in with fiction, to create a misleading and oversimplified narrative.”

Malaysia’s new government discovered the documents, including minutes from Chinese-Malaysian meetings over several months, after a sweep of Mr. Najib’s offices, according to members of the government. The Journal, besides reviewing the documents, interviewed people in position to know the events, among them a former official of Mr. Najib’s government.

The documents describe a plan proposed by Malaysian officials for Chinese state companies to build two large projects with funding from Chinese banks. One, the $16 billion East Coast Rail Link, would be a railway across Malaysia connecting two ports. The other, the $2.5 billion Trans Sabah Gas Pipeline, would be built partly on Malaysia’s portion of the island of Borneo.

The projects would provide “above market profitability” to the Chinese state companies, the documents say. The rail link should have cost only $7.25 billion to build, according to an earlier estimate by a Malaysian consultancy, said a Malaysian government official.

The public must believe “all initiatives are market driven for the mutual benefit of both countries,” Chinese official Xiao Yaqing said at a meeting on June 28, 2016, according to minutes of the meeting.

Image result for Xi Jinping, Li Keqiang, pictures

President Xi Jinping and Premier Li Keqiang

Mr. Xiao, chairman of China’s State-owned Assets Supervision and Administration Commission, said he had “cancelled all his key engagements in Beijing to attend” because the matter “has been approved by President Xi Jinping, Premier Li Keqiang” and another senior Chinese official, according to the minutes. Mr. Xiao’s agency didn’t respond to requests for comment.

At a meeting the next day, Sun Lijun, then head of China’s domestic-security force, confirmed that China’s government was surveilling the Journal in Hong Kong at Malaysia’s request, including “full scale residence/office/device tapping, computer/phone/web data retrieval, and full operational surveillance,” according to a Malaysian summary of that meeting.

Chinese official Xiao Yaqing, seen at a June summit of China’s ‘Belt and Road’ program of building infrastructure in dozens of other countries.
Chinese official Xiao Yaqing, seen at a June summit of China’s ‘Belt and Road’ program of building infrastructure in dozens of other countries. PHOTO: ANTHONY KWAN/BLOOMBERG NEWS
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“Mr. Sun says that they will establish all links that WSJ HK has with Malaysia-related individuals and will hand over the wealth of data to Malaysia through ‘back-channels’ once everything is ready,” the summary reads. “It is then up to Malaysia to do the necessary.”

It couldn’t be determined whether China provided any information. Mr. Sun didn’t respond to requests for comment.

A Journal spokesman said, “We employ experts on security and cybersecurity to work with our journalists on safety and secure communications with sources of information.”

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Najib Razak, Malaysia’s prime minister at the time, and other Malaysian and Chinese officials attend the groundbreaking for the East Coast Rail Link in August 2017.

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China selling rail projects

Derailed

Malaysia has frozen work on a Chinese-funded project called the East Coast Rail Link amid concerns its cost was inflated to divert money to help pay off the debts of 1Malaysia Development Bhd

Image result for East Coast Rail Link, malaysia, pictures

Mr. Sun also promised to use China’s “leverage on other nations” to get the U.S. and others to drop their 1MDB investigations, according to the meeting summary. The Justice Department investigation continued, as did probes in Singapore, Switzerland and elsewhere.

At one meeting, the Malaysians asked that the Chinese state company that would build the rail link assume $4.78 billion of 1MDB debt, a plan they hoped China would agree to quickly “due to the time sensitive nature” of the fund’s debts, according to the documents.

A Chinese negotiator worried this would be “very noticeable” in financial statements of the builder, China Communications ConstructionCo. , meeting minutes show.

A month later, the Malaysians proposed that Chinese state companies instead make payments that would “indirectly be used to repay 1MDB debt,” according to meeting minutes.

Why China and the U.S. Are Vying for Dominance in Pakistan

Why China and the U.S. Are Vying for Dominance in Pakistan
In Pakistan, China and the U.S. are clashing over China’s One Belt, One Road initiative. To understand what’s at stake, it helps to take a look at why China is in Pakistan in the first place.

Notes of a discussion on Sept. 22, 2016, say the sides agreed to move ahead with the infrastructure deals even though “they may not have strong project financials.”

Participants needn’t “waste time studying the actual project financials to see if they can sustain the debt etc.,” because Malaysia’s government backed the deals for strategic reasons, the documents say.

Notes from that meeting said Malaysia was working to enhance bilateral ties, citing support Mr. Najib voiced for China’s position in the South China Sea during a regional summit in Laos.

Two months later, Mr. Najib went to Beijing and signed the deals. Together with other projects, they made Malaysia the second-biggest recipient of One Belt, One Road funding after Pakistan.

Money was flowing by the middle of 2017 as the Export-Import Bank of China issued the first loans. By fall the bank had paid out 80% of the $2.5 billion pledged to state-owned China Petroleum Pipeline Bureau to build the pipeline, although little work had been done, according to Malaysian officials.

Malaysian Prime Minister Mahathir Mohamad, center, suspended plans for Chinese companies to build costly rail and pipeline projects in Malaysia.
Malaysian Prime Minister Mahathir Mohamad, center, suspended plans for Chinese companies to build costly rail and pipeline projects in Malaysia. PHOTO: RAHMAN ROSLAN/BLOOMBERG NEWS
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When campaigning for Malaysian parliamentary elections began early in 2018, China openly sided with Mr. Najib, its ambassador at one point campaigning with members of his coalition. Against the odds, Mr. Mahathir, a prominent former prime minister then 92 years old, led his coalition to victory.

Now, Mr. Mahathir is negotiating with Beijing over potential new terms for the railroad project and seeking the return of Mr. Low. Excavators for the rail projects are idle, and workers’ quarters are vacant. Mr. Mahathir is expected to cancel the pipeline deal.

Malaysian businessman Jho Low with US actor Leonardo DiCaprio. Photo: Twitter

Malaysian fugitive financier Jho Low (R) with US actor Leonardo DiCaprio. Photo: Twitter

Write to Tom Wright at tom.wright@wsj.com and Bradley Hope at bradley.hope@wsj.com

https://www.wsj.com/articles/how-china-flexes-its-political-muscle-to-expand-power-overseas-11546890449

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U.S. Ship Sails Near Disputed South China Sea Islands in Challenge to Beijing

January 7, 2019

USS McCampbell patrol was meant to challenge excessive maritime claims by Beijing, U.S. Navy says

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USS McCampbell 
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WASHINGTON—A U.S. guided-missile destroyer patrolled near the disputed Paracel Islands in the South China Sea on Monday, challenging Beijing’s maritime claims there, U.S. military officials said.

The USS McCampbell conducted what the military calls a freedom of navigation operation in the Paracel Islands chain, sailing within 12 nautical miles of three islands: Tree, Lincoln and Woody, according to a Navy official.

The ship patrol was meant to challenge excessive maritime claims by Beijing and to “preserve access to the waterways as governed by international law,” according to a statement from Lt. j.g. Rachel McMarr, a spokeswoman for U.S. Pacific Fleet.

The Paracels are claimed by Vietnam and Taiwan but have been controlled by China since it seized them from Vietnamese forces in 1974.

The U.S. Navy has conducted such patrols in the South China Sea for years but tensions with Beijing over the operations have escalated in recent years as China has sought to assert its extensive maritime claims in one of the world’s busiest waterways.

The U.S. and its Asian allies and partners have been alarmed in particular by China’s construction of seven fortified artificial islands—including three with large airstrips—in the Spratly Islands chain.

China’s claims in the Spratlys overlap with those of Taiwan, Vietnam, Malaysia, Brunei and the Philippines—a U.S. treaty ally.

Image result for south china sea, nine dash line, pictures

Above chart shows China’a “Nine Dash Line.” China says it owns all ocean territory north of the Nine Dash Line. There is no international legal precedent for this claim. On July 12, 2016, the Permanent Court of Arbitration in The Hague said this claim by China was not valid and is not recognized under international law.

Beijing has also upgraded several military outposts in the Paracels and deployed jet fighters to at least one, according to satellite images and U.S. officials.

The U.S. has responded by stepping up its patrols in the area—often sailing close to China’s new artificial islands—and encouraging allies to exercise their right to freedom of navigation in the area.

China’s reclamation activities in the Paracels are less extensive than in the Spratlys and are considered by the U.S. and others as less threatening to the status quo in the region, but Beijing typically takes a dim view of Washington’s patrols through the area.

China says it has “indisputable” sovereignty over all South China Sea islands and their adjacent waters, and has often accused the U.S. of destabilizing the region with its naval patrols.

The USS Decatur conducted a patrol in the Spratlys in September, sailing past Gaven and Johnson reefs over the course of a 10-hour patrol and sailing within 12 nautical miles of both features.

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USS Decatur

The two outposts have been fortified militarily and have reinforced fears among the U.S., Asian nations and others that China could use such islands to base ships, planes, weaponry and other material to enforce its claims across the South China Sea.

“U.S. forces operate in the Indo-Pacific region on a daily basis, including in the South China Sea,” according to a statement from the U.S. Pacific Fleet. “All operations are designed in accordance with international law and demonstrate that the United States will fly, sail and operate wherever international law allows. That is true in the South China Sea as in other places around the globe.”

Last month, the McCampbell conducted a freedom of navigation operation against Russia in Peter the Great Bay in the Sea of Japan.

Write to Gordon Lubold at Gordon.Lubold@wsj.com and Jeremy Page at jeremy.page@wsj.com

https://www.wsj.com/articles/u-s-ship-sails-near-disputed-south-china-sea-islands-in-challenge-to-beijing-11546838050

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A fighter jet from Taiwan keeps a close watch on a Chinese bomber. Xinhua photo
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Philippine fisherfolk in the South China Sea
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Philippines: Albert Del Rosario pushes for all ASEAN nations so support Vietnam on South China Sea

January 3, 2019

Former Foreign Affairs Secretary Albert Del Rosario on Wednesday said the Philippines and the Association of Southeast Asian Nations (ASEAN) should fully support Vietnam’s tough stance against China in negotiating a Code of Conduct (COC) in the South China Sea.

Former Foreign Affairs Secretary Albert Del Rosario (Wikipedia/ Manila Bulletin)

Former Foreign Affairs Secretary Albert Del Rosario (Wikipedia/ Manila Bulletin)

In a statement, Del Rosario said Vietnam’s specific positions on banning any new Air Defense Identification Zone (ADIZ), clarifying maritime entitlements in accordance with the international law, the blocking of a proposal by China to ban military drills in the SCS with outside powers unless all signatories agree, and the blocking of Beijing’s proposal to exclude foreign oil firms by limiting joint development deals to China and Southeast Asia “are areas of major importance which should be fully supported not only by the Philippines but by ASEAN as a whole.”

Chinese President Xi Jinping reviews a naval parade Thursday in the South China Sea.
Chinese President Xi Jinping during a military display of the PLA Navy in the South China Sea earlier this year. Photo: Xinhua

“Clearly, it would be a constructive move to consult with Vietnam to give us an opportunity to share and appreciate each other’s views which could lead to an agreed plan of action that is beneficial not only to both countries but to others as well,” Del Rosario said.

The former DFA secretary pointed out that China appeared to be adopting a delaying strategy in moving the COC forward “in order to give itself time to complete the Chinese unlawful expansion and militarization strategy.”

“Now that they have practically completed their overall intended strategy, Beijing appears to want to forge ahead with the COC. What could it mean?” he said.

Del Rosario said this could mean that all relevant parties would need to exercise utmost vigilance in ensuring that the COC is not utilized by Beijing for the purpose of protecting what has been declared as being unlawful by the Hague court which is now an integral part of international law.

He insisted that an ASEAN consensus on the issues raised in Vietnam’s position will serve to demonstrate to the world that the 10 member-states of the regional bloc as a solid body, “willing to strongly uphold its centrality and not allow itself to be bullied and bribed.”

Image result for south china sea, nine dash line, pictures

Above chart shows China’a “Nine Dash Line.” China says it owns all ocean territory north of the Nine Dash Line. There is no international legal precedent for this claim. On July 12, 2016, the Permanent Court of Arbitration in The Hague said this claim by China was not valid.

Del Rosario was the foreign affairs chief when the Philippines filed an arbitration case against China before the United Nations-backed Arbitral Tribunal at The Hague. On July 12, 2016, the Arbitration court ruled in favor of the Philippine petition.

The Philippines, Vietnam, Malaysia, Brunei and Taiwan have conflicting claims with China in certain parts of the South China Sea.

https://news.mb.com.ph/2019/01/02/del-rosario-ph-asean-should-fully-support-vietnams-tough-stance-against-china/

Related:

Beijing to restore coral reefs ‘damaged by island building’ in South China Sea

https://www.scmp.com/news/china/diplomacy/article/2180426/beijing-restore-coral-reefs-damaged-island-building-south-china

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Philippine fisherfolk in the South China Sea
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