Malaysian PM heading to China with mega-projects in focus

Mininster Mahathir Mohamad has railed against a series of deals struck with Chinese state-owned companies by the administration of toppled leader Najib Razak AFP/Manan VATSYAYANA

The 93-year-old leader, who returned for a second stint as premier following a shock election win in May, has railed against a series of deals struck with Chinese state-owned companies by the administration of toppled leader Najib Razak.

His government has suspended China-backed projects worth more than US$22 billion, including a major rail link, and Mahathir has pledged to raise the issue of what he views as unfair terms related to some of the deals on his five-day trip.

During his nine-year rule, Najib was accused of cutting quick deals with Beijing in return for help paying off debts linked to a massive financial scandal that ultimately helped bring down his long-ruling coalition.

"We're looking at the agreements entered into by the previous government," Mahathir told a press conference this week. "Where we can drop we will drop, where we can modify we will do that - but the most important thing is for us to save money."

Mahathir - who will visit Hangzhou and Beijing, and hold talks with President Xi Jinping during his visit - is seeking to cut Malaysia's national debt, which has ballooned to about US$250 billion.

Bilateral ties were warm under the old regime, and Chinese investment into the country surged as Beijing signed deals for major infrastructure and construction projects.

But critics said there was often a lack of transparency and the terms, such as interest rates on loans, were unfavourable to Malaysia, fuelling suspicions about Najib's real motives.

Najib and his cronies were accused of plundering billions of dollars from a sovereign wealth fund, 1MDB, in an audacious fraud.

Since losing power, Najib has been charged over the scandal and will stand trial. He denies any wrongdoing.

As well as the rail link, which would have run from the Thai border to Kuala Lumpur, the government has suspended a China-backed project to build pipelines after alleging that almost all the money for the work was paid out but only a fraction of the project had been completed.

Asked about Mahathir's threat to cancel projects, the Chinese foreign ministry said in a statement to AFP that "China and Malaysia's economic and trade cooperation has maintained a positive growth momentum.

"Problems arising from cooperation should be properly handled through friendly dialogue."

Mahathir will also be seeking to strengthen business ties with the world's number two economy, and will pay a visit to the Hangzhou headquarters of Chinese e-commerce giant Alibaba.

China is the top trading partner of Malaysia, which is home to a substantial ethnic Chinese minority.