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Malaysia in transition

China and Malaysia avoid clash but Mahathir wants 'fair trade'

93-year old prime minister rides high-speed train in first visit after comeback

Malaysian Prime Minister Mahathir Mohamad, left, shakes hands with Chinese Premier Li Keqiang following their meeting in Beijing on Aug. 20.   © Reuters

BEIJING/SINGAPORE -- China and Malaysia played up their bilateral ties during a visit by Malaysian Prime Minister Mahathir Mohamad to Beijing on Monday, choosing to focus on trade and other shared interests as China seeks to enlist its neighbors in the trade war against the U.S.

But Mahathir warned that he did not want a "new version of colonialism," and that trade between the two countries must be fair.

Mahathir met with Chinese President Xi Jinping and Premier Li Keqiang separately in the Chinese capital on Monday. "We strongly appreciate Mr. Mahathir's focus on relations with China," Xi said at their meeting, praising Malaysia's support for Beijing's Belt and Road Initiative.

"The purpose of my trip to China was to show we remain committed to our friendship with China," Mahathir responded. 

In a sign of the goodwill both sides were looking to convey during the prime minister's five-day visit to China, Mahathir earlier rode in the driver's compartment of a high-speed train traveling from Hangzhou to Shanghai.

During his interactions with Mahathir, Li made clear that his focus was on improving ties. He spoke with a smile to Mahathir several times while they signed a joint statement, which pledged greater cooperation on Belt and Road as well as stepped-up trade relations.

Malaysian Prime Minister Mahathir Mohamad, left, visits the headquarters of Alibaba Group with the compay's co-founder Jack Ma in Hangzhou, Zhejiang province, China on Aug. 18.   © Reuters

At a joint news conference after their meeting, Li said China planned to import more Malaysian agricultural products.

Sino-Malaysian ties have faced headwinds since Mahathir, now 93-years old, took office in May. He has said he will cancel several major infrastructure projects involving Chinese companies, including a railway along the east coast of Malaysia and a natural gas pipeline, citing financial difficulties.

"I believe that China will look sympathetically toward the problems that we have to resolve and perhaps help us to resolve some of our internal fiscal problems," Mahathir said on Monday.

"We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich ones, in terms of just open, free trade,” Mahathir said. “It must also be fair trade. ”

Li, on his end, did not comment on Malaysia backing out of the projects. With Myanmar and Indonesia also canceling plans to build infrastructure with Chinese partners, Beijing likely wanted to keep the focus on the positive aspects of the bilateral relationship.

Instead, the Chinese premier stressed that the two sides "agreed to protect free trade." He pointedly asked whether Mahathir believed they were on the same page, to which the Malaysian leader replied free trade was "the way to go."

Li was likely sending a message to the U.S., which has ramped up its protectionist rhetoric under President Donald Trump. China is working to bolster ties with its neighbors, including in Southeast Asia, both to avoid isolation from the international community and to build a coalition against American trade policies.

Meanwhile, China is Malaysia's top trade partner and key to its economic growth. Mahathir has said that Malaysia needs to remain friendly with its giant neighbor, and maintains that he only decided to back out of the projects with China in order to cut his country's debt.

Prior to riding the high-speed train in China, Mahathir had said he will reconsider the construction of a similar rail link connecting Kuala Lumpur and Singapore. The project was among those he scrapped after taking office. But given that an outright cancellation would result in massive penalties, Mahathir is now believed to be considering simply postponing it instead.

In addition to Chinese contractors, companies from Japan, Europe and South Korea are prepared to bid on the project. Mahathir visited Japan's Kyushu Railway on Aug. 7. A video posted on Twitter showed him trying out a driving simulator for shinkansen bullet trains. This has fueled speculation in China that Malaysia is now leaning toward the Japanese option.

Still, Mahathir was careful to reach out to Chinese companies during his trip. He visited the offices of automaker Zhejiang Geely Holding Group and Alibaba Group Holding, and discussed greater cooperation with Malaysian companies like Proton Holdings. He also did not mention the South China Sea at the Monday news conference, despite having overlapping territorial claims with Beijing in the waters.

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