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China Reform Monitor - No. 1335

Malaysia rethinks the BRI;
Huawei under renewed scrutiny

Edited by Joshua Eisenman
July 26, 2018

June 17:

Malaysia's "new" Prime Minister, 92-year old Mahathir Mohamad, has said that his government is reviewing any dubious deals with China's state-run firms concluded by his predecessor,
the Bangkok Post reports. Former PM Najib Razak and his cronies are under investigation for looting huge sums of public money from the sovereign wealth fund, known as 1MDB. Under Najib, Malaysia was China's close partner in the Belt and Road Initiative and Chinese FDI grew from just 0.8% of total net FDI inflows in 2008 to 14.4% in 2016. But the change of government has unsettled Beijing's plans. Mahathir has announced that a planned high-speed rail link between Kuala Lumpur and Singapore must be renegotiated because of concerns about mounting debt. China's state-owned companies were favored to build part of the line, which would be the final link in a high-speed rail network stretching from Yunnan to Singapore. Other Beijing-financed projects, including a deep-sea port in Malacca and a massive industrial park, are also under review. Last week, Mahathir visited to Tokyo and said: "We will be friendly with China, but we do not want to be indebted to China." In response, an editorial in the official Global Times warned Mahathir that: "The Chinese government will take concrete measures to safeguard the interests and rights of Chinese enterprises."

June 20:

China will extend more than $100 million in military aid to Cambodia and boost bilateral ties ahead of the country's election next month,
the South China Morning Post (SCMP) reports. The pledge came during defense minister Wei Fenghe's visit to Phnom Penh, where he met Cambodian Prime Minister Hun Sen. The two sides agreed to expand military cooperation, including joint military exercises and a naval visit next year. Cambodian officials asked China to provide tactical gear and fund the building of a training facility for live-fire drills. Last year, Cambodia's main opposition party, the Cambodia National Rescue Party, was dissolved, but political divisions within Cambodia's ruling party and the military make Beijing's support vital for Hun Sen. "China's increase in aid before the election [on July 29] should be seen as a long-term effort to safeguard its investments," said Zhang Jie of the Chinese Academy of Social Sciences.

June 24:

A five-day protest for veterans' rights in Zhenjiang, Jiangsu was ended when the Jiangsu government sent in hundreds of armed police. The protest, which included thousands of veterans, was held in response to the growing number of violent attacks on them around the country. Since May there have been multiple assaults by "gangsters and thugs" hired by local officials to "maintain stability" in Guangdong, Sichuan, Hunan, Hainan, Henan, Anhui and Liaoning. On May 22nd, more than 1000 vets gathered in a square in Luoding, Guangdong to protest the beating of 60-year-old Liu Tianrong by unidentified assailants for petitioning for better treatment for veterans. "Assaults on veterans are a public humiliation of China's military, but it's just the tip of the iceberg,"
one protester told the SCMP. "We veterans realized that we have to join together to fight for our dignity, because even though the central government set up the veteran's ministry several months ago nothing has been done," said another. The problem is the military's opacity, observed Zeng Zhiping at Nanchang Institute of Technology. "There is not a channel for local governments to ask the military to provide the help and information they need so local officials often regard protesting veterans as troublemakers. The central government should give local authorities the legal right to demand that information from the PLA."

[EDITOR'S NOTE: China's newly established Ministry of Veteran's Affairs will consolidate various functions previously distributed across the civil affairs and human resources ministries, and the political works and logistics support departments of the Central Military Commission.]

June 26:

Representatives from more than 50 African countries have gathered in Beijing to discuss regional security at the first China-Africa Defense and Security Forum. "The forum will gather helpful advice and suggestions for China-Africa cooperation in defense and security," said Major General Hu Changming at the Central Military Commission in
comments carried by the official CGTN. The two-week-long Forum, themed "Work together, and assist each other," focuses on "regional security, constructing African countries' national defense safety, and China-Africa military cooperation." China announced its "comprehensive support" for African countries including on piracy and counter-terrorism. Strengthened Sino-African defense ties compliment China's existing security relations, which include the sales of weapons, defense technologies and equipment. "Chinese small arms and light weapons have spread rapidly...African countries should be clear-eyed that the days of China's strict adherence to its longstanding noninterference policy are over," said Luke Patey of the Danish Institute for International Studies in comments carried by CNBC.

June 28:

China's top equipment manufacturer Huawei has strongly dismissed concerns about the cybersecurity risks of its products. The comments come in response to revelations that China's security services have been making hidden backdoors in the network systems of Chinese companies. "The Chinese government has never asked for communications information from Huawei," said Joy Tan, president of corporate communication. Huawei is bidding to supply its next-generation 5G mobile services to Korea's two largest mobile carriers, SK Telecom and KT. Huawei has been partnering with LG Uplus, the third-biggest player in the Korean telecom industry, and competing with global rivals like Nokia, Ericsson and Korea's Samsung Electronics to win the contract for the 5G network systems,
the Korean Herald reports