Malaysia has cancelled three China-backed pipeline projects, announced Malaysia's Finance Minister Lim Guan Eng, according to a report on Sunday, Sept. 9, by Financial Times.

The cancelled projects were:

• two oil and gas pipelines in mainland Malaysia and the island of Borneo that cost more than US$1 billion (S$1.38 billion) each
• a pipeline linking Malacca to petrochemical plant in Johor that cost US$795 million (~S$110 million)

They were all previously suspended in July.

Chinese investments in the country appear to be linked to the scandal-ridden 1MDB.

The finance ministry has alleged part of the Chinese funding was misused to buy land owned by the sovereign wealth fund.

Also, despite 88 per cent of contracts for two of the projects being paid, only 13 per cent of the work has been completed.

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Reviewing the East Coast Rail Link

However, the East Coast Rail Link (ECRL) project has not been dropped, but is being reviewed.

During his five-day trip to China in August, Malaysian Prime Minister Mahathir Mohamad had  announced Malaysia was cancelling the ECRL until a time Malaysia could afford it.

He had also said the ECRL project could have been done by a Malaysian company for less than half the cost.

The ECRL is the most strategic project for China's Belt and Road Initiative (BRI) in Malaysia, and would have connected the South China Sea with strategic shipping routes in the west of Malaysia.

Malaysia, under the new Pakatan Harapan (PH) government, has been reviewing major contracts signed by the previous Najib administration.

China's 'debt-trap diplomacy'

What is it?

Some countries have accused China of using 'debt-trap diplomacy', which is the offering of attractive but pricey infrastructure projects to countries that need them, and using this opportunity to gain influence with debtors when they are unable to repay the loans.

Although Malaysia has not revealed how much it owes China, such China-backed projects contribute to the US$250 billion (~S$345 billion) debt it currently holds.

Sri Lanka handed over port to China

Already, Sri Lanka was forced to hand over its southern port of Hambantota to China on a 99-year lease in December last year when Colombo was unable to repay its debts from Chinese state-controlled entities, according to the Financial Times.

Although the move was criticised as an erosion of the country's sovereignty, China was not shy to publicise it.

Another milestone along path of #BeltandRoad. Sri Lanka officially hands over southern port of Hambantota to China on 99-year lease pic.twitter.com/EOpjYn9IZH

— China Xinhua News (@XHNews) December 10, 2017

China has also asked Mexico for compensation for cancelling a high-speed rail project.

However, China has not been consistent in its response to debtors, at times forgiving their debts.

A growing number of countries are also starting to question the terms of their involvement in China's overseas infrastructure investment plans, such as Pakistan, Nepal and Myanmar.

This is in spite of China's foreign minister trying to assure them that the projects would bring in huge economic benefits and not inflict a debt burden on them.

What are the implications?

Such infrastructure projects are key to realising China's BRI, which could help to promote trade across continents.

Critics, however, see the BRI as a way for China to extend its regional influence and political power.

Some also think it is possible for China to apply debt leverage as a tool for certain strategic goals, such as strengthening its claims in the South China Sea and undermining American naval presence in the region.

Top image via MalaysiaGazette TV/YT