What Malaysia can teach the world about engaging China

China and the region now called Malaysia have a shared trade, cultural, and immigration history that goes back more than one thousand years. China and Malaysia were directly connected by the ancient Silk Road sea routes through the South China Sea, where Malaysia’s coastline strategically straddles two sides.

Today the China-Malaysia relationship is based on trade, investment, and tourism. China has been Malaysia’s largest trading partner for over a decade and Malaysia is China’s third largest trading partner in Asia, just after Japan and South Korea. China invested USD 4.75 Billion last year in Malaysia, and USD 43.8 Billion over the last 10 years. Rapidly growing Chinese tourismto Malaysia reached almost 3 Million visitors last year.

China over the last seven years under the leadership of Xi Jinping, a neo-Maoist in his vision of a great revival of the Chinese Nation, has been re-asserting its place in the world once again. Xi, who is also an inspired Leninist in his view of the importance of state has focused his government’s activities on spreading trade, investment, technology, culture, with an appropriate military presence across the world in pursuit of what is dubbed the Chinese Dream. 

One of the major instruments of China’s assertiveness is the Belt and Road Initiative (BRI), an ambitious recreation of the ancient Silk Road trade routes that once linked Africa, Europe, the Middle East, Americas, and Asia together. The Silk Road was destroyed through the formation of physical borders, trade blocks, geo-politics, wars, and China’s period in isolation in the late 1900s until the country came out again in 1970s.

The ambitions behind the BRI aims to rebuild the old Silk Road and enhance regional connectivity to facilitate greater trade, investment, and cultural exchange on a scale never seen before.

The Najib Barisan Nasional Government enthusiastically embraced China’s initiatives, signing up for an unprecedented number of projects. These included the Kuala Lumpur-Singapore High-Speed Rail (HSR), the Melaka Gateway Port development, Kuala Linggi Port expansion aimed at taking away some of Singapore’s port business, waterfront land reclamation in Penang,  Green Technology Park in Najib’s own town of Pekan, a Methanol Plant in Sarawak fully owned by the Sarawak State Government, and the Trans Sabah Gas Pipeline. Another BRI project, the East Coast Rail Link (ECRL) would connect the new Pahang Port extensions on the East Coast to Port Klang on the West Coast in operation would cut around 30 hours shipping time over ships going around Singapore.

A host of more than 160 private Chinese investments also came to Malaysia along with the USD 100 Billion Forest Cityon the coastline between Johor adjacent to Singapore. Chinese investment into the Bandar Malaysia project at the old KL Airport site was seen in Malaysia as a bailout of the scandal ridden 1MDB, thus assisting the beleaguered Najib who was under criticism, condemnation, and is now facing a lengthy trial.

China was caught by surprise when Dr Mahathir’s Pakatan Rakyat coalition defeated Najib in the general election. China had lost Najib as a close ally to Mahathir Mohamed who had campaigned strongly against Chinese foreign investment.

Abruptly after the election, Mahathir cancelled or deferred a number of Chinese projects which included the HSR, ECRL and a gas pipeline in Sabah. Mahathir further went on to restrict the Forest City project by saying that visas will not be issued for foreigner owners of properties within the project. 

For China Mahathir first appeared a dilemma. The straight talking Mahathir while on a visit to the Philippines warned President Rodrigo Duterte about being caught up in debt, with media stories about the Sri Lankan port in mind. Just recently Malaysia seized USD 240 Million from the bank account of a state-linked Chinese pipeline contractor for ‘work not done’.

Many commentators have hailed Mahathir’s move as fighting back against China. Perhaps a better metaphor would be that China and Malaysia are playing ping pong democracy.

The relationship between China and Malaysia is robust and China is well aware Mahathir’s narratives are primarily for domestic audiences. However, there are also sublime messages for China. Mahathir never directly blamed China, but rather blamed his predecessor Najib Razak for entering into projects with China without doing due diligence. Cost, affordability, and lack of benefit to Malaysia were the official reasons Mahathir gave for cancelling the projects.