What Malaysia can teach the world about engaging China

The behind the scene communications with China were symbolic and at first unofficial. Jack Ma, head of Alibaba and a member of the CCP made a visit to Mahathir in Putra Jaya very quickly after the election.  Mahathir’s closest confident Daim Zainuddin made an unofficial trip to meet China’s premier Li Keqiang, a couple of weeks after Jack Ma’s visit to Putra Jaya.

Mahathir’s visit to Japan before visiting China didn’t go unnoticed by China. On Mahathir’s first visit to China after becoming PM, China accepted Mahathir’s cancellation of the projects. Even with the project cancellations, the visit was deeply symbolic where great respect was accorded to Mahathir by the key Chinese leadership.

During the trip Mahathir visited Alibaba and  Greely which had just taken up a 49% equity in Proton, a car Mahathir has been publicly seen driving on several occasions.

With a reset relationship, Mahathir returned to China in April this year. Some of the projects had been renegotiated and Bandar Malaysia and ECRL were revived. Mahathir publicly expressed his full support for the BRI development strategy. Mahathir’s visit to Huawei headquarters stating Malaysia will continue working with the company on 5G development was important support against US criticism of the company. Malaysia also signed a major palm oil export deal that will offset lose of palm oil exports to the EU. These events showed a very strong two way relationship.

Mahathir had dealt with the Chinese leadership in a way they understood. His visit to Japan showed his displeasure to China over their explicit support for Najib last general election. The Japan visit also showed the Chinese leadership that Malaysia had other strong regional friends. Mahathir’s rebuke of China’s investments projects in Malaysia was not totally taken as an affront to China’s interests, as China itself had restricted capital outflows for the Forest City project.  Mahathir’s calls for due diligence and transparency in BRI projects has even enhanced China’s credibility on BRI in the region, which has been strongly criticized, somewhat unjustly in some corners of the media.

The Malaysia-China reset has created a number of understandings.

State to state relations are of the utmost importance because the majority of China’s Malaysian business partners are related to the state in one way or another. Future investments will be scrutinized as to their benefit to Malaysia. Under a Mahathir Government these investments will be transparent, unlike his predecessor. Malaysia is not an easy place to do business in, even for China. China must take into account political power, various relationships between the stakeholders and public narratives.

The China-Malaysia relationship also hinges on many unsaid givens. Mahathir’s realism about the South China Sea is a thousand years of what has been. He rejects the occidental views of parties outside of the region, which saves enormous amounts on what he believes is unnecessary defense spending.

The BRI is China’s best asset to contest US influence in the region. This is particularly the case as US foreign policy concerning the Asian region is in disarray, especially with the US withdraw from the TPP. US commitment to the region is currently under question by a number of regional governments.

The China-Malaysia reset comes at a time when there is much discussion about growing Chinese influence around the world. Rising Chinese influence is following a pattern not too unsimilar to how US influence grew around the world after the Second World War through aid, cultural exchange, propaganda, trade, investment, military expansion, espionage, and covert military operations.

What does the Malaysian experience mean for other countries engaging China?

The issues are much more complicated today as there are so many Chinese migrants that have integrated into their host societies around the world. Most of these people still carry strong affections for China. The loyalties of people with dual cultural ties is much more complex in regards to the integrity of national security. These issues must be considered very early on, not after the horse has bolted. Potential threats to national security can come from any wave of migration.

It’s the host countries that invited the migrants. It’s the host countries that have invited Chinese investment. Mahathir has pointed out that it’s the responsibility of the host country to carry out their own due diligence on the decisions they make in regards to foreign investment. If a country’s government is corrupt or decision makers compromised, then the country will get into trouble. There is plenty of evidence to support this assertion.

The debt trap has been accorded the status of China’s secret weapon. A loan is like any mortgage. If its not paid back in accordance with the terms, the bank will forgo on the mortgage property. China has been accused of using debt trap diplomacy, but there have not actually been any infrastructure loans that have led to the forfeiture of any Chinese constructed assets in the region.

Mahathir may have given a lesson to China about meddling inside domestic politics, especially during the last federal election. The China-Malaysia case also shows that dealing with China shouldn’t be of a transactional nature. The importance of symbolism, diplomacy, and a little bit of hard ball can’t be underestimated. China has a massive PR job ahead of it on BRI, especially with the slant much of the media has given the subject. Although mistakes have been made, beyond the controversies there is a vision. The US may not be China’s main competitor within the region, it might be China’s own ghost.