By Ge Hongliang
The second Belt and Road Forum for International Cooperation took place in Beijing this April. At a press conference on February 15, Malaysian Prime Minister Mahathir Mohamad announced that he would attend the forum. Mahathir became the first foreign state leader to publicly confirm attendance at the forum, highlighting his support for joint construction of the Belt and Road and Malaysia’s positive attitude towards upgrading Malaysia-China cooperation within the framework of the Belt and Road Initiative (BRI).
As an important hub along the Belt and Road, Malaysia enjoys unique geographical advantages in connecting the Eurasian Continent with oceanic countries of Southeast Asia. The Strait of Malacca between Sumatra and Peninsular Malaysia is one of the most important waterways of global commerce. Malaysia also maintains a strong advantage in terms of economic and social development. The country has laid a good foundation for economic and industrial development. Statistics show that Malaysia’s ranking in an industrial competitiveness index of 122 countries and regions around the world rose from 40th in 1980 to 16th in 2005. Furthermore, the ethnic and cultural diversity of the country has proved an advantage in Belt and Road cooperation.
So far, Malaysia’s most important advantage has been its positive attitude towards Belt and Road cooperation. Malaysia’s overall response to the BRI has been positive. In the view of Malaysians, the 21st Century Maritime Silk Road will further strengthen China’s ties with Malaysia and other ASEAN countries, which is in the mutual interest of China and ASEAN countries and conducive to promoting high-level cooperation between the parties in infrastructure, finance, e-commerce and other realms.
Belt and Road Cooperation
In recent years, Belt and Road cooperation has been a major driver of China-Malaysia cooperation.
In October 2013, Chinese President Xi Jinping called for joint efforts with ASEAN to build a 21st Century Maritime Silk Road during a visit to Indonesia. Malaysia was his second stop on that trip, where China-Malaysia bilateral relations were upgraded to a comprehensive strategic partnership, a development that evidenced increased political mutual trust between the two countries and laid a foundation for wider bilateral security and defense cooperation. The “Peace and Friendship-2015” joint maritime exercise marked new breakthroughs in bilateral maritime security cooperation. Malaysia’s procurement of littoral mission ships (LMS) from China sent a positive signal to the security community. Additionally, the two sides have carried out extensive cooperation in high-level reciprocal visits and army building.
In recent years, China-Malaysia economic, trade and investment relations have developed vigorously. Since 2009, China has remained Malaysia’s largest trading partner for 10 consecutive years. Statistics show that Malaysia’s trade with China reached an all-time high of US$108.6 billion in 2018. According to Chen Guowei, chairman of the Malaysia China Business Council (MCBC), the volume of bilateral trade measured merely US$122 million in 1975. The figure multiplied 890 times by 2018.
The scale of investment between the two countries has been expanding even more thanks to Belt and Road cooperation. According to a think tank report from The Economist, Malaysia was the fourth largest destination for China’s foreign direct investment (FDI) in 2017, up from 20th in 2015. In 2018, Chinese capital funded 40 manufacturing projects in Malaysia, making China the largest source of FDI to Malaysia in the sector for the third consecutive year. According to a report conducted by Nomura Securities, Malaysia has the heaviest inflow of Chinese investment among all Asian countries, with BRI related infrastructure investment alone reaching US$3.4 billion. Within the framework of the BRI, China and Malaysia have carried out intense cooperation in infrastructure, services, manufacturing and other sectors.
Overcoming Emerging Difficulties
China and Malaysia now face an important issue: how can bilateral relations be further upgraded through construction of the Belt and Road?
Prime Minister Mahathir once clearly noted that Malaysia’s foreign policy towards China would not change with a change of government in Malaysia. China remains Malaysia’s largest and most valuable trading partner and one of the leading investors in Malaysia. Nevertheless, Malaysia’s attitude and comments towards Chinese investment as well as foreign policy fluctuations will inevitably impact the implementation of specific projects.
Facing uncertainty, China and Malaysia should work together to overcome difficulties through friendly and pragmatic cooperation. First, the two countries should continue to consolidate their common strategic interests within the framework of the comprehensive strategic partnership, expand consensus and strengthen cooperation in national development and cooperation in international affairs at the regional and international levels. Second, both sides should adopt a pragmatic and cooperative attitude when dealing with differences in interests, which will help reduce the impact of political changes in Malaysia. Third, the two sides should ensure steady progress of Belt and Road projects and further strengthen bilateral cooperation in industrial development, interconnectivity and related sectors. Finally, better China-Malaysia cooperation depends on increased mutual understanding and respect between the two peoples. Therefore, strengthening people-to-people exchanges is equally important. Prime Minister Mahathir’s Look East Policy 2.0 calls on Malaysian people to learn from the Chinese, which clearly provides a prime opportunity for the two peoples to enhance exchange and cooperation in education, science and technology and other areas. Ensuring upgraded China-Malaysia cooperation will provide fresh fuel for a new journey.