Malaysia-China relations appeared to have cooled considerably in the first few months of Pakatan Harapan (PH) rule when Prime Minister Mahathir Mohamad suspended three projects backed by Chinese companies in one of his first decisions in the office.
It was therefore natural for China to be watching Malaysia closely, wondering where would be the direction of bilateral relations going forward.
But there are signs that one year into the historic general election that saw the return of Dr Mahathir at the helm of Malaysia, bilateral ties are warming up again.
One remarkable example would be the recent relaunch of the East Coast Rail Link (ECRL) after a renegotiation with China brought the costs down by almost a third.
And then there was the surprising revival of Bandar Malaysia, which was terminated during former prime minister Najib Razak’s time.
What accounts for these major turn of events? And what may have caused Dr Mahathir – who portrayed himself as a staunch critic of China-funded mega projects during the Barisan Nasional rule – to have a change of heart?
As for China, it softening its tough front in the renegotiation of the ECRL was a telling sign that it needs Malaysia’s friendship. With the United States and Europe distancing themselves, China urgently needs to get other countries on its side.
But moving on, the PH-led Malaysia needs a solid China policy if it wants to tap into China’s growth.
Dr Mahathir knows he could use Chinese expertise and financial prowess to realise a developed and industrialised Malaysia if the only PH outlines a clear set of strategies, and assures follow-through.
Bilateral Ties Back on Track
Under Najib’s premiership, Malaysia had maintained very good ties with China, with many key milestones achieved.
Among others, Malaysia formed a comprehensive strategic partnership with China; enthusiastically supported China’s Belt & Road Initiative (BRI); welcomed Chinese investments, students, tourists, and the very first overseas branch of Xiamen University; and even procured military vessels from China despite both countries having overlapping claims in the South China Sea.
Dr Mahathir, meanwhile, as the current prime minister, visited China twice (August 2018 and April 2019); sang praises about the BRI at the Belt & Road Forum in Beijing; successfully renegotiated ECRL, a signature BRI project; and brought back Bandar Malaysia.
During his visits to China, Dr Mahathir toured Chinese technology companies and expressed his amazement at the advanced science and technology.
In defying the United States, Dr Mahathir openly supported Chinese technology giant Huawei, which has been operating in Malaysia for about 20 years and has provided reliable and affordable services.
In Dr Mahathir’s views, Huawei is a commercial entity that has unfortunately caught up in the political-technological rivalry between China and the US.
Another key event worth noting is the appointment of Mr Abdul Majid Khan, former ambassador to China and president of Malaysia-China Friendship Association, as chairman of the Malaysian Investment Development Authority (MIDA).
Clearly, this is a move to tap into Mr Abdul Majid’s rich China experience to increase the level of Chinese investment to Malaysia.
Malaysia Needs China’s Help to Re-Industrialise
To understand these recent developments in the Malaysia-China ties, one should first note that the purported unhappiness against China on the ground in the lead-up to the general election last year was probably exaggerated.
Election campaign rhetoric aside, there was no deeply rooted “anti-China” sentiment in Malaysia. There was no boycott against Chinese products or reports of hostility towards Chinese tourists.
In fact, a careful examination of Dr Mahathir’s critical rhetoric against China – or that of other PH politicians for that matter will show that they were not targeting China as a whole, but only specific projects involving Chinese companies.
The Forest City in Johor was a case in point. It came under fire for catering to ultra-rich foreign buyers instead of addressing the housing needs of locals.
As a seasoned politician, Dr Mahathir understands fully that China is a major economic power that can help Malaysia re-industrialise.
He had after all, during his first term in office, charted a path of industrialisation for Malaysia, but his subsequent successors Mr Abdullah Ahmad Badawi (2003 to 2009) and Najib (2009 to 2018) had steered Malaysia away from his industrialisation vision.
Under these two prime ministers, service and agricultural sectors took up larger shares of the economy compared to manufacturing, leading some economists to worry about Malaysia’s premature de-industrialisation.
And now, it is China which has the financial and technical abilities to replicate the role played by Japan in the 1980s and 1990s – pumping investment and transferring know-how for Malaysia to accelerate its industrialisation.
Hence, maintaining good ties with China and ensuring the confidence of Chinese investors in Malaysia are of utmost importance, so to guarantee the economic future of Malaysia.
At the same time, China’s BRI vision of building better infrastructure and enhancing strong connectivity is something that Dr Mahathir clearly agrees with.
The BRI will also facilitate trade and create a larger market. These were his objectives when he launched several costly infrastructure mega-projects in Malaysia during his first stint as prime minister, an example being the Kuala Lumpur International Airport in Sepang.
Even though Dr Mahathir might feel that the implementation and financing models of BRI projects could be better refined, his speech at the Belt & Road Forum in Beijing suggested that he has no qualms about China playing the leading role in realising this vision.
China Needs Malaysia’s Friendship
On China’s part, it has shed its image as a tough negotiator and displayed its flexible and accommodative side during the renegotiation of ECRL.
China was willing to listen to Malaysia. It took Malaysian interests into consideration and eventually agreed to a revised route with a cheaper price tag.
The broader context here is China’s current status in the international environment.
Its relationships with the developed world are at an all-time low, as it finds itself facing the hostile US and skeptical Europe, Australia, and Japan.
While it sought to strengthen its ties with the developed world through the BRI, some problematic BRI projects in different countries have cast doubts on China’s credibility and intentions.
Viewed from this lens, China has a very strong incentive to maintain good relations with Malaysia. A Malaysia that stays friendly with China after successfully negotiating a troubled project will provide a much needed antidote to the prevailing negative narrative against China.
Not without Hiccups and Issues
For these reasons, China-Malaysia relations are back on track after an initial period of uncertainty.
However, this is not to say that all is rosy between the countries.
The South China Sea dispute could still derail the bilateral relationship if not carefully managed well by both sides.
The Uyghur issue in Xinjiang has also raised significant concerns among Muslim activists and human rights NGOs in Malaysia, some of whom are pressuring the government to take a stronger stand.
And setting aside the successful renegotiation of the ECRL, there are also lingering concerns in certain sectors of Malaysian society that Chinese investments benefit only China, while such projects should be mutually beneficial endeavours.
Moving forward, while Malaysia will continue to engage China strongly, it will do so prudently.
There is a feeling in the PH government that, whatever its achievements, Najib’s government did not have a coherent policy towards China, nor did it coordinate how Malaysia would approach China among different ministries.
Some of the decisions were based on short-termism, and worse, infused with private interests. Approaching Chinese state-owned enterprises to bail out the troubled 1MDB firm by buying some of its assets was a case in point.
Hence, the PH government wants to pursue relations with China in a more balanced, coordinated and strategic way.
However, this will not be an easy job for Dr Mahathir and his PH colleagues, given that many of them are less experienced in foreign affairs.
So far, despite some positive signs, the new government has yet to articulate a long-term China policy.
Such a policy must go beyond maximising economic gains by accepting more Chinese investment and pushing for more exports to China.
It should recognise and harness the strengths of both countries across various fronts, and turn these into mutually beneficial endeavours, based on a realistic audit of the pluses and minuses of the bilateral relations over the years.
Author: Dr Ngeow Chow-Bing is the Director of Institute of China Studies at University of Malaya.
Editor’s note: The article reflects the author’s opinion only, and not necessarily the views of editorial opinion of Belt & Road News.