Earlier this month, China and Malaysia held the first ever defense and
security consultation between their two defense ministries in Kuala Lumpur. The
landmark event was just the latest in a series of advances which suggest that,
on the surface, Sino-Malaysian relations are at an all-time high.
Personal relationships between
leaders on both sides have rarely been better, frequent bilateral visits have
been made by both sides, and cooperation in flourishing in a variety of areas
beyond traditional ones. Yet, while Sino-Malaysian relations have continued to
strengthen over the last few years, divergences on security issues have remained
and Kuala Lumpur continues to pursue a hedging strategy amid the uncertainty
posed by China's rise.
Malaysia and China have come a
long way since the Cold War days. Back then, Malaysia, which had a significant
ethnic Chinese minority, was deeply suspicious of Chinese Communist Party's
(CCP) ties to the Communist Party of Malaya (CPM) and Beijing's links to the
Soviet Union. This fear began to subside gradually and Malaysia became the
first Southeast Asian country to normalize diplomatic relations with China in
1974 and played a critical role in encouraging the Association of Southeast
Asian Nations (ASEAN) to begin a dialogue with China after the end of the Cold
War.
Since then, Malaysia's leaders
have continued to pursue a hedging strategy towards China. On the one hand,
they have sought closer ties with Beijing because of its crucial role in
strengthening the Malaysian economy and their domestic legitimacy at home as a
multi-racial state with a sizable ethnic Chinese population as well as China's
growing status in Asia and the world. At the same time, however, Kuala Lumpur
also has sought to maintain and strengthen economic and security links with
other Asian and Western powers to varying degrees to keep their options open
given the uncertainty surrounding China's rise.
China, for its part, has also
placed great emphasis on boosting its relationship with Malaysia not only for
economic reasons but in recognition of Kuala Lumpur's historic role in
promoting engagement with Beijing as well as its influence in regional forums,
particularly ASEAN. Cultivating good relations with Malaysia, from Beijing's perspective,
may help ease concerns about "China threat" perceptions that continue
to persist in the region due to both the sheer structural asymmetry between
China and ASEAN states as well as disagreements on specific issues such as
territorial disputes in the South China Sea.
While Sino-Malaysian relations
also have fared pretty well under his predecessors, they have reached new
heights under Malaysia's current Prime Minister Najib Razak. Chinese leaders
never forget that it was Najib's father and Malaysia's second Prime Minister
Tun Abdul Razak who made the landmark visit to Beijing to normalize relations
in 1974. The bilateral relationship, thus, has seen more than its fair share of
symbolism and gestures as well as high-level visits. Najib made China his second
state visit after assuming office in April 2009 following a visit to Singapore,
which attested to Beijing's importance.
Moreover, President Hu Jintao's
visit to Malaysia in November that year was the first state visit by a Chinese
leader to Malaysia in 15 years. Najib also visited China in 2011 and 2012 and
appointed the chairman of the Malaysia-China Business Council Ong Ka Ting as
his special envoy to China, while Premier Wen Jiabao visited Malaysia in 2011.
Plans for commemorating the 40th anniversary of the establishment of diplomatic
ties in 2014 are already well underway with both sides agreeing to designate
2014 "Malaysia-China Friendship Year" last month and China loaning a
pair of panda bears to Malaysia in June as a symbol of friendship.
The flurry of diplomatic activity
has also breathed momentum into the economic relationship. As the global
financial crisis slashed Western demand and plunged Malaysia's export oriented
economy into recession in 2009, Najib knew that getting the Malaysian economy
back on track was the greatest determinant of his political future,
particularly given his party's weak showing in the 2008 general election.
Realizing that China would have
to be at the forefront of any Malaysian economic revival, Najib began to boost
cooperation with Beijing in a variety of areas. He emphasized boosting Chinese
investment into Malaysia and broadening the base of Sino-Malaysian trade, while
Chinese Premier Wen Jiabao suggested a five-point proposal for further
enhancing economic relations during his April 2011 visit that included
deepening cooperation in areas like finance, infrastructure, education, science
and technology.
The efforts of both sides have
yielded impressive results. The most visible symbol of economic cooperation - a
joint-venture project between Malaysia and China called Qinzhou Industrial Park
which began in 2011 - was completed in just a year, which in Najib's words
attests to the "commitment on both sides to the ever broader and deeper
economic ties". Following the project launch, Najib also proposed the
establishment of a sister industrial park in Kuantan to further boost the
relationship. More generally, China-Malaysia trade rose more than 20% from 2010
to reach US$90 billion in 2011, and is expected to reach more than $100 billion
by the end of this year. China has been Malaysia's largest trade partner,
second-largest export destination and largest source of imports since 2009,
while Malaysia is China's eighth-largest trade partner and the largest among
ASEAN nations.
Cooperation over the last few
years has extended beyond the traditional economic realm to include
people-to-people ties as well. On tourism, the Malaysian Association of Tour
and Travel Agents (MATTA) and the China Muslim Travel Association (CMTA) inked
a cooperation deal in August 2011 designed to remove barriers for Muslim
travelers and boost collaboration between the two associations. China
consistently has been a top-ten tourism generating market for Malaysia with
around 1.3 million Chinese visiting annually, while around 1.4 million
Malaysians flock to Beijing every year.
There also has been a particular
focus on youth, since "it is the young people", according to Chinese
Premier Wen Jiabao, "who will carry the future mission of enhancing friendship
and deepening cooperation between our two countries". In April 2011, China
and Malaysia signed a mutual recognition agreement (MRA) in higher education
that would facilitate the official acknowledgement of academic higher education
qualifications.
That deal was hailed as a great
boost to people-to people ties and was expected to raise both the number of
students studying between the two countries as well as partnerships between
educational institutions. Malaysia's full list of 54 public and private higher
institutions is likely to be approved by China by the end of this year, while
Beijing already has seen more than a hundred institutions approved with
hundreds more awaiting recognition.
Cooperation also has improved on
security and defense issues. China and Malaysia signed a memorandum of
understanding (MoU) on fighting cross-border crimes in November 2010 covering
issues like human trafficking, terrorism and drugs, and a bilateral agreement
was also inked last month which could see more collaboration on newer forms of
crime such as telecommunication fraud. Additionally, on September 11, the
security dimension of the relationship received an upgrade when China and
Malaysia held their first ever defense and security consultation between the two
defense ministries.
The consultation, chaired by
Deputy Chief of the General Staff of the Chinese People's Liberation Army (PLA)
Ma Xiaotian and Secretary General of the Malaysian Defense Ministry Ismail
Ahmad, saw both countries agree to maintain high-level exchanges between the
PLA and the Malaysian Armed Forces, strengthen communication in training
cooperation, and deepen cooperation with respect to non-traditional security
issues. The consultation is expected to be held annually.
Yet, this impressive record of
all-round cooperation masks the uncertainty Malaysia continues to feel about
China' rise and the hedging effort Kuala Lumpur has pursued alongside its
engagement with Beijing. While this hedging strategy has been in place since
the end of the Cold War, Malaysia has had to be even more adroit in practicing
it in recent years in an environment marked by China's greater economic and
military heft, uncertainty about the sustainability of US commitment in the
region and the looming threat of US-China rivalry - all the while realizing
that aligning or distancing itself from any side too soon may prematurely incur
costs and preclude benefits.
For now, Malaysia's leaders
continue to believe that cozying up to China yields important immediate
benefits necessary to cement their domestic political position, while Beijing
does not yet pose a direct threat to Malaysia's security interests. Hence, the
emphasis has been on pragmatic cooperation with Beijing now while
simultaneously maintaining key security and economic links with other powers
and boosting ASEAN unity in preparation for any threatening scenarios later.
Specifically, this strategy has
manifested itself most visibly with respect to the South China Sea, which
remains a thorn in the side of Sino-Malaysian relations. Kuala Lampur has
staked its claim to a dozen geographical features in the contested Spratly Islands
and has occupied five of them since 1979. Though Malaysia's defense
establishment is still wary of the South China Sea issue, its leaders have
mostly shied away from directly confronting China on contested claims now,
choosing instead to quietly protect Malaysian claims in the South China Sea by
upgrading naval and aerial capabilities since the 1980s to prepare for the
future.
China's growing assertiveness on
territorial questions over the last few years has seen Malaysia attempt to
counter this behavior through various means without direct confrontation. For
instance, in 2009, Malaysia and Vietnam presented a joint submission to the UN
Commission on the Limits of the Continental Shelf (CLCS) in 2009, which Beijing
still objected to vociferously and called "illegal and invalid". In
the unprecedented case when ASEAN failed to issue a joint communiqu้ in July
because some members did not want to include references to the South China Sea
(some allege at China's request), Malaysia firmly said in private that not
referring to the disputes was "totally unacceptable". [1]
Malaysian leaders also have
stressed repeatedly the importance of a united ASEAN in standing up to China on
the South China Sea question, and they have on more than one occasion urged Washington
privately to pay greater attention to the issue. [2] They also have stressed to
Beijing privately the importance of working towards a code of conduct in the
South China Sea and supporting ASEAN integration, including at the 2nd Annual
Strategic Consultation between the two sides in August this year. They also
have balanced that, however, by stating they will not allow this to disrupt the
overall relationship. As Najib succinctly put it in his keynote speech at the
Shangri-La Dialogue last year, "while I remain fully committed to the
common ASEAN position in terms of our engagement with China on the South China
Sea, I am equally determined to ensure that our bilateral relationship remains
unaffected" [3].
While Najib has managed to walk
this tightrope in Sino-Malaysian relations quite well thus far, it is a risky
and delicate balance that could be disrupted by several factors in the future.
A deterioration of relations between the United States and China could place
Kuala Lumpur in the awkward position of being in the middle of a great power
rivalry or, worse, having to pick sides. China's rising military might and
growing economic influence in Malaysia may cause Beijing to overplay its hand
and try to impinge on the autonomy Kuala Lumpur craves.
Although the United States
continues to assure its Asian partners that it will continue to have a strong
and sustained presence in the Asia-Pacific despite concerns about China's rise
abroad and America's economic woes at home, any sign that this commitment is
waning - whether perceived or real - may undermine Malaysia's faith in
Washington as a critical balancer in its hedging strategy. At home, Najib's
party also faces elections before April next year in which a clear victory is
hardly assured, which could have profound effects on domestic stability and
policy continuity.
Until its tried and true hedging
strategy fails, however, Malaysia will continue to utilize it, reaping the
benefits of cooperation with China now but always with a wary eye towards the future.
Prashanth Parameswaran
Business & Investment Opportunities
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