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China’s influence over Malaysia is growing. It will be a critical GE14 campaign issue. Is it time for Malaysia to accept rather than fight Beijing’s influence?

Editorial

Following GE13, Malaysian Prime Minister Najib Razak lamented the “Chinese tsunami”. He deemed Chinese votes responsible for Barisan Nasional losing the popular vote. How times have changed.

Chinese money now pours into Malaysia. Chinese firms drive infrastructure projects that are changing the landscape. That comes at a cost in addition to repaying massive loans. Malaysia has ceded significant influence to Beijing.

Ahead of elections later this year, Najib’s opponents will play heavily on his cosying up to China. However, as China’s influence on Malaysia grows, might that serve the country well in the long-term? Alternatively, has Najib sold Malaysia’s sovereignty and left it isolated and powerless?

Both countries benefit from investments, but Malaysia ceded influence

China invested more than RM400 billion ringgit (US$102.2 billion). There are positives for both countries. Investment should boost growth in Malaysia. It will provide much-needed infrastructure upgrades and create job opportunities.

China will claim benefits for itself. By, for example, building ports in Malaysia, China can increase its trade revenues. Its tankers may one day be able to avoid the Straits of Malacca.

Sources: Bloomberg, Eurasia Review, Highways Today

Following the 1MDB scandal of 2015, it was China that stepped in to buy Malaysian state assets. Najib and his country remain in China’s debt. Malaysia has limited ability to strike deals and push for investment from elsewhere.

China can use its influence to hamper Malaysia and destabilise ASEAN

China’s power over Malaysia does not affect Malaysia alone. It threatens the unity of ASEAN. ASEAN as a bloc cannot stand up to Beijing if one or more of its members rely on Chinese money.

China has invested in Brunei, Cambodia, and the Philippines. As a result, the nature of the South China Sea territorial dispute changed. After moving closer to China, Malaysia has been quiet about claims to South China Sea islands. Najib stands accused of selling Malaysia’s sovereignty to China. While he remains silent over the South China Sea, he has little evidence to counter the charge.

Furthermore, Chinese companies making investments may hinder Malaysian development. Locals may miss out as Chinese firms prefer to employ their own contractors. Najib has been at pains to put guarantees in place, but he has not convinced everybody. Malaysian firms will struggle to compete with those backed by the Chinese government.

Malaysia needs Chinese assistance, and their relationship is developing

Malaysia cannot make the strides forward it needs to without help. The failure of recent development projects is enough evidence of that. Chinese influence is here to stay.

Najib took a pragmatic approach, arguing turning away Chinese money would be foolish. “It makes no economic sense for Malaysia to turn away Chinese FDI (foreign direct investment), as some politicians are suggesting,” he said. “Such a myopic and narrow-minded view betrays a fundamental misunderstanding of economics and would be bad for the country.”

He had few other options available in the wake of the 1MDB scandal. Accepting Chinese money and influence was a necessary compromise for Najib. He must now do his best to deliver a return on that investment.

Analysts predict Najib will return to power. If he does, the Sino-Malaysian relationship will likely strengthen. Chinese President Xi Jinping is not leaving office anytime soon. Might this long-term arrangement still benefit Malaysia?

Historical links between China and Malaysia are also significant

Malaysia’s ethnic composition is also significant. There are fears Chinese Malaysians could “outmuscle” Malays. Najib’s opponents will argue this is proof he is turning Malaysia into little more than a vassal of Beijing.

Source: World Atlas

Elsewhere in Asia, locals protested against Chinese influence. In Sri Lanka and Thailand, locals became hostile to Beijing’s role. Malaysia is different. It has historical links with China that date back to the 15th century. British colonists brought Chinese workers south in the 19th and 20th centuries.

In that context, it is unsurprising that as many as 75% of Malaysians welcome influence from China. China could influence Malaysia more than other countries without risking significant pushback.

Malaysia faces a dilemma, but Chinese influence is a game-changer

Malaysia will always, to some degree, be in China’s sphere of influence. It always has been. At the same time, Malaysia should try to avoid becoming too close to China. Relying on one partner, or one source of income is dangerous.

Chinese influence over Cambodia, Malaysia, and the Philippines is terrible for ASEAN unity. China says it wants to help the world develop and will work with the likes of the US and Japan. Malaysia must also keep its right to form strategic partnerships with other nations.

Najib has stabilised Malaysia’s economy. Growth prospects are good, and economists are optimistic about the country’s future. It is a no-brainer for Malaysia to accept investment from China. Malaysia must seek investments that link with development, so both parties benefit.

If Malaysia is to cede influence to China, it cannot do so without gaining something. Otherwise, China will shift from influencing Malaysia towards controlling it. That is a delicate balance to strike. If Malaysia can manage it, China’s influence could do the country more good than harm.