Sino-Malaysian Relations: Close But Not Too Close

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 (Xinhua, September 10). 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 Lampur 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 (Bernama, June 12).

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 (China Daily, April 29, 2011; New Straits Times, June 4, 2009).

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” (New Straits Times, April 1). Following the project launch, Najib also proposed the establishment of a sister industrial park in Kuantan to further boost the relationship (Bernama, May 6). More generally, China-Malaysia trade rose more than 20 percent from 2010 to reach $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 (China Daily, August 31).

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 (The Star, August 14, 2011). 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 (China Daily, August 31).

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 (The Star, May 5, 2011). The 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 (The Sun, March 16).

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 (Xinhua, August 2; November 30, 2010). 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 (Xinhua, September 11). 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” (China Daily, May 9, 2009). In the unprecedented case when ASEAN failed to issue a joint communiqué 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 (Malaysian Embassy in China, August 27).  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.

Notes:

1. Carlyle Thayer, “ASEAN’S Code of Conduct in the South China Sea: A Litmus Test for Community-Building?” The Asia-Pacific Journal, Vol. 10, Issue 34, August 20, 2012, available online https://japanfocus.org/-Carlyle_A_-Thayer/3813.
2. John Lee, “Malaysia Punching Above Its Weight and Finally Hitting the Target,” Southeast Asian Affairs, 2011, pp. 158–170.
3. Prime Minister Najib Tun Razak, Keynote Address at the Shangri-La Dialogue, Singapore, June 3, 2011, available online  https://www.iiss.org/conferences/the-shangri-la-dialogue/shangri-la-dialogue-2011/speeches/keynote-address/dato-sri-najib-tun-raza/.