China’s ambitions welcomed in Kuala Lumpur?

Memo #388

By: Phuong Nguyen – h0aiphuong.14 [at] and Kai Ostwald – kai.ostwald [at]

In the shadows of the headline-grabbing October announcement that the Philippines would forge closer ties with China and “separate” from its long-time ally the United States, Malaysia quietly took its own significant strides towards Beijing’s orbitMalaysia’s under-the-radar rebalance provides a lifeline to its beleaguered government and economy, but also entails substantial costs.

Prime Minister Najib Razak concluded his recent Beijing visit with the announcement of over US$34 billion in new investments from China. Beyond this boost to Malaysia’s flagging economy, the investments have clear strategic importance for Najib as insulation against domestic and foreign pressures arising from the massive 1MDB financial scandal. In the latter case, fear that Malaysia could enter more fully into Beijing’s orbit—as Cambodia has done—may well curtail Western demands for reform. But the investments are not costless for Malaysia: China has already demonstrated a willingness to meddle in Malaysia’s domestic politics, and this will very likely increase as its financial stake in Malaysia grows.

Moreover, the investments appear conditional on Malaysia accommodating China’s growing regional security ambitions. This includes an agreement that Malaysia will discuss the South China Sea on a bilateral basis with China, as well as increased cooperation with China’s People’s Liberation Army.

Malaysia’s strategic location on the Strait of Malacca holds great value for China, given its importance for China’s industrial and energy security. Last year China and Malaysia held their first joint military exercise, which was the largest bilateral military exercise between China and a Southeast Asian country to date. Beijing and Kuala Lumpur are also expected to strengthen joint counterterrorism efforts. New arms sales underscore the growing defence ties, including Najib’s “landmark decision” to purchase four littoral mission ships for the Malaysian Navy.

These overtures to China are politically expedient for Najib, who continues to fight for his political survival. Few could fault Kuala Lumpur for quietly solidifying its ties with Beijing in light of the TPP’s likely collapse and the uncertainty that follows the Trump administration’s inward-looking orientation. But looking closely at the details of the growing Malaysia-China ties, it is hard to escape the conclusion that Kuala Lumpur is selling off its interests along with its assets.

About the Authors:

Phuong Nguyen is a WSD-Handa Fellow at Pacific Forum CSIS (Center for Strategic and International Studies) and Adjunct Fellow at CSIS. She is based in Washington, DC.

Kai Ostwald is an assistant professor in the Institute of Asian Research and the Department of Political Science at the University of British Columbia in Vancouver.

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Malaysian PM Datuk Seri Najib Razak with Chinese President Xi Jingping in Beijing, Nov. 3 2016. (Credit: Bernama pic via malaymail online)
The first joint military exercise between China and Malaysia, Sept. 2015. (Credit: Xinhua/ Jiang Shan)


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