Malaysia opens up to ‘true friend’ China for economic stability: analysts

Chinese Premier Li Qiang received it red carpet treatment when he arrived in the Southeast Asian nation of Malaysia on Tuesday, the final leg of a three-nation regional tour.

During the first two stops—New Zealand and Australia—Li had to travel complicated relationship with major trading partners still beset by simmering disagreements.

But Li is in friendlier territory for his final stop. Malaysia’s Prime Minister, Anwar Ibrahim, has been much more open towards Beijing and China. In public statements and interviews, Anwar has criticized the increase tide “China Obsession” emphasizes the country’s perspective unlinked statecalled Chinese President Xi Jinping an “outstanding” leader, and even said Malaysia wants to join the BRICS international group before Mr. Lee’s visit.

By the time Li left Malaysia on Thursday, Anwar had call China is a “true friend”

During Li’s visit, China agree to allow imports fresh Malaysian durian, a pungent fruit increasingly popular with Chinese consumers. Previously, Malaysia, one of the world’s largest durian producers, could only export frozen durian and related products to China. Malaysia exported frozen durian products worth $253 million to China last year.

China and Malaysia signed more than a dozen treaties during Mr. Li’s time in the Southeast Asian country, including a new five-year agreement on economic and trade cooperation.

Li also attended the groundbreaking ceremony for Malaysia’s East Coast Rail Link (ECRL) station at Gombak in Selangor state. The ambitious ECRL project, backed by China, aims to connect the two coasts of peninsular Malaysia. The Chinese Prime Minister proposed to Beijing ready to connect ECRL for other China-funded railway projects in Laos and Thailand, expanding China’s Belt and Road Initiative, the country’s global infrastructure project, deeper into the region area.

Why are Malaysia and Anwar so good to China?

China has been Malaysia’s largest trading partner for more than a decade, meaning the Southeast Asian nation needs to be on Beijing’s good list.

“When your economy is not at its best and you need all this help, you can’t be picky,” said Ei Sun Oh, a senior fellow at the Singapore Institute of International Affairs.

Malaysia’s GDP growth 3.7% by 2023, below the government’s target of 4.0 to 5.0%. The government attributed the weaker-than-expected business results to “weak external demand.” Malaysia’s currency, the ringgit, does also weaken in recent months, making imports more expensive and contributing to inflation.

The economy is becoming a bigger political concern for Anwar. 43% of Malaysians said they disapproved of the government’s handling of the economy, compared with 19% a year earlier, according to November poll from Merdeka Center.

Sheana Yue, an economist with Oxford Economics, based in Singapore, visited China twice last year, where the prime minister won some “quite large investment deals” from Chinese businesses. .

Yue pointed to the extension of visa-free travel agreements between China and Malaysia as a tangible benefit from Li’s trip. Before the COVID pandemic, China was the Southeast Asian country’s third largest source of tourists. But numbers have yet to recover since China lifted quarantine restrictions in early 2023. Only 1.5 million Chinese tourists visited Malaysia in 2023, compared with 3.1 million in 2019.

Geopolitics may also play a role. The Malaysian government has long pursued a non-alignment strategy, which can sometimes be misunderstood as a pro-China stance, said Rahman Yaacob, Southeast Asia program researcher at the Lowy Institute. “Malaysia is trying to attract as many investment and trade partners as possible,” he said.

Wen Chong Cheah, Asia analyst with the Economist Intelligence Unit, said Anwar’s openness to joining BRICS could be a play to “enhance Malaysia’s global standing”.

Both Cheah and Oh believe the war in Gaza could also promote Malaysia’s friendlier relationship with China. Malaysians largely support Palestine and even boycott Western brands such as Kentucky Fried Chicken And Starbucks to protest US support for Israel.

Anwar also has it security involved with Hamas, arguing that maintaining the relationship allows him to help broker peace in the region.

However, Rahman does not see the war in Gaza as the reason for Anwar’s tilt towards China. Instead, the Lowy Institute analyst sees the prime minister’s approach as a way to get the economy stable.

“Economic stability is essential for any government to survive,” he said. Anwar had first-hand experience of that when he served as Malaysia’s deputy prime minister during the Asian financial crisis. “He knows that economic hardship will lead to political and security instability,” Rahman said.


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