Malacca, Malaysia. Pixabay.
China must maintain strong relations with nations along the Silk Road Economic Belt and the 21st-Century Maritime Silk Road as it pursues the Belt and Road Initiative (BRI). The Maritime Silk Road extends through the South China Sea, thus China is expanding its influence into already disputed maritime territories. Though China has improving relations with the Philippines and Indonesia, Malaysia has been a primary economic partner as China increases its presence in the South China Sea.
In 1974, Malaysia was the first Southeast Asian state to establish diplomatic relations with China, and since then, the two states have maintained strong political and cultural relations. Malaysia has maintained a pragmatic approach to China in regards to the South China Sea conflict. Malaysia and China have deep cultural ties and about 21 percent of Malaysians are ethnic Chinese. With friendly political and cultural relations, China and Malaysia have fostered a strong economic relationship.
China is Malaysia’s largest trading partner, with 96.3 billion USD in bilateral trade in 2017. Malaysia is a main source for palm oil and durian for exports to China. This "durian diplomacy" has flourished as Chinese markets have an increasing demand for the pungent fruit. Over the past decade, Malaysia’s economy has experienced significant growth in part because of the Chinese investments and trading driving the Belt and Road Initiative.
Malaysia’s growth fueled by Chinese investments is expected to continue as Malaysia remains an active participant and beneficiary of the Belt and Road Initiative. The Malaysian Prime Minister, Najib Razak has approved several Chinese infrastructure megaprojects, including a 13.1 billion USD rail project. The East Coast Rail Link will connect Malaysia’s east and west coasts to shipping ports on the peninsula, increasing connectivity between the Maritime Silk Road and the Economic Silk Belt.
Three state owned Chinese companies have also been contracted to construct a deep-sea port and maritime industrial park off of the west coast of Malaysia in the Strait of Malacca, further highlighting Malaysia’s central role in developing the Maritime Silk Road and China’s increasing influence in the region.
Though the newly founded Asian Infrastructure Investment Bank has yet to approve any projects located in Malaysia, China will likely use this multilateral development bank as an avenue to increase maritime infrastructure capacity on the Southeast Asian nation. In February, AIIB President Jin Liqun spoke in at the World Capital Market Symposium in Malaysia. He highlighted that the AIIB will work closely with Malaysia, a founding member of the bank, to support infrastructure development in ASEAN countries.
Malaysia is known for its sensible foreign relations, and historically, the state has been able to maintain its Chinese relations while still welcoming the U.S. in the region for security regions. More recently, analysts have claimed that Najib is getting too close to China and that Malaysia has remained dangerously quiet on China’s increasing military presence in the region. There are concerns that Najib is being bought out by China through investment and trade deals.
Analysts highlight that infrastructure investment is beneficial for Malaysia, whether it comes from China or other foreign entities, but in order to continue growing its economy, Malaysia should turn to Japan, Europe and the U.S. for bilateral trade relations and increased foreign investments, thus avoiding complete dependence on China.
By diversifying its economic relations, Malaysia can hope to remain resilient to economic downturns and policy shifts in China. As China increases its economic and political influence with the Belt and Road Initiative into Southeast Asia and beyond, Malaysia will have to find the optimal balance in order to reap from increasing economic opportunities without being completely absorbed into China’s economic orbit.
Elizabeth TeareElizabeth is a fourth-year student studying International Relations and Rhetoric at the University of Texas at Austin. |  |
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