SINGAPORE – Malaysian Prime Minister Anwar Ibrahim has cast his recent maiden state visit to China as a major foreign policy win, securing a record 170 billion ringgit (US$38.6 billion) worth of investment commitments from Beijing all the while asserting his country is non-aligned in the escalating New Cold War pitting Washington versus Beijing.
The billions of dollars of investment promises were spread across 19 memoranda of understanding (MOUs) covering various areas including green energy, electric vehicles and the digital economy, as well as an agreement to expedite long-delayed Belt and Road Initiative (BRI) infrastructure projects in Malaysia.
Anwar praised Chinese President Xi Jinping’s signature development initiative and called for its resumption in Malaysia following a three-year pandemic-caused lull. Previous Malaysian governments had suspended major China-funded projects such as the East Coast Rail Link and Trans-Sabah Gas Pipeline over corruption concerns, but they were eventually reinstated under renegotiated terms.
“Translating lofty ideals into practical reality, solidarity and cooperation is best exemplified in the realization of the Belt and Road Initiative,” Anwar waxed effusive in a speech at the Boao Forum for Asia held in China’s Hainan province on March 30. The forum is often referred to as the “Asian Davos” and is convened annually to promote regional economic integration.
This year’s event overlapped with the second US-organized Summit for Democracy, a mostly virtual gathering spearheaded by the Joe Biden administration to promote and protect global democracy. Malaysia was one of three nations in Southeast Asia to be invited when the gathering debuted last year, though the then-government opted not to attend.
Despite Anwar’s reputation as a Muslim democrat and perceptions of his pro-Western leanings, it was significant to some observers that Malaysia again chose not to participate in the US-led conference. Given that the Malaysian premier’s political staying power and legacy will hinge on his ability to deliver economic results, his preference for China’s event was perhaps not surprising.
“Anwar has highlighted how the economy is in very bad shape with high inflation, high debt and slowing performance. Therefore, it is imperative for him to get investment from, for example, China,” said Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs (SIIA). “The United States, on the other hand, is not as forthcoming in terms of investment commitments.”
China has been Malaysia’s largest trading partner for 14 consecutive years, with bilateral total trade reaching 487.1 billion ringgit ($110 billion) in 2022. Beijing was also Malaysia’s biggest source of foreign direct investment (FDI) last year, with commitments amounting to 55.4 billion ringgit ($12.5 billion), or nearly 34% of the $59.9 billion approved in 2022. The US came in a distant second place at 18%.
While in China, Anwar was clearly keen to show his government is not taking sides in the so-called New Cold War. Responding to a question on the rising Sino-American rivalry during a public lecture at Beijing’s Tsinghua University, Anwar said his country would not allow any power to “dictate” its decisions, while adding that Malaysia views China neither as a competitor nor threat.
In a statement on Facebook, Anwar said China’s president had “invited Malaysia to jointly develop a strong and outstanding civilization, as well as reject the Cold War mentality by playing chess with any countries.” In separate remarks, he referred to President Xi as a “visionary” who had “not only changed the course of China, but also given a ray of hope to the world and mankind.”
The Malaysian premier also said his Chinese counterpart was open to conducting bilateral trade in their respective currencies, namely the ringgit and renminbi. “There is no reason for Malaysia to continue depending on the [US] dollar,” Anwar told parliament on April 4, citing the need to reduce reliance on a strong greenback that has weakened local currencies and raised debt servicing costs.
Xi also endorsed his proposal to establish an Asian Monetary Fund, according to Anwar, who initially mooted the formation of a regional lending institution during his first stint as Malaysia’s finance minister in the 1990s.
Envisioned as an Asia-centric alternative to the International Monetary Fund, the world’s leading multilateral financial bailout agency, Anwar said although his idea did not gain traction then, it could now given the strength of Asia’s economies.
Anwar’s trip to China appeared to help offset the controversy around his earlier official visit to Saudi Arabia from March 22 to 24. Announced meetings between the Malaysian premier and the Saudi king and crown prince failed to materialize due to reputed scheduling conflicts, prompting opposition parties to spin the episode as a high-level diplomatic snub from an important Islamic ally.
Anwar and his delegation traveled to the kingdom to perform an umrah pilgrimage in the city of Mecca to mark the start of Ramadan, observed by Muslims worldwide as a month of fasting and prayer. Since taking office in November, the premier has made official visits to Southeast Asian neighbors including Indonesia, Singapore, Thailand and the Philippines, as well as Turkey.
Ngeow Chow Bing, director of Universiti Malaya’s Institute of China Studies, said Anwar’s decision to visit China before any Western country fits a pattern established by past Malaysian leaders.
Although details of China’s offered investments are scarce – consistent with past multi-billion-dollar offers to nations like the Philippines that were never subsequently delivered, “the optics are good and Anwar’s priorities are indeed economic diplomacy, and in this sense he achieved his objectives in this visit to China.”
The academic suggested that “although Anwar is a democrat, he is not necessarily comfortable in using democracy as a means to categorize countries into friends and non-friends.” Ngeow added that Anwar’s pro-Western reputation should not be “over-interpreted” and that his foreign policy would “largely continue Malaysia’s tradition of being pragmatic-oriented and non-aligned.”
Hoo Chiew Ping, an international relations lecturer at Universiti Kebangsaan Malaysia, (UKM), agreed. “Anwar being pro-West is a widespread misconception due to the US support he received while he was incarcerated under Mahathir [Mohamad]’s regime in the 1990s. He understood China’s potential very well while he was deputy prime minister back then,” she told Asia Times.
“Therefore, it comes as no surprise that he emphasizes China’s importance, especially in economic terms. In my opinion, it makes perfect sense for Anwar to maximize economic gains from the summit with Xi Jinping and to improve bilateral relations with China. However, it should not come at the expense of Malaysia’s security concerns,” Hoo added.
Despite the good rapport on display during Anwar’s China trip, long-standing bilateral differences remain. Beijing claims sovereignty to nearly all of the South China Sea, where Malaysia and other nations have overlapping territorial claims. The disputed waters play host to key shipping lanes and are endowed with rich oil and gas deposits.
Addressing the dispute in parliament, Anwar this week said that Beijing had expressed concerns over energy exploration activities carried out by Malaysian state oil giant Petronas within the country’s 200 nautical mile exclusive economic zone (EEZ). Chinese Coast Guard ships have in recent years passed by or lingered near Petronas’ drilling operations, prompting protests from Malaysia.
The premier said he told Beijing that “Malaysia sees the area as Malaysian territory, therefore Petronas will continue its exploration activities there.” Anwar added that Malaysia is open to negotiations on the issue “if China feels this is their right,” echoing the Association of Southeast Asian Nations’ (ASEAN) stance that the disputes should be resolved through negotiations, not force.
Malaysia’s foreign ministry will issue a protest note if there are any “collisions” between Malaysian and Chinese vessels there, Anwar said. Malaysia has in recent years held bilateral military exercises with the US Navy in the South China Sea, and with increasing pressure to take sides between Washington and Beijing, analysts say Putrajaya will find it increasingly difficult to maintain its non-aligned balance.
Malaysia is generally seen as a beneficiary of the escalating Sino-American trade and tech wars, as many companies depart China and relocate to other Asian venues to avoid being targeting by ever-expanding US security-related restrictions on China and its companies.
That’s particularly true for the crucial semiconductor sector, where the US has slapped restrictions on American and foreign companies that use US technology from producing chips in China.
“Increasingly there are many high-tech factories, especially computer chip factories, moving out from China,” said SIIA’s Oh. “I think Malaysia will be the ultimate destination for some of these relocations of American high-tech factories and firms. In that sense, Malaysia has been benefiting substantially.”
“Malaysia does not mind benefitting from the opportunities arising from US-China tensions, and it has benefited,” said Universiti Malaya’s Ngeow. “This can be seen in those investment projects that were shifted from China, but fundamentally, Malaysia still prefers both major powers not to continue the tensions and find ways to co-exist and maintain certain stable ties, if not rapprochement.”
Chandra Muzaffar, a political analyst and former lecturer at the Universiti Sains Malaysia in Penang, on the other hand, argues that while Malaysia may see increased investment flows resulting from US-China tensions, “it will be a bane rather than a boon for Malaysia and other nations” that will have to “walk a tight-rope between the two global powers.”
“The US wants to draw as many nations as possible in Asia and the Pacific to its side in order to isolate China and weaken its position. Through military bases and military alliances, the US intends to achieve its goal,” said Muzaffar, who described Anwar as a “pragmatic politician [who] knows that the decline of the West, and in particular of the United States of America, is irreversible.”
UKM’s Hoo remarked that Malaysian leaders “always strive to strike a balance between the two great powers, at best maintaining an equidistance diplomacy.” As a crucial part of Asia’s supply chain, she said the nation is well-placed to “emerge as a mediating force in scenarios where increased tensions between US and China continue to rise, asserting inclusive engagement with both.”
Follow Nile Bowie on Twitter at @NileBowie