Malaysia remains strategic on the radar of Beijing, made even more critical now in view of the perceived thawing of ties with Washington with Xi’s offering of olive branch to Biden in his reassurance of maintaining peaceful relationship and avoiding conflict.
Economic interests and assurances of supply chain and energy security remain the key short term pillars for Beijing, in view of the dwindling economic prospects and outlooks in its internal economic structure and performance led by the debt and real estate crises and the gloomy demographic and unemployment downturns.
The need to maintain self-assurance and sufficiency in its economic and geostrategic near water dominance is reflected in the back to back visits by top Beijing officials to Malaysia in the past month alone.
China’s Vice-President, Han Zheng, came for a four-day visit and the visit was deemed to focus on cooperation in new future sectors including the halal industry and in paving the way for the 50th anniversary of Malaysia-China diplomatic relations next year.
Trade and economic concerns remain the foremost priority, China being Malaysia’s largest trading partner, also as the largest foreign direct investor in Malaysia for 2022, with investments amounting to RM55.4bil (US$12.5bil).
In the efforts to lay the foundation for the 50th anniversary of ties next year and possible visit by Xi, Beijing has made it critical to introduce and forge deep trust and confidence and in showcasing sincerity in building foundations of trust, as Han Zheng’s visit came just a week after the visit by Japan’s Prime Minister Fumio Kishida.
Han Zheng’s visit highlighted the importance of digital and green economy and future potential of Malaysia in the sectors of green hub technology, green energy and EV, all providing the needed alternative and fallback option for China amidst its increased economic pressure and downturn and Western containment efforts.
Areas of focus now for Beijing in view of the intensified scramble for critical geopolitical tools include the race for dominance in rare earths and petrochemical and oil and gas sector, all of which are critical for China for food and energy security. Other critical areas include Artificial Intelligence and new energy, all of which Beijing has invested heavily in its own domestic development and economic progress that are based on these new sectors.
However, the economic structural problems presented by the real estate crisis and the ever growing demographic structural problem, coupled with existing and new sanctions and the embargo and containment moves by the West, will result in future risks for these sectors and where Beijing is seeking to ensure a resilient fallback option. This is made more critical in view of the growing exodus of top firms and the dwindling resources available to spur up internal resilience and growth.
Dwindling lack of opportunities, interests and productivity of the young labour and workforce in China, with worsening unemployment rate and the tang-ping movement, a personal rejection of societal pressures to overwork and over-achieve, regarded as a rat race with ever diminishing returns. All these threaten the future stability of productivity and economic drivers of China.
The total trade between Malaysia and China for 2022 was RM487.13 billion, an increase of 15.6 per cent compared with 2021, while China’s investment in Malaysia amounts to RM9.6 billion (US$2.2 billion).
Malaysia is seen as a safe hub and a safe bet in continuing Beijing’s dependence and cultivation of these areas, safe from the West’s interference and in capitalising on Malaysia’s entanglement in Beijing’s orbit of economic dependency.
Malaysia remains vital for Beijing not only in this safe haven bet, but also both in geographical advantage and as the nucleus for regional expansion and capitalising on Malaysia’s internal political trap that will need to continue to depend on China for continuous economic growth.
All these provide vital bulwark of supply chain assurance for Beijing, and to provide the necessary supply guarantee during times of conflict, to revive Beijing’s flagging economic recovery and also to ensure that there is continuous economic dependency and continuation of BRI relevance.
These can be seen in Beijing’s efforts to invest more in capital and skill transfer, including TVET training and development and building the right pool of readiness in two critical fronts. First, building capable human capital and talent pool in serving as the first line of needed capacities in ensuring sustainability to this new drive that will need the right high level skilled talents. Second, providing the assistance in hardware capacities and assets that will be needed to push this through.
Han Zheng’s visit is preceded by the visit by China’s State Councillor and Public Security Minister Wang Xiaohong. The agenda of the visit which includes Melaka and Penang reflects a potential shift in strategic calculations involving key geostrategic considerations and needs of the future.
Melaka remains a pivotal strategic calculation in terms of energy and maritime routes that will be critical for Beijing. New investments in the coastline of Melaka and the potential of future strategic ports and will be strategic in the Strait of Malacca, from docking capacity to potential new assurance of oil and gas route protection and port resilience. Melaka remains important as ever, dating back to its heyday when it became the most pivotal strategic point for trade and as a base in connecting both oceans.
Now in modern times, it serves as a new counterbalance maritime route and base point against new existing power bases in the Indian Ocean and the Nicobar Island chains in the Andaman Sea. It also serves as a strategic stop point between the South China Sea and the Indian Ocean, where its importance has also changed with the new routes to the Indian Ocean through the Lombok and Sunda Straits. The newest shift in the strategic calculations for Strait of Malacca and the Melaka state in specific also is influenced by the new strategic move by Thailand in the new land bridge and the potential of the Kra Canal in bypassing the trade route of the Strait of Malacca and Singapore.
Melaka is also a possible future counterbalancing future force and base against the renewed power presence in Nicobar Island chain and as a fallback in complementing other existing forward bases and port capacities in Gwaddar in Pakistan and in linking up with the other fallback routes in accessing the Indian Ocean, including the land route from Yunnan to Myanmar.
The visit to Penang also reflected the growing importance especially in the field of semiconductor and the geostrategic advantage of Penang and its port, which will be a nearer geographical asset and advantage within the distance of the Nicobar Island chain and the new land route connecting the Andaman Sea from Myanmar.
China does not possess a dominating presence in the Strait of Malacca, and any new potential presence and influence there would bolster its anti-containment efforts of the West.
It also serves as a vital connecting point to its new Ream base in Cambodia which serves as a needed back-up support base for its South China Sea ambition as a forward operating base, especially in warding off Washington’s renewed presence in the Philippines. Any potential new presence in the Strait of Malacca either in the form of port presence or in trade and economic route presence will be a critical supporting point in connecting the dots in supporting a larger ambition and presence in the Indian Ocean.
AUKUS and its strategic naval power presence in the region remains a highly relevant factor in the new calculations, alongside the persistent Quad joint deterrent capacity and individual defence diplomacy efforts by Tokyo, Berlin and London in this part of the world. All these changed the equation of efforts and calculations by Beijing.
Strategic visits remain important in maintaining the level of trust and confidence and in connecting with the right players both in economic and geopolitical fronts, and despite the renewed confidence and overtures in sending the right message to both Washington and the Global South, distrust and uncertainties remain prevalent in the high-stake game of both competition and power scramble in the region and beyond. While there are no permanent friends or enemies both in international politics and power calculations, geographical interests and advantages remain permanent. The moves and strategies to accommodate and mould the best returns to these fixed geographical fixtures remain the highest bets.
Opinions expressed in this article are those of the author.