Malaysia’s Prime Minister, Anwar Ibrahim, is set to visit China for the first time since his election in November. During his four-day visit, Anwar will meet with Chinese President Xi Jinping, as well as business leaders and Premier Li Qiang. The talks are expected to focus on trade, political cooperation, prevention of corruption, and civilizational issues. Malaysia has close economic and security ties with both China and the US, but the escalating trade and tech war between the two superpowers complicates Malaysia’s efforts to maintain positive relations with both. Malaysia is the world’s sixth-largest exporter of semiconductors, which have been a key target of US sanctions aimed at hobbling China’s tech sector. If Malaysia wishes to boost cooperation with China, it will need to consider the possibility of US pressure and how to navigate the delicate line of advancing technological cooperation for national interests while still being able to convince both US and China that such cooperation will not affect bilateral relations politically.
Malaysia has been among the biggest beneficiaries of trade and investment diversion as US and Chinese companies seek to diversify their geographic exposure to trade restrictions. A 2019 report by Nomura found that Malaysia was the fourth-biggest winner of the US-China trade war, after Vietnam, Taiwan, and Chile. China’s overall direct investment in Malaysia rose to 9.7 billion Malaysian ringgit ($2.2bn) in 2022, up 23.5 percent from 7.9 billion ringgit ($1.8bn) in 2021. The US was Malaysia’s top source of investment last year, investing 43.9 billion ringgit ($9.9bn), followed by Singapore and Japan.
Anwar is likely to promote Malaysia as the destination of choice for Chinese investors seeking to lessen the impact of the trade war as well as to find new markets in the region. Since Malaysia imports more from China than it exports, it will be a good opportunity for the PM to push for China to import more from Malaysia. Malaysia could also tap into China’s rapidly advancing digital technologies to enhance the productivity and competitiveness of its small and medium-sized sectors.
Analysts suggest that Anwar will be cautious about raising sensitive issues during his trip, including China’s treatment of the Uighurs and other ethnic minority Muslims, whose plight he highlighted during his many years as an opposition leader. The South China Sea dispute is likely to be raised in private as well as noted publicly using restrained language. Chinese Coast Guard ships have frequently sailed into Malaysia’s exclusive economic zone in the South China Sea, where Malaysia’s state-owned Petronas gas and oil company is drilling for hydrocarbons. In 2021, 16 Chinese military aircraft came within 60 nautical miles (112 km) of Sarawak state, prompting Kuala Lumpur to summon the Chinese ambassador and accuse Beijing of posing a “serious threat to national sovereignty and flight safety”.