Malaysia’s Economic Engagement with China: A Consideration of the Economics and Security Nexus

Malaysia’s economic relations with China have been evolving since Malaysia’s independence and this economic engagement has been coterminous with China’s development and political ambitions. China has progressed from a nation that was drawn into the global economy through United States President Richard Nixon’s administration and US Secretary of State Henry Kissinger to a country that wants to chart its own destiny, independent of any foreign power. Malaysia, for its part, has shifted from a country that viewed China with suspicion to one that cautiously cultivated economic ties with China. It has more recently identified China as an agent that can drive its own economic development. China may indeed be a country that seeks to pursue peace, prosperity and progress among developing countries. But the argument is complicated by the perceptions of other countries in the Association of South-East Asian Nations (ASEAN) and of Western powers. The South China Sea issue has been festering and is yet to be resolved. Malaysia has been dragged into US–China trade tensions, which could well deteriorate into something of broader dimensions. While Malaysia might profit from trade diversion and benefit from investment that might otherwise have flowed to China, the reality may be more difficult to navigate. The US may prefer that Malaysia make a binary choice between that kind of opportunistic gain from the diversion of trade and investment, or greater economic engagement