Relations with China remain a crucial aspect of Malaysian politics. On November 20, 2024, several media outlets reported on statements made by Malaysian Transport Minister Anthony Loke, emphasizing the importance of establishing a high-speed railway in Asia as a vital alternative trade route between China and Southeast Asia. These remarks followed a statement by the Chinese ambassador to Malaysia on November 16, 2024, indicating that the relationship between China and Malaysia had entered a new phase of historical development, steadily progressing towards building a community with a shared future, coinciding with the celebration of the 50th anniversary of diplomatic relations between the two countries.
The significance of Malaysian-Chinese relations is major, as it represents one of the most prominent bilateral relationships in Southeast Asia. Economic and historical interests intertwine with geopolitical issues, alongside Malaysia’s strategic location at the heart of global trade routes and China’s status as a global economic and political power. In light of rapid global and regional developments, questions arise regarding the flexibility of these relations amid some conflicting interests.
Strong Relations
Malaysian-Chinese relations date back to the era of maritime trade along the traditional Silk Road, with cultural and commercial ties between the two countries increasing during the 15th century, particularly with visits by the Chinese fleet led by the explorer “Zheng He” to the Malacca Sultanate, which was a major trading center in the region. The relationship witnessed a turning point with the normalization of diplomatic relations in 1974, as Malaysia was among the first Southeast Asian countries to recognize China at that time. Generally, Malaysia’s interest in maintaining stable relations with China is linked to several key dimensions:
Ethnic Interconnection: Ethnic Chinese comprise about 23% of Malaysia’s population and are sometimes viewed as part of China’s rising influence there. Despite some ethnic tensions between the Malaysian Chinese community and other ethnic groups, exemplified by the recent incident of a Chinese flag being raised at a local festival in late October 2024—which drew widespread local criticism—such incidents have not impacted the Malaysia-China relationship as they are considered internal matters.
Trade Cooperation Between Beijing and Kuala Lumpur: China is Malaysia’s largest trading partner, with bilateral trade surpassing $117.2 billion in the first seven months of 2024, reflecting a 10.8% increase compared to the same period last year. Key Malaysian exports to China include essential products like electronics, palm oil, and natural gas, while imports from China consist of machinery, automobiles, and electronics. The Belt and Road Initiative plays a central role in strengthening economic ties between the two countries.
The Importance of Chinese Technological Investments to Malaysia: Technology has emerged as a new area of cooperation between the two nations, with China investing in the development of smart cities and digital infrastructure in Malaysia and engaging in renewable energy projects such as wind and solar farms, reflecting a shift towards sustainable collaboration.
Continued Political Engagement: A recent example of this engagement was Malaysian Prime Minister Anwar Ibrahim’s visit to China in November 2024, where he met President Xi Jinping and praised the progress in bilateral relations, expressing his commitment to advancing the successes of cooperation between China and Malaysia onto multilateral platforms. Anwar emphasized that relations between the two countries embody the importance of respect and trust in international cooperation, asserting that this spirit should be nurtured throughout the region during his attendance at the APEC Economic Cooperation Forum in Peru on November 14, 2024.
Promotion of Regional Connectivity Projects with China: Malaysia promotes certain regional connectivity projects with Beijing. Minister Anthony Loke recently highlighted the importance of creating a high-speed railway in Asia as a vital alternative trade route between China and Southeast Asia, stating, “If you can connect Malaysia with China, it serves as an alternative transportation route for China, particularly significant for supply chains, especially amid tensions in the South China Sea,” adding, “Through the Strait of Malacca, we can use trains to transport goods from China to the rest of the world via Malaysian ports.”
Existing Challenges
Despite the strong economic ties between the two nations, several challenges exist, including disputes in the South China Sea and Malaysia’s relations with the U.S., as outlined below:
Geopolitical Disputes in the South China Sea: The South China Sea holds strategic significance for global trade and contains substantial reserves of oil and natural gas, leading to disputes among the bordering nations. China claims most parts of the South China Sea based on the “nine-dash line,” which overlaps with the exclusive economic zones of several countries, including Malaysia, which asserts its sovereignty over maritime areas defined by international boundaries. Malaysia is expanding oil and gas exploration in its economic zones, like the Kasawari project, and is strengthening reliance on dispute resolution mechanisms via ASEAN to counter the escalating tensions between China and Southeast Asian countries and the increased Chinese military presence in contested areas.
Malaysia’s Commitment to Sustaining Relations with Washington: The U.S. is a key partner for Kuala Lumpur in various fields, most notably maritime security. Both nations conduct military training to enhance Malaysia’s capabilities to protect its territorial waters. In trade and investment, the U.S. serves as a primary market for Malaysian exports, particularly in the electronics sector, and U.S. universities and institutions offer opportunities for academic and technological collaboration.
Trump’s Return to the White House: The return of Trump could pose an additional challenge to Malaysia-China relations, especially considering Trump’s hardline policies towards China, which include imposing further economic sanctions and increasing tariffs. This concern was reflected in statements from Malaysian Minister of Investment, Trade, and Industry Tengku Zafrul Aziz on November 15, 2024, expressing worry about increasing tensions between Washington and Beijing and the implications for global growth and rising costs despite the positive role in attracting investments to Southeast Asia, including Malaysia.
Kuala Lumpur’s Policy of Balance in Relations with Beijing and Washington: Washington aims to strengthen its relations with Southeast Asian countries to mitigate China’s influence in the region, and the relationship with Malaysia presents strategic opportunities to achieve this goal. Nevertheless, Malaysia seeks to avoid a direct confrontation with China; thus, Kuala Lumpur adopts a careful balance policy allowing it to benefit from relations with both sides.
Potential Use of ASEAN to Pressure Beijing: Malaysia is set to assume the presidency of the Association of Southeast Asian Nations (ASEAN) in 2025, granting it a unique opportunity to influence the regional agenda and contribute to finding solutions to regional disputes, particularly those concerning the South China Sea, and to enhance cooperation among member states in facing common challenges. The South China Sea issue stands as one of the most complex challenges facing ASEAN. Despite previous efforts to establish a “Code of Conduct” between ASEAN and China, disputes persist. Therefore, Malaysia may push for the development of this Code, which might provoke some disagreements with China, as questions arise concerning the nature of the code and the necessary concessions and agreements to reach it.
In conclusion, Malaysian-Chinese relations reflect a sensitive balance between economic interests and geopolitical challenges. While Malaysia seeks to maximize its partnership with China, disputes in the South China Sea and local tensions pose real challenges. Conversely, cooperation with the United States serves as a vital tool for strengthening Malaysia’s position against regional pressures. As Malaysia approaches its ASEAN presidency, it appears strategically positioned to enhance regional stability and achieve its developmental goals, but the future success of Malaysia will depend on its ability to balance conflicting interests and manage its relationships wisely with major powers, while focusing on enhancing its leadership role in the region.
