Malaysia is finding it increasingly difficult to stay neutral in the US-China rivalry as the superpowers lock horns over trade, investment and the security of advanced technology, according to a top government adviser.
“They don’t make us take sides when it comes to foreign policy,” Tengku Zafrul Aziz, senior political adviser to Malaysia’s Prime Minister Anwar Ibrahim, told This Week in Asia. “They ask me to take sides when it comes to security of technology.”
Malaysia’s solution was conditional neutrality, he said, backed by stronger regulations, closer scrutiny of sensitive technologies and assurances that neither side’s hardware or know-how would end up in the other’s hands.
The challenge is particularly acute for Malaysia’s growing data-centre sector, with policymakers needing to convince Washington that advanced US artificial intelligence chips will not be diverted to China, while assuring Beijing that tighter controls do not amount to choosing sides.
They ask me to take sides when it comes to security of technology
“Today the first question I always get asked is whether Malaysia is aligned with China or the US,” said Zafrul, a former finance minister who also served as Malaysia’s trade chief from 2022 to December last year, “Companies then make decisions based on that [answer]. It used to be driven by efficiency, cost, but now it’s driven by alignment.”
Last year, Washington alleged that Chinese engineers had circumvented US export controls by renting Malaysian data-centre capacity equipped with high-end Nvidia chips to train AI models.