Malaysian Prime Minister Anwar Ibrahim has made it clear he will not get caught up in China-US geopolitical tensions and be pressured into picking a side, playing down territorial disputes in the South China Sea and the risk of sanctions as he looks to fast track his country’s transition to a hi-tech economy through stronger economic and strategic ties with Beijing.
In an exclusive interview with the Post, Anwar was defiant about putting Malaysia’s interests first and carrying on doing business with China, but stressed that he neither had any intention of antagonising the United States nor being swayed by the unilateral action of one country against another.
“If they have compelling evidence to suggest that any company or any country is causing mischief, then all right. They should adduce evidence,” he said.
“But otherwise, we will not succumb to that sort of pressure. It is no longer neocolonialism or colonial rule. We are an independent nation.”
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Anwar Ibrahim on navigating Malaysia through China-US tensions | Talking Post with Yonden Lhatoo
Anwar Ibrahim on navigating Malaysia through China-US tensions | Talking Post with Yonden Lhatoo
Malaysia celebrates 50 years of diplomatic ties with China this year, with a view to leveraging Beijing’s investment capacity and technical expertise across sectors from manufacturing to renewable energy.
Southeast Asia has in recent years benefited from a flurry of fresh tech investments worth tens of billions of dollars by companies seeking safe havens from US sanctions, which bar China from accessing valuable chips used to develop sophisticated artificial intelligence and build anything from supercomputers to hi-tech weaponry.
The sanctions imposed by Washington are the latest salvoes in an extended trade war between the two nations that has upended global supply chains and made it awkward for countries such as Malaysia to remain neutral.
China ranked as Malaysia’s top trading partner for a 15th straight year in 2023, while the US has retained its spot as the Southeast Asian nation’s top investment partner over the same period.
The US and European Union warned Anwar’s government last year that it might face a national security threat if it were to allow Chinese telecommunications infrastructure giant Huawei to participate in the development of Malaysia’s 5G high-speed mobile broadband network.
They have been most receptive and they collaborate well, and they are frank
The Malaysian government said then that it would settle for the “best deal” and would not rule out Huawei from the list of potential partners, despite US claims that the company’s technology would enable spying for Beijing.
Anwar said it made sense for Malaysia to ramp up ties with China, a country “willing to accommodate and listen” to his nation’s suggestions and concerns.
This included helping to build Malaysia’s digital economy, renewable energy and AI capacities, as well as greater Malaysian involvement in joint ventures, he said.
“They have been most receptive and they collaborate well, and they are frank and [make] no display of arrogance,” Anwar said.
“That’s why … [we are] seen to be a bit closer to China. The exchange between ministers, between party leaders, between students and researchers, [is] because of [China’s] response [to Malaysia’s engagements].”
He also acknowledged the importance of Hong Kong as an international financial centre and gateway between mainland China and the rest of the world, saying he did not subscribe to negative narratives about the future of the city.
Anwar conceded that Malaysia had in the past been saddled with “lopsided” Chinese deals, but said it was less to do with China and more an issue of “poor governance” by his predecessors.
Malaysia has had to renegotiate the cost of the East Coast Rail Link, a flagship project under China’s Belt and Road Initiative, bringing it down to 50 billion ringgit (US$10.6 billion) from the initial bill of nearly 70 billion ringgit.
Malaysia has also grappled with the near-empty US$100 billion Forest City project in southern Johor state facing neighbouring Singapore, which launched in 2016 and faced long delays after Chinese developer Country Garden suffered a cash crunch due to capital controls imposed by Beijing.
But Anwar was confident of better deals moving forward, buoyed by his optimism that China would soon rebound despite its slower-than-expected post-pandemic recovery.
China’s gross domestic product rose 5.3 per cent in the first quarter of 2024 from a year earlier, but analysts have flagged an unbalanced recovery that is heavily reliant on manufacturing and exports – sectors that could be directly affected by US sanctions.
“It’s a huge country, like the United States. It has enormous capacity, and do not underestimate the ingenuity, the capacity of their leaders to shift [trajectory],” Anwar said.
“They know their priorities. And what, to me, is exciting [is] even if they don’t call themselves a Western democracy, they listen quite a bit and they adjust fast.”
Anwar also spoke of Malaysia’s long-standing South China Sea territorial dispute with Beijing, which has made an expansive historical claim over one of the world’s busiest waterways through which at least US$3 trillion in trade passes each year.
Malaysia has previously issued diplomatic protest letters to Beijing, most recently in 2021, over the presence of Chinese coastguard ships and fishing trawlers in waters it claims as part of its exclusive economic zone.
Anwar did not dispute that the overlapping claims were an issue between the two partners, but stressed that the West had an “obsession, the tendency to exaggerate the problem”.
“Do we have a problem [with China]? Yes. Have we encountered any serious clashes or problems? No,” he said.
“Do we then concede? No. But what I am appalled [by] is this idea that ‘Yes, we have a problem with China only.’”
Anwar called for settling South China Sea disputes through bilateral engagements and discussions within Asean, rather than third-party intervention, especially to quell the latest tensions between Beijing and the Philippines.
“It is important to impress on the Philippines, on the Chinese, that we are here. We must be prepared and able to manage our own affairs,” he said, adding that Malaysia would push this point upon assuming the rotating chair of the Association of Southeast Asian Nations next year.
On Taiwan, Anwar said he was not “unduly worried” by the prospect of a war breaking out over the self-ruled island, as mainland China’s leaders “know how to navigate the situation”.
He said Malaysia and the world recognised the one-China policy, and tensions between Beijing and Taiwan were a domestic matter that must be resolved peacefully and amicably between the two sides.
“I think even this issue is being exaggerated … we have to caution other partners, including the US, not to be seen as provocative, because it will affect us invariably,” Anwar said.
