When Prime Minister Mahathir Mohamad made a surprise return to power earlier this year at the age of 92, it precipitated a qualitative shift in Sino-Malaysian relations as he pushed for more transparent and equitable economic deals with Beijing. As Mahathir said at the time, he views China’s leadership as “inclined towards totalitarianism” and unashamed to “flex [its] muscles” in order to “increase [its] influence over many countries in Southeast Asia.” He characterized the new assertiveness in China’s behavior as “very worrisome,” particularly for smaller neighbors such as Malaysia. And he lashed out at China’s major infrastructure deals, even warning against its “new colonialism” during an August trip to Beijing.
Up to $40 billion in Chinese infrastructure deals are now up in the air, having been suspended, cancelled or considered for cancellation. These include the $20 billion East Coast Rail Link project by China Communications Construction Company; the $10 billion Melaka Gateway project co-developed with PowerChina International and the $2.5 billion natural gas pipeline project led by a subsidiary of China National Petroleum Corporation.
Mahathir has also imposed new restrictions on large-scale Chinese real estate investments such as the $100 billion Forest City, which was almost exclusively marketed to mainland buyers. For the new Malaysian government, any major investment should be inclusive and transparent. As Liew Chin Tong, Malaysia’s deputy defense minister, told The WorldPost, his country welcomes Chinese investments — so long as they create quality jobs for locals. “If investment into [a country] doesn’t bring jobs, you will eventually see a domestic political problem,” he said.
As Mahathir actively seeks to counter China’s influence, he is turning his country into the region’s new face of resistance against the Middle Kingdom. And where Malaysia goes, the region will likely follow.
As a midsized emerging market, Malaysia’s experience is resonating among countries such as the Philippines, which has been reexamining its evolving relations with China. The backlash against China’s suffocating influence in Malaysia is reenergizing domestic opposition to Philippine President Rodrigo Duterte’s China-friendly policy, while encouraging other regional states such as Indonesia and Thailand to reconsider their growing dependence on Chinese infrastructure investments. By threatening to cancel big-ticket Chinese infrastructure deals, Malaysia has helped puncture the lure of Beijing’s mega economic initiatives.
Malaysia’s new position against China has not been solely about economics. It has also embraced a tougher stance on the South China Sea. Mahathir has called for the fortification of the country’s military presence in the Spratly Islands and has more openly criticized Beijing’s intrusions into Malaysian waters and on its land. It is currently exploring a new peace formula to end militarization of the disputes and foster confidence among warring parties.
Crucially, as Liew told The WorldPost, Malaysia is interested in cultivating greater strategic cooperation among the Association of Southeast Asian Nations (ASEAN) claimant states, particularly with Vietnam and the Philippines, as a means to collectively dissuade and deter China from further militarization of the disputes.
This could come in the form of joint exercises, a common diplomatic stance, negotiation of maritime delimitation agreements in areas of overlapping claims and a reiteration of shared commitment to the principles of modern international law. One proposal under consideration is a comprehensive code of conduct among ASEAN claimant states, separate from the open-ended and long-delayed set of rules being negotiated with China.
Given Malaysia’s pivotal role in ASEAN, augmented by Mahathir’s unparalleled influence as a global statesman, Malaysia is in a unique position to counsel its regional peers to adopt a more cautious position on China’s growing regional influence. The Malaysian leader should encourage ASEAN to call for sustainable and transparent infrastructure investments in the region, particularly by China. And he should also advise fellow claimant states to collectively demand demilitarization of the disputes in the South China Sea and collectively criticize China’s coercive actions when necessary.
As the region’s senior statesman, Mahathir should personally advise pro-China leaders, such as Duterte, to remain cautious and not to mindlessly agree to Chinese investments, particularly in critical infrastructure such as telecommunications. (The Philippines is about to welcome China Telecom despite national security concerns.)
Thanks to Malaysia’s clarion call for a reset in bilateral relations with China, which has resonated in the region, Beijing is now under pressure to reassure that its investments won’t undermine the sovereignty and solvency of smaller nations. To be sure, Mahathir’s Malaysia has chipped away at the luster of China’s ambitious 21st century Silk Road initiative. This is nothing short of a major diplomatic coup by smaller nations against a rising China.