Tuesday, May 30, 2017

New Silk Road: Is there a China plan for M’sia?

Dennis Ignatius     Published     Updated

COMMENT | The leaked China-Pakistan Economic Corridor (CPEC) Long Term Plan invariably invites questions about China’s plans for Malaysia.

Given the detailed and comprehensive planning that went into CPEC, it is more than likely, given the country’s strategic location and its critical importance to the success of the One Belt One Road (OBOR) initiative in Southeast Asia, that a similar master plan for Malaysia has been crafted.

What are we to make of the profusion of projects (many of dubious value), the huge infrastructure proposals, the purchase of key national assets, the billions of loans and investments being offered, the new cities that are being built and offered for sale primarily to China nationals, the burgeoning military and security cooperation, and China’s increasing political involvement in our domestic affairs?

Is it merely a natural evolution in bilateral cooperation or is it part of some wider strategy? 

Discerning the game plan

While we do not have leaked documents to fall back on, there is already sufficient information based on public statements, policies and actions to make some assumptions about China’s Malaysia strategy.

It is, for example, safe to conclude that China’s interest in Malaysia, as with Pakistan, is as much about geopolitics as it is about economics. 

As in Pakistan (and Cambodia and Laos as well), a key goal appears to be the creation of a pliant government, one that is sensitive to, and fully supportive of, China’s wider geopolitical interests.

Political influence also makes possible the achievement of another equally important objective: the integration of the local economy into China’s supply chain and access to markets for Chinese technology, skills, products and labour.

This is a major preoccupation of the Chinese Communist Party as its legitimacy depends on maintaining steady growth rates and creating new jobs; a massive challenge given the millions of young people who enter the labour market each year. It is not unusual, for example, for up to 10,000 applicants to vie for a single job.



Keeping China’s factories running at optimal capacity, securing new contracts and job opportunities overseas, ensuring a steady supply of raw materials and market access undergirds the whole OBOR initiative.

While such a preoccupation is, of course, not unique to China, its size, proximity and power presents unique challenges for smaller economies.

Exploiting vulnerabilities

In Malaysia, internal weaknesses (the 1MDB scandal, corruption, ethnic, religious and political division, declining productivity, mismanagement, etc) have provided China with extraordinary opportunities to maximise its leverage.

China has, for example, been quick to capitalise on the 1MDB imbroglio to expand its influence over the administration, push for maximum political and economic concessions and leapfrog other countries to become primus inter pares among Malaysia’s partners.

China’s economic and diplomatic strategy has already yielded impressive dividends as Malaysia shifts significantly closer to China, upending the more cautious and nuanced approach to big power relations that has long been the hallmark of Malaysia’s foreign policy.

In short order, Malaysia has moved to purchase naval vessels from China, open its ports to Chinese warships and submarines and invite the People’s Liberation Army to participate in joint land exercises, something that would have been unthinkable not so long ago.

Prime Minister Najib Razak has hinted that a new mutual defence partnership with China might be in the offing as well.

In keeping with the new closeness to China, the Najib administration appears to have also opted for a policy of benign neglect in respect of China’s territorial claims in the South China Sea. It is not inconceivable that both sides are quietly discussing shared sovereignty and joint exploitation of oil, gas and fishery resources. Such an agreement would be a major concession to China.

The new ‘Kapitan Cina’

In the meantime, Chinese embassy officials are staking out a role for themselves in our domestic politics in contravention of established bilateral principles and diplomatic norms.
 
Embassy officials now regularly accompany government politicians on constituency visits and to meetings of local trade and clan associations where they openly enjoin Malaysian citizens of Chinese origin to support the Malaysian Chinese Association (MCA) and laud the Najib administration’s pro-China policies. The Chinese ambassador himself has emerged as one of the MCA’s strongest supporters and has criss-crossed the country speaking in its favour.

His active involvement in domestic politics has earned him the nickname ‘Kapitan Cina’ (a colonial-era appointee vested with significant power to act and speak on behalf of the Chinese community).

How far China will go to protect its increasing interests in Malaysia and ensure that pro-China personalities, political parties and policies remain in place is a key question.

Rapidly growing economic influence

At the economic level, China appears to have used its new-found influence to rapidly embed itself in key sectors of the economy. It has, for example, become the second largest independent power producer in the country through its takeover of the 1MDB-linked Edra Energy and, in time, could emerge as the largest automobile manufacturer thanks to the recent deal between Proton and Geely.

Many of the infrastructure projects given to China on a preferential basis, will further strengthen China’s influence over the economy while at the same time significantly increasing the nation’s indebtedness to China for decades to come.

While many insist that there is nothing sinister about China’s participation in the economy, the lack of transparency and governance standards is troubling and raises questions about whose interests are being served.

Whether it is purchasing submarines from France or contracting China to build railways, a lack of transparency invariably gives rise to all sorts of suspicions, particularly in a country like Malaysia which is riddled through and through with corruption.

Furthermore, it is more than passing strange that all of a sudden Malaysia has to upgrade all of its ports, build some new ones as well as invest in two, maybe three, new railway projects - all with China’s assistance. It is a godsend for China, of course, but the case that it is in Malaysia’s interest has not yet been made.

It doesn’t help either that independent reviews of projects such as the East Coast Railway suggests that it is massively overpriced, of dubious economic benefit and heavily skewed in China’s favour.

How is it that China keeps coming out ahead time and again in all these mega projects?

Malaysians, who already have good reason to be distrustful of their government, cannot but view these developments with grave concern.

Where are we headed?

Of course, none of these developments in themselves suggest that Malaysia is now a client state.

However, when a bilateral relationship shifts so dramatically, when a foreign power makes such rapid political and economic inroads, when it suddenly acquires a monopoly of major infrastructure projects, when it begins to involve itself in domestic affairs, it does raise questions about where the relationship is ultimately headed.

And, while OBOR itself may bring some benefits to Malaysia, the way both governments are going about pursuing it leaves much to be desired. Without greater political and economic transparency and accountability, closer relations with China will always be dogged by suspicion and controversy.

Next: Demons within, dragons without

Part 1: Pathway to prosperity or slippery slope to subjugation?

DENNIS IGNATIUS, a former Malaysian ambassador, firmly believes that we should put our trust not in the leadership of politicians but in the sanctity of great institutions - our secular and democratic constitution, a democratically elected parliament, an independent judiciary, a free press and a government fully accountable to the people. He blogs here.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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