Malaysia - China Relations

The Malaysia - China bilateral relationship continues to be burdened by Malay mistrust of the PRC. The ethnic Malay political elite still doesn't trust the Chinese, especially in military affairs. Malaysians seek the kind of "a la carte" relations with the PRC that they have with the US, in which they rigorously segment interests they perceive to have in common with us from those areas in which they don't and react very cautiously to the prospect of improving political relations across-the-board.

On May 31, 1974, China and Malaysia officially established diplomatic relations. Since then, they have witnessed sound development in the political, economic and cultural fields. Starting from 1985, the Malaysian Government made gradual readjustment of its policy toward China, contacts at different levels have been continuously increasing between the two countries. Since the 1990s, as Sine-Malaysian relations reached a new stage for development, friendly contacts and cooperation have developed in various fields. The bilateral relations are currently at its best time in history and the strategic cooperation develops smoothly. The bilateral ties are entering into a new stage of maturity and all-round development.

For many years Malaysia was troubled by its perception of Chinese assistance to the communist rebels inside Malaysia and elsewhere in Southeast Asia. Since 1979, however, the Chinese leadership publicly expressed its intention to terminate such assistance. The Malaysian government remains somewhat skeptical, however, because China continued to express its intention to lend "moral and political" support to the rebels.

Malaysia enjoys excellent relations with China. Since the establishment of diplomatic relations between Malaysia and China in 1974, bilateral relations have been on an upward momentum. Bilateral relations between Malaysia and the People's Republic of China have progressed substantially over the years. China is definitely one of Malaysia's most important economic partners, for now and for the foreseeable future. As an important and long-standing trading and investment partner for Malaysia, bilateral trade for the last five years between Malaysia with the People's Republic of China has been growing at an average growth rate of 29.5 per cent annually. For the year 2006, China was Malaysia's 2nd largest trading partner among the East Asian countries and the 4th largest trading partner after the U.S., Singapore and Japan.

The bilateral trade volume in 2003 reached US$ 20.13 billion, up 41% from the previous year, of which China's exports registered US$ 6.14 billion and its imports US$ 13.99 billion up 23.5% and 50.5% respectively. Malaysia continues to be the biggest ASEAN trading partner for China. With sound development of economic cooperation between the two countries, mutual investment has kept increasing. By the end of September 2004, Chinese total investment in Malaysia reached US$ 102 million. In 2003, there were 350 Malaysian projects in China with their contractual volume reaching US$ 0.96 billion, up 20.8% from 2002, and their actual volume US$ 0.25 billion, down 31.8% from the previous year.

By 2008 Malaysia-China bilateral economic relations were growing by leaps-and-bounds, with two way trade growing by over 16 percent last year to $37 billion. Senior-level official encounters had become frequent, especially with the growth of the ASEAN plus 3 and the establishment of the East Asia Summit. People-to-people exchanges have also mushroomed, with 689,283 Chinese tourists visiting Malaysia in 2007 (up 57.8% from 2006).

China and Malaysia had an issue with Chinese fishing vessels in disputed waters in the South China Sea, and that the Chinese Embassy had helped to release Chinese fishermen detained in East Malaysia. A senior official in Malaysia's Foreign Minister described the encroachment of Chinese fishing vessels as a greater problem, one that reflected Malaysian anxiety over China's excessive maritime claims. China approached Malaysia to enter into bilateral agreements for developing oil/gas blocks in the South China Sea, but Malaysia remained wary because it did not want to lend legitimacy to Chinese claims.

In 1995, with the establishment of military attaché offices in both countries, China and Malaysia have witnessed growing contacts and exchanges of visits between their military circles. China's navy formation fleet visited Malaysia respectively in 199 and 2001. in August 2002, Malaysia's fleet visited China for the third time. In September of 2002, Vice-Chairman of the Central Military Commission, State Councilor cum Minister of Defence Chi Haotian made a stopover in Malaysia and had a meeting with Malaysian Minister of Defence Najib. In September 2003, Chief of the General Staff Liang Guanglie visited Malaysia and met Malaysian Prime Minsiter Mahathir and Minister of Defence Najib. In October 2004, Vice-Chairman of the Central Military Commission Guo Boxiong made a stopover in Malaysia and met Deputy Prime Minister cum Minister of Defence Najib.

By 2008 not much had happened since the two countries had concluded an agreement to increase military-to-military exchanges in 2006, with only "several" Chinese officers now attending the Malaysian Defense University. Still, all decisions about even small defense-related issues had to be made at very senior levels of the Malaysian government, and the mid-level Malaysian officers don't trust the Chinese just because they are Chinese. The Malaysia-U.S. defense relationship was much stronger and China had so far sold the Malaysians almost nothing.

The Malaysian government's fears of Mainland China's links to ethnic Chinese-Malaysians appeared to have largely subsided as memories faded of the Communist insurgency in Malaysia. Some saw the 2007 visit to China by the Malaysian Chinese Association (MCA, the dominant ethnic Chinese political party) president Ong Ka Ting as a positive sign of Malaysia's reduced concerns in this area.

The Chinese Embassy in Kuala Lumpur has one of the busiest consular sections among all of China's overseas posts, due to a high rate of visa issuances, but he did not have statistics on hand. Some 10,000 Chinese students currently study in Malaysia. Many of the students use Malaysia as a springboard to continue studies in the U.S., Australia or elsewhere. Only about 1,000 Malaysians study in China.