China needs to understand its partner countries

Unlike the previous Najib administration, the ‘new’ Malaysia under Mahathir Mohamad shows some reservation towards Chinese investments under the BRI umbrella. It has suspended some projects under BRI while others have been revived after re-negotiation with China.

Three factors have been identified while dealing with China. The first concerns the issue of trust between China and its smaller neighbors, including Malaysia. It is true that China’s charm diplomacy such as the introduction of its ‘New Type of Major Power Relations in the 21st Century’, Periphery Diplomacy and BRI have resulted in Beijing’s considerable collaboration with its neighbors. But its increasingly “assertive” maritime activities in the South China Sea since 2009 have deepened anxieties among regional states, as it gave an impression that Beijing is pursuing a contradictory strategy. Such distrust derives not only from Malaysia’s problematic past with China, but also due to differences over political values and uncertainties around China’s strategic vision.

The second factor is directly related to BRI. As BRI could offer multiple opportunities for Malaysia, for example in accelerating growth in infrastructure, construction, property and tourism, the initiative also poses risks: potential risk to our labor market due to high dependence on foreign workers, and the risk of our inability to meet loan repayments.

High dependence on foreign workers had been a hot debate much before the introduction of BRI. However, after Chinese companies chose to import skilled workers for their operations in Malaysia, a new debate has been sparked. For the locals, Chinese investments must fulfill three basic criteria: First, it must utilize local materials because importing foreign materials for these mega projects that do not benefit local enterprises does not make sense. Second, Chinese investment must stimulate domestic employment. Importing Chinese workforce for projects in Malaysia by arguing that Malaysia has no skilled workers is unfair. Chinese firms need to assess the capacity and ability of the local workforce because unlike some underdeveloped countries, Malaysia certainly has much to offer. Lastly, what Malaysia really needs from China is technology and knowledge transfer for the benefit of local industries.

This shift in attitude in Malaysia is connected to regime legitimation, whereby leaders try to boost economic growth while trying to reduce the burden on people at the same time. Despite Mahathir’s tough rhetoric about Chinese investment prior to winning the general election, the importance of Sino-Malaysia trade relations and Chinese investments in Malaysia is a fact that the new government cannot overlook.

China has been Malaysia’s largest trading partner since 2009. In addition, total Chinese Foreign Direct Investment (FDI) in Malaysia has also grown at a remarkable rate, from RM4.79 billion in 2013 to nearly RM21 billion by late 2016. And bilateral trade shows steady increment year-on-year.

There is also room to further enhance cooperation between Malaysia and China. For successful economic cooperation it is vital for China to build strong trust with its smaller neighbors. This can be done through emphasis on one of the least-discussed, but the most fundamental aspect of BRI, namely, efforts to improve people-to-people or cultural ties between nations.

Recognizing that friendship derives from close contact between peoples is the key to sound relations between China and BRI participant states. The Chinese government has taken a series of initiatives to portray BRI as a positive, intercultural exchange where great civilizations and religions share their wisdom via the Silk Road. For instance, Special Silk Road Scholarships have been set up to encourage international cultural and educational exchanges.

At the same time, various other people-to-people cooperation projects such as Silk Road cultural year, tourism year, art festivals and think-tank dialogues have also been introduced. However, having policies and initiatives is not enough. We need to make sure these policies are communicated to different layers of society, under the mantra of “engage the people and not the political elites”.

That is the essence in cultivating people-to-people ties and the best and fastest way to gain trust.
We must also ensure such partnerships are mutually beneficial. We need to recognize that every country is unique. Therefore, a single standard cooperation model cannot be applied to all BRI states. For example, Malaysia is politically, economically and socially different than Cambodia or some African state. China needs to understand what its partner countries really need and what they are capable of giving back.

 

(Last week, experts from South Asia and Southeast Asia were in Kathmandu for the ‘Fourth international Conference on Belt and Road for the Development and Prosperity of South Asia’. This article is based on Kamal Dev Bhattarai’s discussions with Malaysian scholar Nur Shahadah Jamil who has a Phd in International Relations from the National University of Malaysia.)