Malaysia must diversify trade, reduce dependency on China, says analyst

 

In 2023, Malaysia earned RM192.2 billion from exports to China, while its imports amounted to RM258.6 billion. (Facebook pic)

PETALING JAYA: An analyst has called for Malaysia to diversify its trade by entering into partnerships with more countries and reducing dependency on China, particularly given its “intrusive behaviour” in the South China Sea.

Collins Chong, a security and strategy analyst with Universiti Malaya, said it was important for Malaysia to take a firm stance on such behaviour which may give rise to security issues and deter foreign investors.

“Malaysia’s approach in the South China Sea dispute has been subdued, relying on quiet and backdoor diplomacy to avoid risking overall ties with Beijing, its largest trading partner.

“However, lest we forget, the biggest chunk of Malaysia’s economic assets comes from the fossil fuel deposits located in the South China Sea.

“Therefore, to ensure that its interests and sovereignty in the sea are protected, Malaysia must break free from its heavy dependence on export-driven factors that rely heavily on China for capital and economic spillover effects,” Chong told FMT.

Presently, 17.1% of Malaysia’s total trade is with China.

Malaysia generated RM192.2 billion in revenue last year from the exports of goods to China and imported RM258.6 billion, mostly in the form of machinery, equipment and chemical products.

On March 4, Prime Minister Anwar Ibrahim defended Malaysia’s ties with China amid pressure from the United States and its allies to defend territorial integrity and freedom of navigation in the South China Sea.

Stressing that Malaysia is “fiercely independent” and will not be dictated by any external power, Anwar dismissed the call as an attempt to contain China’s rise, which he said would only aggravate the country and sow discord in the region.

The US-led appeals came in response to China’s publication of its 10-dash line last year, which claims as much as 90% of the 3.6 million sq km South China Sea, including maritime territories belonging to Malaysia, Vietnam, the Philippines and Brunei.

Collins said Anwar should not misinterpret the Western call to “uphold the rule of law” in the region as an attempt to dictate foreign policy, but as an attempt to preserve peace in the South China Sea, one of the world’s busiest trade routes.

Meanwhile, Sharon Seah of the Iseas-Yusof Ishak Institute said Malaysia should actively engage with Asean member states in a collective effort to uphold the rule of law in the South China Sea.

She said Malaysia should undertake minilateral and focused small-scale collaborations with Vietnam and the Philippines to show their combined maritime presence, similar to a collaboration announced by the two countries on Jan 30.

Seah proposed that Asean organise a joint military exercise annually, similar to the Asean solidarity exercise conducted last September, to foster trust among its member states and enhance their ability to work together in case of disasters or conflicts in the region.

“While China is Asean’s largest trading partner, it is also a major source of Asean’s insecurity,” she said. - FMT