Towards A Competitive Malaysia #99
Chapter 14: Environmental, Regional, and Global Challenges
Our Giant Neighbor—China
Malaysia has three giant neighbors: China, India, and Indonesia. We can dismiss India despite the current international hoopla over its prowess in ICT. That affects an insignificant slice of India; the bulk of the country is still mired in abject poverty and hobbled by endless red tape. It will remain so for the foreseeable future. India can never aspire to greatness so long as its best and brightest are compelled to leave in order to succeed. To make matters worse, it is consumed with endless conflict with Pakistan. That will distract India for some time.
That leaves China and Indonesia. China is a formidable economic and military power. It stands ready to challenge even America. Inevitably China will exert its influence in the region; in fact it already has. China has always deemed its smaller neighbors as vassal states, and the Chinese leadership would like nothing more than to return to those grandiose days of yore. A few decades ago the Chinese Red Army could easily be humbled by the likes of Vietnam. Today, fueled by its increasing economic might, China is rapidly modernizing its military.
Prime Minister Mahathir once remarked that one sure way to make China your enemy is to treat is as a potential one. America nearly succeeded in turning that giant nation into its enemy by treating it as such. Fortunately, through the initiative of President Nixon, America chose a wiser path. Today, both America and China, and the world are benefiting from Nixon’s brilliant initiative.
More practically China is a major economic competitor. It has already siphoned the bulk of the investment funds, with only a trickle left for Malaysia and others. China could out-manufacture any country. Its goods may not necessarily be better, but they are definitely much cheaper. Chinese tractors may not be as good as American ones, but then the American-made tractors are not three times better than Chinese ones as their prices would indicate. The main reason inflation is under control in America is that cheap Chinese imports fill the shelves of its Wal-Mart and other stores.
The fate of the American economy, the world’s greatest, is increasingly being determined not by policymakers in Washington, DC, but by the politburo in Beijing by virtue of China being one of America’s major creditors. America’s interest rates and the value of its dollar are determined more in Beijing than Washington, DC. So too are Malaysia’s economic policies. When China de-pegged its currency from the dollar in early 2006, Malaysia was forced almost immediately to do likewise.
China never hesitated to assert itself militarily either in the Straits of Formosa or the South China Sea. The Filipino navy made the stupid mistake of engaging the Chinese at the Spratly Islands, and was lucky enough to survive to tell the tale. It would be folly for Malaysia to similarly engage China. If valuable deposits of oil and gas were to be discovered at the Spratly Islands, rest assured that China would be very assertive with its claims. China is already actively prospecting in the area, ignoring the understanding reached by the various contending states. Malaysia’s large Chinese community could potentially complicate the nation’s relationship with China. This is more theoretical than real. Malaysian-Chinese have no particular love for China. When they choose to leave Malaysia, they emigrate to the West, not China, their protestations about maintaining their mother tongue and culture notwithstanding. The most vociferous defenders of Chinese culture and language in Malaysia send their children to Australia or Canada, not China. Meaning, given a choice between China and Malaysia, few Chinese would opt for the mainland despite being less than favorably treated a la the NEP.
When I criticize Malaysia for being corrupt, inefficient, and oppressive, I am using the West as my standard, not Beijing. Compared to China, Malaysia is the model of order, efficiency and freedom, a fact conveniently forgotten by many who are hypercritical of Malaysia, and a reality smugly complacent Malaysian authorities readily use as a convenient excuse. Similarly while I am critical of the cronyism, corruption, and insularity of UMNO politicians, I am comparing them to their counterparts in the West, not to the Chinese Communist Party operatives and politburo members.
Malaysia’s Chinese population is an asset in dealing with China. I do not see Malaysia becoming stupid enough to mistreat its ethnic Chinese citizens as the Philippines and Thailand are doing to their Muslim minorities, or as Indonesia did to its Chinese citizens in the 1950s and 60s. Then China was weak and impotent, and could only stand by helplessly. The China of the future will be strong and assertive; it would be foolish for Malaysia to cross swords with her.
In the past, the local Chinese community was a major factor in formulating policies toward China. The Communist insurgency, primarily a Chinese phenomenon, would not have lasted as long as it did without China’s support. Once China disavowed the movement, it rapidly spluttered. It was the genius of the late Tun Razak to engage China constructively. This was at the height of the Cold War, and long before President Nixon saw the wisdom of a similar move.
Tun Razak did not engage China naively. Apart from extracting from the Chinese a commitment not to support the Malaysian Communist Party, he set the stage for bilateral trade. Not just any trade arrangement, for had China used the existing business structures in Malaysia, owned and operated primarily by Malaysian Chinese, that would not have been politically wise. Instead, Tun Razak channeled trade through state-owned trading companies like Pernas, operated primarily by Malays. Using state-owned corporations also fitted well with the Communist Chinese mode of operation.
In the long run, the more practical and effective way to handle China would be to encourage the development of a countervailing force. Economically, the two candidates would be Japan and America; militarily, only one, America; and socio-culturally, only Indonesia.
It is imperative that Malaysia develops close relations with America. It is much easier to keep a distant giant at bay than a nearby one. It is also much easier to influence and change the policies of a democratically elected government like America than a totalitarian state like China. We can influence America by lobbying its policy makers and legislators, or directly to the American people. The authoritarian Chinese government is immune to public pressures.
Malaysia shares many interests with America; both are committed to democracy and capitalism. More importantly, both have the same strategic interest in ensuring that China remains peaceful and not have imperial ambitions. If China were to flex its muscle in the South China Sea, there is nothing Malaysia could do unless it wants to suffer the same military humiliation as the Filipinos did. The only solution would be for Malaysia to frame and align its interest with America and the free world (like navigation rights and pollution controls). It would then be easier to secure America and the world to Malaysia’s side, or better yet, for Malaysia to be on the side of the world.
There is a more practical reason why Malaysia should be on the good side of America. It still has a lot to learn from the most technologically advanced and developed economy. Even China is desperate to be on America’s good side for this same reason. China wants easy access to the largest and most lucrative market, and to benefit from the transfer of technology and “soft” skills like management. When the United States Air Force shot down a Chinese military jet in the South China Sea in 2001, China went to great lengths not to escalate the dispute despite tremendous domestic pressure.
If Malaysia were friendly with America, it is unlikely for China to bother Malaysia for fear of risking the wrath of America. In the ethos of the street, one way to ensure that a bully (China) does not intimidate you is to be friendly with the other bully (America). This does not mean that Malaysia and China should not strive to align their aspirations and interests. This being the real world however, there will inevitably be areas where the two nations would diverge, and Malaysia had better be prepared.
Japan has its own problems with China, heavily burdened by the baggage of history. Although Japan has significant economic interests in Malaysia, they pale in comparison to Japan’s investments in China, despite the historical hostilities between the two. Economic interests often transcend national or historical barriers. In any conflict between Malaysia and China, there would be no mistaking where Japan’s interest and sympathy would be: China.
Next: Another Giant Neighbor—Indonesia
Our Giant Neighbor—China
Malaysia has three giant neighbors: China, India, and Indonesia. We can dismiss India despite the current international hoopla over its prowess in ICT. That affects an insignificant slice of India; the bulk of the country is still mired in abject poverty and hobbled by endless red tape. It will remain so for the foreseeable future. India can never aspire to greatness so long as its best and brightest are compelled to leave in order to succeed. To make matters worse, it is consumed with endless conflict with Pakistan. That will distract India for some time.
That leaves China and Indonesia. China is a formidable economic and military power. It stands ready to challenge even America. Inevitably China will exert its influence in the region; in fact it already has. China has always deemed its smaller neighbors as vassal states, and the Chinese leadership would like nothing more than to return to those grandiose days of yore. A few decades ago the Chinese Red Army could easily be humbled by the likes of Vietnam. Today, fueled by its increasing economic might, China is rapidly modernizing its military.
Prime Minister Mahathir once remarked that one sure way to make China your enemy is to treat is as a potential one. America nearly succeeded in turning that giant nation into its enemy by treating it as such. Fortunately, through the initiative of President Nixon, America chose a wiser path. Today, both America and China, and the world are benefiting from Nixon’s brilliant initiative.
More practically China is a major economic competitor. It has already siphoned the bulk of the investment funds, with only a trickle left for Malaysia and others. China could out-manufacture any country. Its goods may not necessarily be better, but they are definitely much cheaper. Chinese tractors may not be as good as American ones, but then the American-made tractors are not three times better than Chinese ones as their prices would indicate. The main reason inflation is under control in America is that cheap Chinese imports fill the shelves of its Wal-Mart and other stores.
The fate of the American economy, the world’s greatest, is increasingly being determined not by policymakers in Washington, DC, but by the politburo in Beijing by virtue of China being one of America’s major creditors. America’s interest rates and the value of its dollar are determined more in Beijing than Washington, DC. So too are Malaysia’s economic policies. When China de-pegged its currency from the dollar in early 2006, Malaysia was forced almost immediately to do likewise.
China never hesitated to assert itself militarily either in the Straits of Formosa or the South China Sea. The Filipino navy made the stupid mistake of engaging the Chinese at the Spratly Islands, and was lucky enough to survive to tell the tale. It would be folly for Malaysia to similarly engage China. If valuable deposits of oil and gas were to be discovered at the Spratly Islands, rest assured that China would be very assertive with its claims. China is already actively prospecting in the area, ignoring the understanding reached by the various contending states. Malaysia’s large Chinese community could potentially complicate the nation’s relationship with China. This is more theoretical than real. Malaysian-Chinese have no particular love for China. When they choose to leave Malaysia, they emigrate to the West, not China, their protestations about maintaining their mother tongue and culture notwithstanding. The most vociferous defenders of Chinese culture and language in Malaysia send their children to Australia or Canada, not China. Meaning, given a choice between China and Malaysia, few Chinese would opt for the mainland despite being less than favorably treated a la the NEP.
When I criticize Malaysia for being corrupt, inefficient, and oppressive, I am using the West as my standard, not Beijing. Compared to China, Malaysia is the model of order, efficiency and freedom, a fact conveniently forgotten by many who are hypercritical of Malaysia, and a reality smugly complacent Malaysian authorities readily use as a convenient excuse. Similarly while I am critical of the cronyism, corruption, and insularity of UMNO politicians, I am comparing them to their counterparts in the West, not to the Chinese Communist Party operatives and politburo members.
Malaysia’s Chinese population is an asset in dealing with China. I do not see Malaysia becoming stupid enough to mistreat its ethnic Chinese citizens as the Philippines and Thailand are doing to their Muslim minorities, or as Indonesia did to its Chinese citizens in the 1950s and 60s. Then China was weak and impotent, and could only stand by helplessly. The China of the future will be strong and assertive; it would be foolish for Malaysia to cross swords with her.
In the past, the local Chinese community was a major factor in formulating policies toward China. The Communist insurgency, primarily a Chinese phenomenon, would not have lasted as long as it did without China’s support. Once China disavowed the movement, it rapidly spluttered. It was the genius of the late Tun Razak to engage China constructively. This was at the height of the Cold War, and long before President Nixon saw the wisdom of a similar move.
Tun Razak did not engage China naively. Apart from extracting from the Chinese a commitment not to support the Malaysian Communist Party, he set the stage for bilateral trade. Not just any trade arrangement, for had China used the existing business structures in Malaysia, owned and operated primarily by Malaysian Chinese, that would not have been politically wise. Instead, Tun Razak channeled trade through state-owned trading companies like Pernas, operated primarily by Malays. Using state-owned corporations also fitted well with the Communist Chinese mode of operation.
In the long run, the more practical and effective way to handle China would be to encourage the development of a countervailing force. Economically, the two candidates would be Japan and America; militarily, only one, America; and socio-culturally, only Indonesia.
It is imperative that Malaysia develops close relations with America. It is much easier to keep a distant giant at bay than a nearby one. It is also much easier to influence and change the policies of a democratically elected government like America than a totalitarian state like China. We can influence America by lobbying its policy makers and legislators, or directly to the American people. The authoritarian Chinese government is immune to public pressures.
Malaysia shares many interests with America; both are committed to democracy and capitalism. More importantly, both have the same strategic interest in ensuring that China remains peaceful and not have imperial ambitions. If China were to flex its muscle in the South China Sea, there is nothing Malaysia could do unless it wants to suffer the same military humiliation as the Filipinos did. The only solution would be for Malaysia to frame and align its interest with America and the free world (like navigation rights and pollution controls). It would then be easier to secure America and the world to Malaysia’s side, or better yet, for Malaysia to be on the side of the world.
There is a more practical reason why Malaysia should be on the good side of America. It still has a lot to learn from the most technologically advanced and developed economy. Even China is desperate to be on America’s good side for this same reason. China wants easy access to the largest and most lucrative market, and to benefit from the transfer of technology and “soft” skills like management. When the United States Air Force shot down a Chinese military jet in the South China Sea in 2001, China went to great lengths not to escalate the dispute despite tremendous domestic pressure.
If Malaysia were friendly with America, it is unlikely for China to bother Malaysia for fear of risking the wrath of America. In the ethos of the street, one way to ensure that a bully (China) does not intimidate you is to be friendly with the other bully (America). This does not mean that Malaysia and China should not strive to align their aspirations and interests. This being the real world however, there will inevitably be areas where the two nations would diverge, and Malaysia had better be prepared.
Japan has its own problems with China, heavily burdened by the baggage of history. Although Japan has significant economic interests in Malaysia, they pale in comparison to Japan’s investments in China, despite the historical hostilities between the two. Economic interests often transcend national or historical barriers. In any conflict between Malaysia and China, there would be no mistaking where Japan’s interest and sympathy would be: China.
Next: Another Giant Neighbor—Indonesia
posted by M. Bakri Musa | 7:01 PM
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