MALAYSIA-CHINA RELATIONS: A 50-YEAR JOURNEY OF ECONOMIC GROWTH, STRATEGIC PARTNERSHIPS, AND CULTURAL EXCHANGE

HISTORICAL CONTEXT

Malaysia and China established diplomatic relations on May 31, 1974, marking a significant milestone as Malaysia became the first ASEAN country to formalize ties with China. This foundation has allowed for the development of a robust partnership characterized by extensive cooperation across various fields, growing stronger over the decades. Since then, bilateral ties between the two countries have developed substantially, with active exchanges and high-level visits. Notably, YAB Prime Minister Dato’ Seri Anwar Ibrahim visited China from March 29 to April 1, 2023, as both countries marked the 10th anniversary of their "Comprehensive Strategic Partnership" (CSP).

ECONOMIC AND TRADE RELATIONS

Economic and trade relations form the cornerstone of Malaysia-China bilateral ties, with both countries benefiting from significant mutual trade and investment. Since 2013, the relationship between the two countries has been elevated from "Strategic Cooperation" to "Comprehensive Strategic Partnership" (CSP), marking its 10th anniversary this year.[1] This elevation is significant, as the strategic cooperation between the two countries has consolidated into many areas, including economy, trade, investment, tourism, education, commodities, security and defence, infrastructure development, as well as at regional and multilateral forums. Thus, Malaysia and China celebrate the 10th anniversary of the elevation to a Comprehensive Strategic Partnership. Next year, Malaysia and China will celebrate the 50th anniversary of the establishment of diplomatic relations.

TRADE VOLUME

China has been Malaysia’s largest trading partner for several years. In 2022, the total trade volume between Malaysia and China reached approximately USD 176.8 billion. Malaysia’s exports to China, which include electronic components, palm oil, rubber, liquefied natural gas (LNG), and chemicals, amounted to around USD 90.3 billion in 2022. Conversely, Malaysia imports machinery, equipment, chemicals, and consumer goods from China, with the import value standing at approximately USD 86.5 billion in the same year.

Trade and investment have been the main foundation of Malaysia-China ties. As the world’s second-largest economy, China remained an important trading partner, representing 17.1% of Malaysia’s global trade in 2022. In 2022, China remained Malaysia’s largest trading partner for the fourteenth consecutive year since 2009, with total trade amounting to RM487.13 billion (USD110.62 billion), an increase of 15.6% from 2021. Total exports increased by 9.4% to RM210.62 billion (USD47.84 billion), while total imports expanded by 20.7% to RM276.50 billion (USD62.78 billion) compared to 2021.

Table 1: Malaysia – China Bilateral Trade[2] (RM billion)

INVESTMENT

Chinese investment in Malaysia has been substantial, making China one of the largest sources of foreign direct investment (FDI) in the country. Key sectors receiving Chinese investment include manufacturing, construction, and real estate. In 2022, the total value of Chinese FDI in Malaysia was estimated at around USD 14.6 billion. Conversely, Malaysian companies have also invested in China, particularly in the manufacturing, services, and agriculture sectors, with Malaysian FDI in China valued at approximately USD 8.1 billion.

In 2022, 46 manufacturing projects with participation from China were approved, with a total investment amount of RM9.6 billion (USD 2.2 billion). These projects were expected to create 6,193 jobs. The approved projects from China during this period mainly focused on petroleum products (including petrochemicals), non-metallic mineral products, electrical and electronics, machinery and equipment, and transport equipment.

In the same year, 25 manufacturing projects with participation from China were implemented, with a total investment amounting to RM3.2 billion (USD 715 million). These projects were expected to create 3,381 jobs.

The top 5 PRC companies (in terms of investment value) that involve in the renewable energy, data centre, telecommunication and metal industries set up their regional operations in Malaysia. These includes:

(i)?????? Risen Solar Technology Sdn. Bhd. (Solar cell and solar module);

(ii)?????? Bytedance System Sdn. Bhd. (Data Centre);

(iii)????? Huawei Technologies (Malaysia) Sdn. Bhd. (Principal hub);

(iv)????? Wenan Steel (Malaysia) Sdn. Bhd. (Basic Metal Products); and

(v)????? Alliance Steel (M) Sdn. Bhd. (Basic Metal Products).

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In 2021, 15 projects with participation from China were implemented, with investments totalling RM1.82 billion (USD 435.4 million). These projects were expected to create 1,816 jobs. Meanwhile, 43 projects with participation from China were approved during the same period, with total investments amounting to RM16.6 billion (USD 3.98 billion). China was ranked as the 4th largest investor for this period. These projects were expected to create 13,898 jobs.

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Table 2: Summary of Investment for Approved and Implemented Projects

For the year 2022, the FDI stock from China amounted to RM55.4 billion (USD12.5 billion). China is the largest investor in 2022 for total FDI stock in Malaysia, with the services being the main sector for Chinese investors.

During the recent official visit to China in March 2023, YAB Prime Minister witnessed the signing of 19 Memorandums of Understanding (MOUs) between Malaysian and Chinese companies for future projects in Malaysia. As an outcome of the Roundtable Meeting (RTM) and the Malaysia-China Business Forum, the total value of investment commitments by business leaders from the People’s Republic of China amounted to RM170.07 billion (USD 38.5 billion), with the potential export value standing at RM2.44 billion (USD 542 million).

Furthermore, during the second visit of YAB Prime Minister to China for the 20th China-ASEAN Expo (CAEXPO) in Nanning, Guangxi Autonomous Region, three MoUs were concluded, bringing in an investment of RM17.5 billion and RM2.34 billion in trade volume. These agreements focus on the new energy sector, transportation of goods, and palm oil distribution.

MAJOR PROJECTS

Significant projects highlight the depth of economic cooperation between Malaysia and China. The East Coast Rail Link (ECRL) is a flagship infrastructure project under China’s Belt and Road Initiative (BRI), aimed at enhancing connectivity and trade within Malaysia. Additionally, the Malaysia-China Kuantan Industrial Park (MCKIP) and the China-Malaysia Qinzhou Industrial Park (CMQIP) are twin industrial parks symbolizing the strong economic partnership between the two countries.

On 13 May 2017, Malaysia and China signed the Memorandum of Understanding (MOU) on Promoting Mutual Economic Development through the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative (BRI MOU).

The BRI is a global infrastructure development strategy adopted by the PRC Government in 2013. Since its inception, Malaysia has always remained supportive of the BRI based on principles of mutual and equal benefits. Malaysia and China are currently working on the way forward to facilitate the implementation of BRI projects in both countries. Once consensus has been achieved between Malaysia and China, it is envisaged that the Cooperation Plan will be signed by Ministers of both countries. Ongoing BRI projects or have been implemented are as follows:

????? i.???????? “Two Countries, Twin Parks” projects in, i.e., Kuantan Industrial Park (MCKIP) and Qinzhou Industrial Park (CMQIP);

???? ii.???????? East Coast Rail Link (ECRL) Project; and

??? iii.???????? Xiamen University Malaysia Campus (established in 2015 with about 8,000 registered students from Malaysia and China).

TOURISM

Tourism is another critical aspect of Malaysia-China relations. China is a major source of tourists for Malaysia. Before the COVID-19 pandemic, Malaysia received about 3.1 million Chinese tourists in 2019, significantly contributing to the local economy. China is considered an important market for Malaysia in the field of tourism, especially in terms of tourist arrivals, tourist spending and foreign exchange earner. In 2023 and 2024, Malaysia is targeting over 5 million of tourists from China entering Malaysia. In 2022, the Chinese arrivals to Malaysia recorded an increase of 96.4% to 212,603 from 7,701 in 2021. The key data on Chinese tourists’ arrivals appear as follow:

Table 3: Comparison of Chinese Tourist Arrivals by Year from 2018 to

July 2023[3]

The MoU between Malaysia and China in Tourism Cooperation was concluded on 15 September 2003 in Beijing. The MoU, however has expired on 14 September 2013. MOTAC is keen to renew the said MoU in the nearest time.

A series of bilateral discussions through the Ministry of Foreign Affairs of both countries took place and on 2 June 2015, MOTAC received the counter proposed draft from Chinese side. The counter proposed draft was sent on 4 August 2016 and yet to receive feedback from the Chinese side. To follow up on this matter, the Ministry submitted a counter proposal through the diplomatic channel on 24 August 2022. The Ministry received China’s feedback on 20 March 2023. MOTAC had sent the counter proposal on 7 September 2023.

EDUCATION AND CULTURAL EXCHANGE

Educational and cultural exchanges further strengthen bilateral ties. Numerous academic collaborations exist between Malaysian and Chinese universities, with many Malaysian students pursuing higher education in China. Various cultural exchange programs and festivals also promote mutual understanding and friendship between the two nations.

MOU on Cooperation in the Field of Education and Higher Education:

????? i.???????? MoU between Malaysia and the PRC on cooperation in the field of higher education was signed during the State Visit by H.E. President of the People’s Republic of China to Malaysia on 11 November 2009.

???? ii.???????? the Ministry of Foreign Affairs is currently working together with the PRC Embassy in Kuala Lumpur on resuming the cooperation in the field of higher education through the signing of a new MoU with the PRC.

??? iii.???????? the draft MoU was submitted to the PRC Embassy in Kuala Lumpur on 30 January 2023. It is expected that the Malaysia and China will sign the MoU during the celebration of the 50th Anniversary of Establishment of Diplomatic Relations between the two countries in 2024.

MUTUAL RECOGNITION AGREEMENT (MRA):

A Framework Agreement to Facilitate Mutual Recognition in Academic Higher Education Qualification between Malaysia and China was signed during the Official Visit by H.E. President of the People’s Republic of China to Malaysia on 28 April 2011.

The main objectives of the said Agreement are:

????? i.???????? to promote cooperation in higher education; and

???? ii.???????? to facilitate student mobility between both countries.

Both Malaysia and China recognize the degrees (bachelor, masters and doctorate) awarded by their countries. These recognitions are subject to the existing regulatory undertakings and requirements of the Higher Education Institutions (HEIs), professional bodies, government agencies and non-governmental organizations in Malaysia.

The Malaysian Qualification Agency (MQA) was appointed as the Designated Body representing Malaysia as agreed in the MRA. As the Designated Body, MQA is committed in updating and providing information on accredited qualifications since the enforcement of the Framework that took place in October 2011. Updated information on accredited qualifications can be accessed from the Malaysian Qualifications Register (MQR).

Based on the MRA, both parties shall form an Expert Committee consisting of members from awarding bodies nominated by each country. After a discussion between the Honorable Deputy Minister of Education Malaysia and MOE China on 5 September 2019, MQA forwarded the latest List of Degree Granting Institutions in Malaysia (including Foreign Branch Campuses) to the Department of International Cooperation and Exchanges for their further action. On 15 May 2020, the PRC Embassy in Malaysia replied on the List of Degree Granting Institutions in Malaysia. To date, there are altogether 88 Malaysian institutions listed in the JSJ list (also referred as the Chinese Ministry of Education’s “White List”, an official list of all overseas universities by country.

The Government of Malaysia and the PRC Government signed a Cultural Agreement on 23 November 1999 in Kuala Lumpur. Malaysia and China also signed a MoU on the Establishment of China Cultural Centre in Malaysia on 23 November 2015 in Putrajaya, Malaysia. The Centre was officially open on 19 January 2020, as part of Malaysia-China Year of Culture and Tourism 2020.

In order to strengthen bilateral cooperation and friendship between Malaysia and China in the field of culture and arts, Malaysia should collaborate with China in the following areas:

????? i.???????? promotion of close co-operative relations between museums, archives, arts, heritage and cultural institutions of the two countries;

???? ii.???????? enhancement of performing arts, visual arts and other related cultural activities;

??? iii.???????? exchange of archaeological, museology and archival materials of the two countries;

?? iv.???????? collaboration in research and development through the exchange of experience, publications, research studies and other information pertaining to culture;

???? v.???????? education and training in cultural arts including exchange of experts and training of personnel;

?? vi.???????? organizing meetings and visits of officials, experts and technical personnel through the exchange of programs between both countries;

? vii.???????? publicizing and promoting cultural exhibitions and performances in both countries; and

?viii.???????? any other areas of cultural co-operation to be mutually agreed upon by both countries.

To further enhance cultural cooperation, both countries had further signed a Cultural Exchange Program (CEP) Agreement on 11 January 2004 for the period of 2004 to 2007 and the CEP for the period of 2014 to 2019 was signed during the official visit of the former Prime Minister to Beijing on 29 May 2014. On 28 February 2023, MOTAC and the Chinese Embassy had discussed the China’s draft. The Attorney General’s Chambers of Malaysia is reviewing the draft currently.

POLITICAL AND STRATEGIC RELATIONS

High-level political dialogues and strategic consultations characterize Malaysia-China relations, with both countries engaging in several key areas of cooperation. The super powers’ rivalry in the region continue to feature in Malaysia and China relations including on the South China Sea. In most cases, both countries would adopt a more subtle approach through dialogue and ‘quiet diplomacy’ as ways of navigating the challenges of maintaining peace, stability and prosperity in the region.

In the context of defense and security, there has been increased cooperation in defense and security, including joint military exercises and dialogues on regional security issues. Meanwhile, for multilateral engagements, Malaysia and China collaborate in regional and international forums such as ASEAN, APEC, and the United Nations, promoting common interests and regional stability.

In addition, for parliamentarian cooperation, both House of the Representatives (Dewan Rakyat) and the Senate (Dewan Negara) have established Parliamentary Regional Friendship Group to which the People’s Republic of China set under East-Asia region. This Regional Friendship Group aims at promoting inter-parliamentary dialogue and information exchange for greater cooperation and understanding between Malaysia and those countries. Other than that, it would also explore future cooperative initiatives and programs between the two parties.

The formation of the Friendship Group could spur future collaboration and cooperation especially in the areas of information sharing and knowledge in good governance for the mutual benefits of both countries.

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FUTURE PROSPECTS

The future of Malaysia-China relations is promising, with several areas poised for further growth:

????? i.???????? Digital Economy: Collaboration in the digital economy, including e-commerce and technology transfer, is expected to grow.

???? ii.???????? Green Technology: Both countries are likely to enhance cooperation in renewable energy and sustainable development initiatives.

??? iii.???????? Healthcare: Post-pandemic, increased collaboration in healthcare and pharmaceutical industries is anticipated.

Joint Halal Lab - In the recent years, Malaysia has been aggressively promoting itself as a global halal hub. Halal testing has played a major role in helping the Islamic communities to be reassured that what they are consuming is halal. Due to the increase of demand in the halal market, TPM Biotech has been focusing developing, establishing and accrediting methods of halal analyses in order to facilitate halal testing.

Ministry of Higher Education Malaysia acknowledges the Memorandum of Understanding (MoU) in Science, Technology and Innovation between the Ministry of Science, Technology and Innovation (MOSTI) Malaysia and the People’s Republic of China. Halal Lab is one of the programs within the stated MoU and it involves the collaboration between Technology Park Malaysia (TPM) and Northwest University, People’s Republic of China.

In regard to the constraints faced by TPM in scouting experts in Halal research, the Ministry of Higher Education Malaysia hereby strongly supports MOSTI’s initiative through the establishment of MOHE-led Consortium which consist of higher education institutions, Higher Education Canter of Excellence (Hi-CoE) and the Halal industry leaders.

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EXCHANGE OF VISITS

After China reopened its border on 15 March 2023, YAB Prime Minister undertook an Official Visit to Boao, Hainan and Beijing, China from 29 March to 1 April 2023. He was accompanied by YB Dato’ Seri Diraja Dr. Zambry bin Abd Kadir, Minister of Foreign Affairs; YB Datuk Seri Utama Tengku Zafrul bin Tengku Abdul Aziz, Minister of Investment, Trade and Industry; YB Anthony Loke Siew Fook, Minister of Transport; YB Nga Kor Ming, Minister of Local Government Development; YB Chang Lih Kang, Minister of Science, Technology and Innovation; and YB Dato’ Sri Tiong King Sing, Minister of Tourism, Arts and Culture.

Prior to YAB Prime Minister’s Official Visit to China, YB Foreign Minister undertook a Working Visit to China from 28 to 29 March 2023. A bilateral meeting was held between YB Foreign Minister and Qin Gang, then State Councillor and Minister of Foreign Affairs of China, to pave the way for the Official Visit of YAB Prime Minister. Both sides discussed mutual efforts to strengthen existing bilateral cooperation and increase understanding on regional and international issues.

Both sides also had an exchange of views on regional and international issues of common interest. Both President Xi Jinping and Premier Li Qiang have been invited to undertake a visit to Malaysia respectively in commemoration of the 50th anniversary of diplomatic ties in 2024.

During the series of visit, Malaysia has also secured 19 memorandums of understanding (MOU) with a few leading enterprises from China during the Roundtable Meeting (RTM) and a Malaysia-China Business Forum. The investment commitments reached a record of RM170 billion (USD 38.5 billion) and covers various fields, including green technology and digital economy including the Rongsheng Petrochemical Co. Ltd. plans to build a world-class Environmentally Friendly Complex Integrated Refining & Petrochemical Project in Pengerang, Johor. This project will have a potential investment of USD 20 billion (RM 80 billion) to be built in one single integrated project and divided into two (2) phases (Phase 1 in 2026 & Phase 2 in 2028).

Subsequently on 17 September 2023, YAB Prime Minister undertook a Working Visit to Nanning, Guangxi Autonomous Region, China to attend the 20th China-ASEAN Expo (CAEXPO). During the visit, YAB Prime Minister officiated the Malaysian Pavilion where 107 Malaysia companies had opened their booths, showcasing their specialties

. YAB Prime Minister also had a bilateral meeting with Premier Li Qiang, where both leaders discussed on issues of mutual concerns and exchanged views on bilateral cooperation including trade, investment, tourism, agro-commodity and people-to-people exchanges. YAB Prime Minister also witnessed the exchanges of three MoUs that will bring in an investment of RM17.5 billion and RM2.34 billion of trade volume in the field of new energy sector, transportation of goods and palm oil distribution.

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50TH ANNIVERSARY OF THE ESTABLISHMENT OF DIPLOMATIC RELATIONS BETWEEN MALAYSIA – CHINA

Malaysia and China will celebrate the 50th Anniversary of the Establishment of Diplomatic Relations in 2024. During the recent official visit to China, YAB Prime Minister and President Xi Jinping agreed that the 50th anniversary celebration is a significant milestone in bilateral relations between the two countries. To mark this occasion meaningfully, a variety of programs and activities will be held throughout 2024.

These may include high-level visits, naval port calls, the issuance of commemorative stamps, notes, and coins, as well as business forums and receptions that symbolize the enduring friendship and close cooperation between Malaysia and China. The Ministry of Foreign Affairs is currently preparing these commemorative events in collaboration with Malaysian ministries and agencies, as well as the diplomatic missions of both countries. Further discussions with the Chinese side will take place to finalize the plans for this special celebration.

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CONCLUSION

Malaysia-China bilateral relations are comprehensive and multifaceted, with economic and trade ties being a central pillar. The relationship encompasses significant trade volumes, substantial investments, and major collaborative projects, alongside strong political and cultural connections. As both nations continue to develop, their partnership is expected to deepen, benefiting both economies and contributing to regional stability and prosperity.

Malaysia-China bilateral relations are characterized by robust economic ties, extensive trade partnerships, and mutual investments. Both countries collaborate on infrastructure projects under China's Belt and Road Initiative, enhancing connectivity and economic integration. Diplomatic relations are generally positive, underscored by frequent high-level visits and cooperation in areas like education, culture, and tourism. Despite occasional geopolitical tensions in the South China Sea, Malaysia and China maintain a pragmatic and forward-looking approach to their relationship.

[1] Hoang Thi Ha (2021), The ASEAN-China Comprehensive Strategic Partnership: What’s in a Name? ISEAS, Singapore

[2] Source: Ministry of Investment, Trade and Industry

[3] Source: Research Division, Tourism Malaysia