If 1978 was the year China began to open up, 2020 may well be remembered not just for the Covid-19 pandemic, but also for how the Middle Kingdom began to turn its back on the Western world. Stung by the American-led backlash against its economic and technological ambitions, the Chinese leadership started to implement a “dual-circulation” economic model where the emphasis is on looking inwards.
Their aim is for the Chinese economy to rely on internal circulation, driving the world’s second-largest economy by way of domestic production and consumption. China’s economic links with the rest of the world — the external circulation — are to be relegated to an incidental, supplementary role.
If we strip this concept of its jargon and examine what it means in real terms, it becomes clear that this model amounts to a declaration of economic independence: a “China First” doctrine. Coupled with American efforts to restrict China’s global influence — whether it is to compete with China on 5G or provide an alternative to the Belt and Road Initiative — we could be on the cusp of an economically and technologically divided world: one led by China, another by the US.
But what does this all mean for Malaysia and other countries whose economies have hitherto been lifted by China’s tide? It is no secret that in Malaysia, China has become a hot-button topic for all sectors and stakeholders of late: from politicians tussling over past deals and renegotiations to business owners striking out into foreign waters.
While it is tempting to reduce this large question to a simple answer — that we should, as in All The President’s Men, “follow the money” by binding ourselves even closer to China — the consequences of doing so loom larger every day.
The choices that we make have strategic and security consequences that all too often are discounted by the business community. And likewise, policy wonks and similar can often overlook the concerns of business owners.
It may seem counterproductive to be discussing China, Malaysia; China and Malaysia; and China in Malaysia at a time where the populace is suffering and coloured flags are flown to broadcast precarity, anger and discontent. But we must not make the error of treating this question as a discursive luxury: make no mistake, our dealings and ties with China will impact our society as much as the pandemic has.
In the past, there was a long-held assumption that China, upon joining the World Trade Organization, would follow in the footsteps of nations like South Korea and Japan with economic liberalisation in lockstep with socio-political freedoms: perhaps not to the extent of the louder democracies, but to an extent acceptable to nations such as the US.
An example of this can be seen in the handover of Hong Kong in 1997, which came with the understanding that Hong Kong would retain its legislative system, and people’s rights and freedom for 50 years. Now we see that instead of the original system bequeathed by the British remaining supreme, Chinese legislation has become more and more powerful and widely used.
We saw Western objections to how China decided to stay itself hit a fever pitch during Donald Trump’s presidency, but it is worth remembering that his administration’s antipathy and impatience was a long time brewing. Trump just rode this wave and kept it within certain confines by avoiding an ideological battle, remaining uninterested in questions of human rights and democracy.
President Joe Biden, however, has made this contrast ideological: a competition of values. While Biden is less mercurial than his predecessor, bringing ideologies into the conversation will make the discussion more intense and the trickle-down effect will be felt by Malaysia and Malaysians.
The question of China and Malaysia, then, is too important to be left to political and administrative elites to answer. It must be a national conversation, one where business leaders, economic voices, policy thinkers and public intellectuals communicate to these elites various aspects related to both the US and China while keeping in mind that we may all have varying priorities and concerns.
Of particular note, however, is the question of security and strategy. In the coming years, we will come under growing pressure to make some difficult choices to do with infrastructure partners, development collaborators and political allies. A recent example would be our decision to select Ericsson for Malaysia’s 5G infrastructure: a choice that may come down to purely commercial factors but could have far-reaching implications given the perception that choosing providers that are not state-owned Huawei indicates a lack of trust in Chinese technology.
Malaysia will also have to make the difficult choice of deciding whether to pursue its oil and gas explorations in its exclusive economic zone in the South China Sea with the same vigour as in the past. China is increasingly in a position to pressure Malaysia into pursuing joint development of oil and gas in the area, and it is understood that there is already intense pressure on Malaysia in ongoing activities there.
However, we are not without options: there are nations that help us provide balance and to both manage and mitigate exposure to China. Between 2018 and 2022, the US has and will give us military assistance worth US$230 million, which is, at today’s exchange rate, nearly RM1 billion. This does not mean we should “take sides” as if geopolitics is a schoolyard squabble. Rather, we can rest perhaps slightly easier knowing that there is a certain amount of cushion present should the pressure continue.
Neither are we suggesting drastic moves: an adversarial relationship is not the goal and China’s presence in our milieu is a geographic fact. Figures such as US$100 billion in trade is not to be sniffed at. However, we must ascertain how Malaysia should react should China become more and more assertive in its territorial claims and insistence on things like Taiwan, Hong Kong, technology infrastructure and business dealings.
There is, unfortunately, a tendency to simplify historical standing and mythologise our relationship with China — a move that only serves to impoverish the conversation.
Simplistic historical arguments like our coexistence with China for 2,000 years without colonisation or war is often trotted out, as is the romanticisation of the fact we were the first non-socialist Southeast Asian nation to recognise them. While no doubt a brave and forward-thinking move by former prime minister Tun Abdul Razak Hussein, we must also bear in mind that this does not mean China will always remember these gestures and reciprocate.
But neither can we rest and depend on this historical record for too long. China has changed and China will change — just as Malaysia has — and we must deal with China as it is, not as we would like it to be.
In a recent poll carried out by Australia’s Lowy Institute, only 16% of Australians “trusted China a great deal or somewhat to act responsibly in the world”. Just three years ago, more than 80% of Australians saw China as an economic partner — today, it is 34%, with 60% viewing it as an outright threat to security.
This dramatic swing is an example of what can happen when the national conversation becomes one-sided and public opinion swings dramatically in response to a handful of events, and precipitously narrowing options for policymakers. We need a sophisticated national conversation that eschews such stark approaches.
One such avenue to do so is the Asia-Pacific Roundtable, which enters its 34th iteration this year after a hiatus due to the pandemic. A fully virtual and free event, the roundtable centres on bringing together not just think-tanks but also top civil servants, academics, the media, business leaders and other key stakeholders and thinkers to craft and innovate solutions to problems new and old.
The intense rivalry between China and the US involves stakes that are high and growing. Ultimately, Malaysia will not be able to influence this all-important relationship — we are hardly in control of the elements involved. But we can shape how we will respond, especially if the rivalry takes a more dangerous course — and that is a national conversation that is worth having.
Tashny Sukumaran and Shahriman Lockman are researchers at the Institute of Strategic and International Studies (ISIS), Malaysia’s premier think tank established in 1983. Malaysia’s 34th Asia-Pacific Roundtable will take place in August.