Business Commentary Economics

Slow(ing) boat to China

Chinese President Xi Jinping (right) meets with Malaysian Prime Minister Najib Razak in Beijing

Chinese President Xi Jinping (right) meets with Malaysian Prime Minister Najib Razak in Beijing

TheMole
Written by TheMole

By Salahuddin Hisham

“I’d like to get you on a slow boat to China” was a pop standard sung by Bing Cosby and Rosemary Clooney as duet, Ella Fitzgerald, Liza Minnelli, and many others. It was a phrase among poker players to pick on players on a losing streak.

Slow boat to China describes the longest trip home after a loss at the table. This is not referring to Prime Minister Datuk Seri Najib Razak’s return from the Belt and Road Forum (BRF) on the One Belt One Road initiative (new acronym BRI) in Beijing recently. It would have been the slow boat from China.

But Malaysia has not lost at any high stake poker game as a financial weekly puts it last week.  

Agreements and MOUs on FDI to Malaysia totalling RM31 billion were signed in Beijing to add to the earlier dizzying FDI commitments. The second phase agreement for the East Coast Rail Link (ECRL) was also signed.

In one of the session, Najib was seen sitting next to President Xi Jin Peng. It is a subtle acknowledgement to Malaysia as the first and strongest supporter of BRI. At a time the person that proposed on East Asia Economic Group and was one of earlier voices to call on China to look outward did yet another U-turn, Malaysia has not wavered in it’s belief  in Asia.

Salahuddin Hisham was involved in various financial markets but has since, turned political and online.

BRI is a solution for peace and sustainable development to Asia and nearby region from a once secluded communist state to one that has embraced free enterprise and globalisation.

It is a probable answer to current global crisis on infrastructure bottleneck, lack of fund, and protectionism and unilateralism by building roads, power lines, ports and energy pipelines to open new corridors of growth.

It is about economics – trade and connectivity, thus nothing to do with sovereignty and military expansionism. And, that has been Malaysia’s general attitude towards China.

Though now selectively reverting to populist old-school nationalist narrative to swing Umno’s vote to opposition, Tun Dr Mahathir Mohamad’s comment in the book by Tom Plate in 2011, “Dr M: Operation Malaysia” reflected that view:

“Whether it is Christians or not, the European perception of things is different. Even in terms of trading, they wanted a monopoly. They wanted a trade agreement. They wanted to set up forts to defend themselves. They came in armed regiments, whereas the Chinese, the Arabs, the Indians came here to trade … since 1,800 years ago, they came to Malaysia to trade. But they never invaded us. They didn’t come with armed regiments. They came to trade.”

The same view was echoed recently by Sam Beatson, a researcher from King’s College of London.

Despite the US pivot policy placed 300 military and nuclear bases to surround China as reported by a policy international foreign policy journal, western conspiracy of China’s military ambition still abound. With only a single aircraft carrier, does China have a WMD the world does not know of?  

In Malaysia, the fear mongers intensified to the possibility of compromised sovereignty, and South China Sea territorial dispute to the neutralise good news from the BRF.

China’s nine, and then ten dash line policy has no legitimacy under any international law. And, Malaysia has not been taking it lying down. It made preparations and alliances but it is just not talking about it loudly.

If a superpower decides to wage war on our soil and sea, Malaysia is not in the position to militarily hold it back from as far back as the days the Portuguese conquered Melaka. It will be mutual interest that could allay such prospect.

There was a positive development at Guiyang, China over the weekend.

ASEAN and China made “headway” in the contested South China Sea to complete negotiations on the draft framework on the Code of Conduct. Surrounded by US’s pivot policy, China needed to ensure the South China Sea is safe for passage.

From the fear of China’s domination of the local economy and business, including allegations of Malays being denied rights and special interest, the propaganda shifted to prospect of a pullout due to either cancellation of Bandar Malaysia deal or China’s capital control policy.

Investment was spun as selling the country. While, they have remained silent on AirAsia’s entry into China.

Dr Mahathir practically sold the country to Japan but this time not for China’s seldom-hard-to-believe deals.  And he himself is no more excited of  the prospects of Singapore port being reduced to a transshipment hub.

Anything to slow the boat to China (at least till the general election is won) including the laughable attempt by a newbie DAP politician to make a durian-to-apple comparison between the greenfield East Coast Rail Line and upgrading of colonial time Peninsular railway.

It is matter of time before they blame durian diplomacy for the more expensive durian in the local market.  

The local issues are getting pettier as the days go by in comparison to the legitimate concerns of India and European Union to BRI. For India, it is the objection to China-Pakistan Economic Corridor’s (CPEC) portion of the new Silk Road passing through disputed Pakistan Occupied Kashmir.

EU held back endorsement to secure more commitment from China for a more transparent, consultative and co-ownership arrangement with more social and environmental sustainability and transparency.  While, it is seen as geo-political manoeuvering, EU usually walks the talk on such concerns.  

With US President Donald Trump giving the nod after a lucrative trade agreement with China, India could find itself alone and reduced to an insignificant role. China made it clear that it will not involved itself in the bilateral dispute between India and Pakistan that has a long history to the past.

India was a willing participant with China in the various BRIC initiatives. Nevertheless, sovereignty will always be a sensitive domestic issue that could supersede the larger interest. China has firmly laid it out that it will not force skeptical and nervous countries to be part of BRI.  

For Malaysia, a nervous India is beneficial to its planned ports and railway. ECRL could be a miniature version of Seattle to New York port-to-port rail link but there is much hope to invigorate the economy of Pahang and east coast peninsular states.

While bankers remain sceptical and on a “wait and see” on BRI, strangely the European Investment Bank was supportive.

Jean-EIB Director-General Christophe Laloux recognised the leadership China has shown by participating in an MOU with representatives from Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, the New Development Bank, and the World Bank.

The underlying support from Malaysia to China lies in the spirit of “win-win cooperation” adopted by China, as  Najib stated in his letter to Hong Kong’s South China Morning before the conference.

Cheng Xiaohe, a Chinese foreign policy expert at Beijing’s Renmin University, explained that the preferential treatment for Malaysia was due to both countries’ long ties and not for any insidious objective.

China has committed to import RM2 trillion goods in five years, US$150 billion investment and 10,000 places for education and training. It was the blessing from US pullout of TPPA in which they manoeuvered to exclude China.

There will be teething problems before the western banks overcome their awe and nervousness with the commercial considerations, higher funding costs and compliance of the big numbers to confidently participate. China will need to resolve its domestic capital outflow problem.

All roads stopped leading to Rome. In the not too distant horizon, it will likely lead to China. So, eat more durians before it gets more expensive.

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