Chinese Journal of International Politics 2013 Kuik 429 67

The Chinese Journal of International Politics, Vol.
6, 2013, 429467
doi:10.1093/cjip/pot006
Advance Access publication 12 April 2013
Making Sense of Malaysias

China Policy: Asymmetry, Proximity,
and Elites Domestic Authority
Cheng-Chwee Kuik*y
Cheng-Chwee Kuik is Associate Professor in the Strategic Studies and International

Relations Program at the National University of Malaysia (UKM). At the time of writing
this article, he is a Post-doctoral Visiting Research Fellow at the Department of Politics
and International Relations, University of Oxford, and concurrently an Associate Member
of the Nuffield College. The author gratefully acknowledges the support by the UKMKPT (Malaysian Ministry of Higher Education)s Study Leave Scheme, the UKM Centre
for Research and Innovation Management (CRIM) Grant Code GGPM-2012-038, and
the ISIS-UKM Perdana Project on Malaysia-China Relations. He would like to thank
Karl D. Jackson, Yuen Foong Khong, Rosemary Foot, Donald Emmerson, See Seng Tan,
Mingjiang Li, Joseph Liow, Thomas Fingar, Xiaoyu Pu, Guanyi Leu, Clara Soon, Zakaria
Haji Ahmad, Tang Siew Mun, Nor Azizan Idris, two anonymous referees, and the participants at the Stanford-NTU Workshop on The Deer and the Dragon: Southeast Asia
and China in the 21st Century, November 1416, 2012, Singapore, for their helpful
comments and suggestions on earlier versions of this paper. All the usual caveats apply.
*Corresponding author. Email: cheng-chwee.kuik@politics.ox.ac.uk
The Author 2013. Published by Oxford University Press. All rights reserved.
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Using Malaysias China policy as a case study of a smaller

states response to a rising power, this article challenges the
mainstream neorealist notion that the growing capability and
geographical proximity of a rising power tend to induce fear
among its weaker neighbours. By tracing the transformation of
Malaysias China policy, the articles findings indicate that
power asymmetry and geographical proximity have no inherent
logic of their own; rather, whether and to what extent the two
variables will prompt smaller states to become fearful and/or
attracted to a rising power is often a function of intervening
factors at the domestic level, i.e. the imperative of ruling elites
domestic legitimation. In the case of Malaysias China policy,
it is the ruling Barisan Nasional elites desire to capitalize on
the big powers risefor the ultimate goal of enhancing and
justifying its political authority at homethat has driven the
smaller state to adopt a hedging approach characterized by an
inclination to prioritize immediate economic and diplomatic
benefits over potential security concerns, while simultaneously
attempting to keep its strategic options open for as long as the
systemic conditions allow.
430 Cheng-Chwee Kuik
Introduction
1
2
Kenneth N. Waltz, Theory of International Politics (Reading: Addison-Wesley, 1979).

Stephen Walt, Alliance Formation and the Balance of World Power, International
Security, Vol. 9, No. 4 (1985), pp. 343.
The Chinese Journal of International Politics, Vol. 6, 2013
For many students of International Relations and Asian security, Malaysias

post-Cold War China policy presents a puzzling anomaly. Judging from the
tenets of mainstream neorealism that has for decades dominated the scholarly discourse on states alignment choices, Malaysia as a much smaller state
should and would have numerous reasons to balance against the rising
power. According to the logic of Kenneth Waltzs balance-of-power
theorywhich prioritizes security as the most important goal of national
interest under conditions of anarchysmaller states like Malaysia, when
faced with an increasingly strong big power, would opt for alliances and
armament in order to resist, countervail, and balance against the power
before it grows even stronger.1 According to the logic of Stephen Walts
balance-of-threat theory, which refines the Waltzian proposition by arguing
that states do not balance against the strongest power but against the most
threatening power, Malaysia as a weaker state would have multiple compelling reasons to view a rising China as a threatening actor.2 After all, the four
factors that Walt specifies as the sources of a states threat perceptiona big
powers aggregate capability, geographical proximity, offensive capability,
and offensive intentionsare all pertinent reasons that could have led
Malaysia to perceive the rising China as an increasingly menacing power,
which could, in turn, have driven it to opt for a balancing strategy.
These factors are relevant for various reasons, past and present.
Throughout much of the Cold War period, chiefly due to Chinas support
for the Malayan Communist Party (MCP) insurgency that attempted to
overthrow the Kuala Lumpur government and to Beijings ambiguous
Overseas Chinese policy, Malaysia had openly described China as the
greatest threat to its security. Such a perception persisted even after
Malaysia moved to establish diplomatic relations with the Peoples
Republic of China (PRC) in 1974 (the first member country of the
Association of South-East Asian Nations [ASEAN] to do so). Although
ideological and ethnic Chinese issues ceased to be barriers to Malaysia
China relations during the post-Cold War era after the dissolution of the
MCP in 1989, and the domestic transformations in both countries, bilateral
relations in the new era are nevertheless somewhat clouded by their overlapping claims, which also involve the Philippines, Vietnam, Brunei, and
Taiwan, over the Spratlys in the South China Sea.
Given these past and present problems, it is thus conceivable that
Malaysia could have viewed a rising China as a growing threat, and thereby
seen balancing as a relevant option. This is particularly so if one considers
Malaysias China Policy
431
While some analysts have described Chinas protest note as a provoked response to
Malaysia and Vietnams joint submission to UNCLCS, from Malaysias viewpoint, however, Chinas recent actions in the South China Sea and the nine-dotted-line map have
raised concerns about the big powers potentially offensive intentions. This viewpoint is
reflected in a paper presented by Kadir Mohamad, former secretary-general of the
Malaysian Foreign Ministry and former foreign policy advisor to the Prime Minister, at
an international workshop, in which he wrote that Chinas actions and the map have
created doubts, uncertainties and concern about Chinas actual intentions. See p. 4 of the
paper, The Way Forward: The Necessary First Steps Towards A Solution presented at
the Second MIMA South China Sea Conference, Kuala Lumpur, September 5, 2012.
developments at the regional level in recent years, which point to a marked

increase in value of the Waltian variables, which are: (i) the big powers
aggregate capability (as evidenced by the uninterrupted growth of Chinas
economic and military capabilities, which have grown faster in relative terms
since the 20082009 global financial crisis); (ii) offensive capability (i.e. the
development of Chinas maritime combat and blue water navy capabilities,
best signified by the commissioning of its first aircraft carrier in September
2012); (iii) geographical proximity (although generally a constant variable,
its values are not necessarily completely constant. With respect to the case at
hand, the continuous growth in Chinas power projection capabilities,
coupled with the expansion of the Yulin (Sanya) Naval Base along the
southern coast of Hainan Island, have all made China appear to the smaller
actors to its south, including Malaysia, an even more proximate power); and
(iv) offensive intentions (a series of actions interpreted by some as Chinas
growing assertiveness in maritime disputes, which include: the United
States Naval Ship (USNS) Impeccable Incident in March 2009; Chinas
lodging of a protest in May 2009in response to the MalaysiaVietnam
joint submission to the United Nations Commission on the Limits of the
Continental Shelf (UNCLCS)attaching its nine-dotted-line map;3 the reported news in March 2010 that China considered the South China Sea issue
as part of its core interests; and the months-long stand-off between China
and the Philippines at Scarborough Shoal in mid-2012).
These factors and trends thus make Malaysia one of the most likely cases
(along with the Philippines and Vietnam) for the Waltian balance-of-threat
propositions. The expected observable implications are that Malaysia, as a
weaker state, is likely to view an emerging China as an emerging threat,
and is hence likely to respond by pursuing a balancing strategy for its
survival.
Empirically, however, this is not quite the case. Throughout the period
19902012 (not a short period by most standards), Malaysian leaders statements and actual policies have persistently reflected a low level of threat
perception vis-a`-vis China, notwithstanding the apparent increase in Chinas
capabilities and other Waltian variables. Significantly, this low level of
threat perception has persisted not just under one leader, but three
Cheng-Chwee Kuik, Malaysias China Policy in the Post-Mahathir Era: A Neoclassical

Realist Explanation, RSIS Working Paper No. 244, Rajaratnam School of International
Studies, Singapore, July 2012.
For a recent cogent analysis on the evolution of MalaysiaChina relations, see Ian Storey,
Southeast Asia and the Rise of China: The Search for Security (London & New York:
Routledge, 2011), pp. 21229.
Joseph Chinyong Liow, Malaysia-China Relations in the 1990s: The Maturing of a
Partnership, Asian Survey, Vol. 40, No. 4 (2000), pp. 67291; Abdul Razak Baginda,
Malaysian Perceptions of China: From Hostility to Cordiality, in Herbert Yee and Ian
Storey, eds, The China Threat: Perceptions, Myths and Reality (London: Routledge
Curzon, 2002), pp. 22747; Lee Poh Ping and Lee Kam Hing, Malaysia-China
Relations: A Review, in Hou Kok Chung and Yeoh Kok-Kheng, eds, Malaysia,
Southeast Asia and the Emerging China: Political, Economic and Cultural Perspectives
(Kuala Lumpur: Institute of China Studies, University of Malaya, 2005); Liao Xiaojian,
Adjustments in Malaysias China Policy, in Tang Shiping, et al., eds, Lengzhanhou jinlinguojia duihua zhengce yanjie (A Study of the Immediate Neighbours China Policies after
the Cold War) (Beijing: Shijie zhishi chubanshe, 2006), pp. 13153.
Amitav Acharya, Containment, Engagement, or Counter-Dominance? Malaysias
Response to the Rise of China, in Alastair Iain Johnston and Robert Ross, eds,
Engaging China: The Management of an Emerging Power (New York: Routledge, 1999),
pp. 12951; Zakaria Haji Ahmad, Malaysia, in Evelyn Goh, ed., Betwixt and Between:
Southeast Asian Strategic Relations with the U.S. and China, IDSS Monograph No. 7
(Singapore: The Institute of Defence and Strategic Studies, 2005), pp. 5160.
Joseph Chinyong Liow, Malaysias Post-Cold War China Policy: A Reassessment, in Jun
Tsunekawa, ed., The Rise of China: Responses from Southeast Asia and Japan (Tokyo: The
National Institute for Defense Studies, 2009), pp. 4779.
For an analysis of the balance of power in political terms, see Ralf Emmers, Cooperative
Security and the Balance of Power in ASEAN and the ARF (London & New York:
Routledge Curzon, 2003).
successive leaders in a row.4 Under the premierships of Mahathir Mohamad,

Abdullah Ahmad Badawi (20032009) and Najib Tun Razak (2009 to present), Malaysian leaders have, throughout the post-Cold War era, all publicly and repeatedly stressed that Malaysia does not see China as a threat.5
In terms of actual policy, none have opted to isolate or confront Beijing.
Instead, all three have chosen to proactively engage and partner with China
in both the economic and diplomatic domains (with implications that go
beyond bilateral relations, as shall be discussed).6 In the security domain, the
smaller states military actions also do not constitute a balancing strategy in
the strict sense of the term. While it is true that Malaysia does maintain close
defence cooperation with the United States and other Western powers, these
arrangements were created during the Cold War, well before the rise of
China.7 In addition, there is no clear indication that Malaysias external
military links and its own defence modernization has been primarily motivated by, and accelerated in tandem with, the pace of Chinas growing
power.8 Malaysias approach, therefore, is at most a limited- or indirect
balancing, and not a complete one. This approach is complemented with
the practice of using multilateral diplomatic institutions as a platform to
prevent and deny domination by any single power in regional affairs. It is
hence an act of balance of political power, and not a balancing strategy in
the classic sense.9
433
Between Concepts and Facts: Balancing,

Bandwagoning, and Hedging
Malaysias China policy as described above is qualitatively different from a
balancing strategy in its pure and classic form. A pure balancing strategy
would not involve an attempt to forge a partnership with the big power to
advance certain common foreign policy goals (i.e. promotion of East Asian
cooperation, discussed below); it would not entail a decision to develop, let
alone institutionalize, bilateral defence ties with the power; and it would not
feature enduring readiness to accommodate the big powers interests on
issues ranging from Taiwan and Tibet to Xinjiang and Falungong. A pure
balancing strategy would be one wherein Malaysia openly described China
as a threat (as epitomized by the smaller states stance throughout the first
decade of its post-independence years); wherein the state took actions aimed
at isolating, limiting, and denyingrather than engaging, encouraging, and
facilitatingthe rising powers regional role; and most important of all, one
manifested in a military alliance (formal or de facto) with other power(s)
directly and explicitly targeted at containing the rising powers strategic
Perhaps the best example through which to illustrate Malaysias absence

of balancing vis-a`-vis China is to contrast its response with that of the
Philippines and Vietnam to the South China Sea imbroglio. Unlike the
two ASEAN claimants that have publicly described China as a threat and
thus sought to use their upgraded military ties with the United States as the
main leverage to deal with Beijing, Malaysia has continued to emphasize the
use of diplomatic means to manage the issue. Although Malaysia decided in
2010 to elevate its status in the US-led Cobra Gold military exercise from
that of observer to full participant, it remains a matter of contention as to
what extent the decision was driven by the China factor. Interestingly,
Malaysias move to enhance its long-standing military ties with the United
States has been accompanied by an effort to develop its security relations
with China. Since signing the Memorandum of Understanding on defence
cooperation in 2005, Malaysia and China have gradually increased military
personnel and training exchanges. The two countries defence ministries held
the first annual MalaysiaChina Defence and Security Consultation in
September 2012. Although the level of this bilateral military cooperation
pales in comparison with that between Malaysia and its Western security
partners, the fact that Putrajaya has agreed to gradually develop and institutionalize its security relations with Beijing suggests a conscious move to
diversify strategic links. Arguably, it also suggests that there is a tacit readiness on the part of Malaysia to acknowledge and adapt toas opposed to
ignore, refuse, and resistthe reality of the rising powers geostrategic
outreach.
10
11
12
13
On bandwagoning, see Randall Schweller, Bandwagoning for Profit: Bringing the

Revisionist State Back in, International Security, Vol. 19, No. 1 (1994), pp. 72107.
Amitav Acharya, Will Asias Past Be Its Future?, International Security, Vol. 28, No. 3
(2003/04), pp. 14964.
Alastair Iain Johnston and Robert Ross, eds, Engaging China, pp. 280, 288; Ian Storey,
Singapore and the Rise of China: Perceptions and Policy, in Ian Storey and Herbert Yee,
eds, The China Threat: Perceptions, Myths and Reality (New York & London: Routledge,
2002), p. 219; Chien-peng Chung, Southeast Asia-China Relations: Dialectics of
Hedging and Counter-Hedging , in Chin Kin Wah and Daljit Singh, eds.,
Southeast Asian Affairs 2004 (Singapore: ISEAS, 2004), p. 35; Evelyn Goh, Meeting the
China Challenge: The U.S. in Southeast Asian Regional Security Strategies, Policy Studies
16 (Washington, DC: East West Centre Washington, 2005), pp. viii, 4; John Ciorciari, The
Limits of Alignment: Southeast Asia and the Great Powers since 1975 (Washington, DC:
Georgetown University Press, 2010), p. 7.
Evelyn Goh, Meeting the China Challenge, p. viii; Evelyn Goh, Understanding Hedging
in Asia-Pacific Security, PacNet 43 (Honolulu: Pacific Forum CSIS, August 31, 2006);
and David Kang, China Rising: Peace, Power, and Order in East Asia (New York:
Columbia University Press, 2007).
reach. None of these features characterizes Malaysias post-Cold War China

policy.
That Malaysia is not pursuing pure balancing strategy does not mean that
it is adopting a pure bandwagoning strategy.10 Although the smaller state
has sought to develop closer economic ties with and to engage China diplomatically, these acts should not be regarded as bandwagoning. Economic
cooperation and diplomatic engagement are motivated by pragmatic desire
for commercial and foreign policy payoffs, and do not constitute an act of
power acceptance.11 Bandwagoning, in contrast, is essentially a readiness on
the part of a smaller actor to acceptvoluntarily or otherwisea stronger
actors power and ascendancy. There are indeed some elements of power
accommodation and power utilization in Malaysias China policy, apparent
in its tendency to give deference to the big power and to capitalize on
Chinas growing influence, in pursuit of its own economic and foreign
policy benefits [e.g. in materializing the first informal ASEAN Plus Three
(APT) in 1997 and the inaugural East Asian Summit (EAS) in 2005]. Such
acts of deference giving and power utilization, however, are largely voluntary, selective, and limited, rather than across-the-board. The bandwagoning
element of Malaysias China policy is thus at best a limited one.
If neither pure balancing nor pure bandwagoning, then how best would
one define Malaysias post-Cold War China policy, which has been a mix of
economic pragmatism, diplomatic engagement, a limited form of bandwagoning, and an unconventional variant of balancing? A look at the literature on East Asian international relations shows that a growing number
of analysts have used the term hedging to denote the responses of
Southeast Asian states, including Malaysia, to China.12 We concur that
this is a more accurate term. But unlike other scholars who define hedging
as a middle position wherein a state avoids having to choose one side at
the obvious expense of another,13 we hold that hedging is not just a middle
435
14
15
16
Cheng-Chwee Kuik, The Essence of Hedging: Malaysia and Singapores Response to a

Rising China, Contemporary Southeast Asia, Vol. 30, No. 2 (2008), pp. 15985; ChengChwee Kuik, Smaller States Alignment Choices: A Comparative Study of Malaysia and
Singapores Hedging Behaviour in the Face of a Rising China, Ph.D. dissertation, Johns
Hopkins University, 2010, pp. 12631; Cheng-Chwee Kuik, Nor Azizan Idris and Abd
Rahim Md Nor, The China Factor in the U.S. Reengagement with Southeast Asia:
Drivers and Limits of Converged Hedging, Asian Politics and Policy, Vol. 4, No. 3 (2012),
pp. 31544.
For a perceptive analysis of smaller states inclination to adopt a fallback position under
conditions of uncertainty, see Yuen Foong Khong, Singapore: A Time for Economic and
Political Engagement, in Alastair Iain Johnston and Robert Ross, eds, Engaging China,
pp. 10928; Yuen Foong Khong, Coping with Strategic Uncertainty: The Role of
Institutions and Soft Balancing in Southeast Asias Post-Cold War Strategy, in J.
J. Suh, Peter J. Katzenstein and Allen Carlson, eds, Rethinking Security in East Asia:
Identity, Power, and Efficiency (Stanford: Stanford University Press, 2004), pp. 172208.
Cheng-Chwee Kuik, The Essence of Hedging, p. 171; Cheng-Chwee Kuik, Smaller States
Alignment Choices, p. 117.
position but also an opposite position. Specifically, hedging is an act

through which a state seeks to protect its interests by pursuing a bundle
of contradictory options, which allows it to maximize short-term benefits
from a big power when all is well while simultaneously attempting to offset
or minimize longer-term risks that might arise in worst-case scenarios.14
Hedging typically entails two sets of mutually counteracting policy instruments that can be labelled the returns maximizing and risk contingency
options (Figure 1). The former refers to policies aimed at maximizing economic, diplomatic, and foreign policy benefits through a positive relationship with a rising power; the latter to the sort of fallback measures designed
to prepare for contingencies.15 A hedger would pursue these policies concurrently so that their effects would offset and cancel each other out, in
hopes of avoiding the danger of putting all the eggs in one basket when
the direction of structural changes at the systemic level is still far from
certain.16
In specific terms, the returns maximizing set consists of three options:
namely, economic pragmatism (pragmatism intended to maximize commercial benefits and to diversify economic links); binding engagement
(a policy to bind, engage, and integrate China into the ASEAN-based
regional institutions); and limited bandwagoning (a readiness to accommodate and utilize Chinas power, but without accepting a subordinate status).
All three options seek to reap as many payoffs as possible when all is well.
They are counteracted by the risk contingency set, which consists of dominance denial (use of non-military means to cultivate a balance of political
power to prevent any player from evolving into an unchecked hegemon) and
indirect balancing (a limited form of military alignment and armament,
aimed at contingency and without directly and explicitly targeting any
actor). These policies seek to reduce risks and mitigate loss, in case things
go awry. Hedging is thus a strategy that works for the best and prepares for
the worst. A policy that focuses on merely returns maximizing without
HEDGING BEHAVIOUR
BALANCING
Strategy
(Pure form)
Risk-Contingency Options
IndirectBalancing
Degree of Power Rejection
Returns-Maximizing Options
Dominance- EconomicDenial
Pragmatism
BindingLimitedEngagement Bandwagoning
Neutrality Point
BANDWAGONING
Strategy
(Pure form)
Degree of Power Acceptance
Fig. 1 Balancing, Hedging, and Bandwagoning.
The Argument
The basic argument of the article is that the substance of Malaysias China
policywhich bears all the hallmarks of hedgingis a result of the net
effects of power asymmetry, geographical proximity, and the elites domestic
political authority. We contend that the Waltzian and Waltian propositions
only partially explain the phenomenon at hand because they focus primarily
on the causal effects of asymmetry and proximity, thus ignoring domestic
factors, and because they overemphasize the negative dimension of the two
variables, thus overlooking the positive, integrative, and instrumental aspects of power and geography. We hold that, although power gap and geographical factors are central to the smaller statebig power interactions,
their causal impact is not unidirectional. A rising powers growing strength
and proximity may be a source of mounting apprehension to smaller states,
but may also be a source of increasing attraction and inducement.
Ultimately, whether or not and to what extent the two variables will
prompt smaller actors to be either fearful of or attracted to a rising power
preparing for risk contingencyand vice versashould not be regarded as

hedging.
This conception serves to uncover and throw light on the characteristics,
components, and options of Malaysias China policy (and that of other East
Asian states) in a more systematic manner. It provides a basis for us to
ponder the possibility, direction, and conditions of a horizontal shift
along the spectrum, thereby offering useful pointers for studying states
alignment choices in the face of shifting power structure in the 21st century
Asia-Pacific.
The above discussion leads us to ask: What explains the puzzle? Why has
Malaysia avoided both the full-fledged balancing and pure bandwagoning
options? More importantly, why has the smaller state chosen to hedge, and
in the way it has done so over the past two decades?
437
is often a function of intervening factors at the domestic level. This third

explanatory variablethe elites domestic legitimationrefers to the ruling
elites efforts to respond to the changing external conditions (in this case a
rising power) in a way that justifies and consolidates its domestic political
authority.
As an alternative explanation to the neorealist paradigm, this Domestic
Legitimation model treats the elites internal justification efforts as an intervening variable between structural conditions and states policy choices. The
model is premised on the following assumptions. First, states do not make
foreign policy choices; ruling elites do. Secondly, the elites policy considerations of key issues are driven primarily by the imperative to ensure their
political relevance and survival. Thirdly, a countrys key foreign policy decision (e.g. towards a rising power) is often a product of domestic legitimation, a process through which the ruling elite seeks to act in a way that
conforms to the bases of its domestic legitimacy with the ultimate end of
enhancing its authority and capacity to govern. In actual terms, the imperative of domestic legitimation must involve goal prioritization. That is, the
elites need to justify and enhance its domestic authority would prompt it to
prioritize certain national goals over others. Examples are those of the need
to prioritize immediate economic and diplomatic benefits over potential security concerns; to emphasize territorial issues over commercial payoffs; or
to value material gains over policy independence, etc. These distinct prioritizations reflect distinct pathways of elite legitimation in different polities,
which include: performance legitimacy, nationalism, inter-elite bargaining,
and so on. The sort of goals a state pursues is often that prioritized by the
ruling elite of the day.
Our emphasis on domestic political factors does not imply that structural
variables are less important. Structural conditionsthe ever-changing distribution of capabilities and wills among the big powers at the systemic
levelalways exert top-down pressure and opportunity on all states, especially the smaller ones. As we shall see below, the structural changes in the
early 1970s (after the British East of Suez withdrawal and the US retreat
from mainland Southeast Asia) and the even bigger structural changes in the
early 1990s after the end of Cold War both affected Malaysias external
environment in a profound way. The effects of these structural shocks, however, are not straightforward, but filtered through the ruling elites domestic
political needs of the day. It is for this reason that domestic political factors
are treated here as an intervening variable.
Power asymmetry and geographical proximity are integral parts of
the structural variables, because they always exert top-down constraints
and opportunities on adjoining smaller states, and because they are the given
conditions that a smaller state must face regardless of any changes at the
domestic level (including changes in leadership or the political system).
Asymmetry: Size and Strength does Matter

(in Both Ways)
Power asymmetrya clear disparity in capabilities among state actorshas
been the defining feature of Malaysias relations with China. While this is
the case for their modern day sovereignty-based bilateral relations it was
even more so for their historical ties, which can be traced back to the 15th
century when the Malacca Sultanateregarded by many Malaysians as the
starting point of Malay historyestablished a tributarysuzerain relationship with its gigantic neighbour to the north, Ming China. Malaccas strategy, to use todays International Relations (IR) lexicon, was one of
bandwagoning: accepting a subordinate status in return for profit (in the
forms of security protection and economic benefits). Power asymmetry with
China, then, was a principal source of support and strength. From 1403 to
1433, Malaccas first three rulers forged productive relations with Ming
China with an eye to both gaining trade benefits and warding off threats
from Siam and Java.17 For the next century or so, Malacca thrived on
extrepot trade, commanding the major trading routes between India and
China and establishing itself as the most important port in the region.
However, Malaccas days of gloryand its interactions with China
ended with the arrival of the European powers. It was colonized in turn
17
Historian Wang Gungwu observes that Malaccas relationship with Ming China was a
mutually beneficial one: Malacca needed help against Siam and China needed a base for
fleets to the Indian Ocean. He adds that after 30 years of Chinese protection, Malacca
was obviously ready to look after itself and it did so with increasing confidence and success
for the remainder of the century. See Wang Gungwu, The First Three Rulers of Malacca,
Journal of the Malaysian Branch of the Royal Asiatic Society, Vol. 41, No. 1 (1968), pp. 11
22. See also Geoff Wade, Melaka in Ming Dynasty Text, in MBRAS, Southeast AsiaChina Interactions (Kuala Lumpur: The Malaysian Branch of the Royal Asiatic Society,
2007), pp. 33637.
The magnitude of their effects may go up or down (i.e. when there is an

increase or decrease in the big powers relative capability, and/or when there
is a change of strategic will on the part of the power), but the realities
of strongweak relations and geographical closeness would remain
unchanged.
What follows is a discussion of how the effects of asymmetry and proximity are filtered through and defined by the successive ruling elites concerns to enhance its domestic authority in shaping the substance of
Malaysias China policy at different junctures. Attention will be paid to
explaining why, despite the enduring challenges of asymmetry and proximity, Malaysias China policy has been transformed from one of hostility
during the Cold War to one of cordiality and partnership during the postCold War era that is driven by a determination to prioritize concrete economic and diplomatic benefits over potential security concerns.
439
by the Portuguese (15111641), Dutch (16411795), and British (1795

1957).
Threats and Balancing (19571969)
18
19
20
21
Jay Taylor, China and Southeast Asia: Pekings Relations with Revolutionary Movements
(New York: Praeger, 1976); Melvin Gurtov, China and Southeast Asia: The Politics of
Survival (Baltimore: The Johns Hopkins University Press, 1971/1975).
Speech of Tun Ismail bin Dato Abdul Rahman, Minister of Home Affairs and Acting
Minister of Foreign Affairs, to the Foreign Correspondents Association, Johore Bahru,
June 23, 1966, in R. K. Jain, ed., China and Malaysia, 19491983 (New Delhi: Radiant,
1984), p. 91.
Chin Kin Wah, The Defence of Malaysia and Singapore: The Transformation of a Security
System, 19571971 (Cambridge: Cambridge University Press, 1983).
Hari Singh, Malaysia and the Communist World, 196881, Ph.D. Dissertation, La Trobe
University, 1988, p. 68.
Fast forward to the 20th century, the consequences of power asymmetry

were largely negative throughout the first three decades of the smaller states
existence as a sovereign actor. In August 1957, when the Federation of
Malaya gained independence from London, the PRC was in its eighth
year after Mao had declared the establishment of the republic. The world
was structured along bipolar lines, with the United States-led Western bloc
on one side and the Soviet-dominated Communist camp on the other.
Against this Cold War backdrop, Malayas relations with Communist
China were hostile and antagonistic. This was due not just to ideological
differences but to Maos policy of supporting indigenous communist insurgencies in Southeast Asia, including the MCP, which had since 1948 sought
to establish an independent republic via armed struggle.18 As a reaction to
this and to Beijings perceived links with the local Chinese, the ruling Parti
Perikatan elite in Kuala Lumpurcomprising mainly of the Malay aristocracy and predominantly Malay state bureaucrats, as well as English-educated Chinese and Indianshad come to view China as a threat to its
security and internal order. China was described as a giant outside
power who was bent on a long-range programme of expanding its power
and influence through its proxies in South East Asia.19 Power asymmetry
was thus perceived as a source of national threat and regional instability.
The Malayan elites strategy was one of pure balancing, i.e. aligning with
Western forces to confront and counter the source of threat. Under the first
Prime Minister Tunku Abdul Rahman, tiny Malaya entered into the AngloMalayan Defence Agreement (AMDA) with Britain, and pursued an anticommunist and anti-China foreign policy.20 In 1957, when Beijing offered to
recognize the newly independent federation (as part of Chinas policy of
peaceful coexistence or the Bandung Line), the Malayan government
turned down the overture, fearing that a Chinese embassy in Kuala
Lumpur would become the centre of communist propaganda and subversion.21 In 1958, the Tunku chose to make his first overseas trip as premier to
Structural Uncertainties, Domestic Exigencies, and the Elites

Push for Rapprochement (19701974)
The period from the second half of the 1960s to the early 1970s was a
threshold for the Malaysian elites security outlook and external orientation.
This was not so much because of an increase in the magnitude of threat, but
because developments during this period had, for the first time, created an
acute sense of uncertainty in the minds of the smaller states policy elite
about the long-term commitments of its security patron.
22
23
24
25
Abdullah Dahana, China dan Malaysia dalam Arena PerangDingin 194974 (China and
Malaysia during the Cold War Era, 194974) (Bangi: Penerbit Universiti Kebangsaan
Malaysia, 2002), p. 123.
Chandran Jeshurun, Malaysia: Fifty Years of Diplomacy, 19572007 (Kuala Lumpur: The
Other Press, 2007), p. 27; R. K. Jain, China and Malaysia, pp. 3940.
J. Saravanamuttu, The Dilemma of Independence: Two Decades of Malaysias Foreign
Policy, 19571977 (Penang: Penerbit Universiti Sains Malaysia, 1983), p. 27.
Hari Singh, Malaysias National Security: Rhetoric and Substance, Contemporary
Southeast Asia, Vol. 26, No. 1 (2004), pp. 125.
Saigon, which he viewed as a frontline state against communist expansionism. The next few years saw Malaya providing arms and training in counterinsurgency to South Vietnam, to display its solidarity with Saigon.22 In
March 1959, Malaya came out strongly to deplore Chinas suppression of
the Tibetan revolt. In October the same year, it co-sponsored with Ireland a
resolution tabled at the UN General Assembly, calling for respect for the
fundamental human rights of the Tibetan people and for their distinctive
cultural and religious life.23 In October 1962, when the IndiaChina border
war broke out, Malaya was forthright in criticizing Chinas action. It
launched a Save Democracy Fund to help India defend itself against
Chinese aggression.24 Domestically, the Malayan government insulated
the local Chinese community from the political and socio-cultural pulls
reverberating from the home of Chinese civilization.25 Publications from
China were banned; travel restrictions to and from the mainland were
imposed; and the Bank of China branches in Malaya were all ordered to
close.
On September 16, 1963, Malaya merged with the former British colonies
of Singapore, Sarawak, and North Borneo (now Sabah) to form a larger
Federation of Malaysia. From 1963 to 1966, Indonesia launched
Konfrontasi, a low-intensity military campaign, to crush the infant
nation. In the event, Beijing gave support to Jakarta. This deepened the
Perikatan elites fear that Maos China and Sukarnos Indonesia had
forged a pact to establish hegemony over the region, with tiny Malaysia
as the target of the two larger countries expansionism. The end of
Konfrontasi in 1966 ended the threat from Indonesia, but did not ease the
pressure of power asymmetry from China.
441
26
27
28
29
30
David Hawkins, The Defence of Malaysia and Singapore: From AMDA to ANZUK
(London: The Royal United Services Institute, 1972).
Robert J. McMahon, The Limits of Empire: The United States and Southeast Asia since
World War II (New York: Columbia University Press, 1999), p. 157.
Chin Kin Wah, The Defence of Malaysia and Singapore, pp. 14478.
Muthiah Alagappa, Malaysia: From the Commonwealth Umbrella to Self-reliance, in
Chin Kin Wah, ed., Defence Spending in Southeast Asia (Singapore: ISEAS, 1987), pp.
16593; Lau Teik Soon, ASEAN and the Future of Regionalism, in Lau Teik Soon, ed.,
New Directions in the International Relations of Southeast Asia: The Great Powers and
South East Asia (Singapore: Singapore University Press, 1973), pp. 16585.
Noordin Sopiee, The Neutralisation of South-East Asia, in Hedley Bull, ed., Asia and
the Western Pacific: Towards a New International Order (Sydney: Nelson, 1975), p. 136.
In July 1967, the British government announced that it would withdraw its
forces east of Suez, particularly from their bases in Malaysia and Singapore,
by the mid-1970s.26 In January 1968, due to mounting financial pressures,
the Wilson government announced its decision to accelerate the timetable
for withdrawal to March 1971. In July 1969, during a trip to Guam,
President Richard Nixon stated that although the United States would
continue to honour all its treaty commitments, in cases other than those
whose survival we consider vital to our security, the United States shall
look to the nation directly threatened to assume the primary responsibility
of providing the manpower for its defence.27 In 1971, the British began the
withdrawal of forces from its bases in Singapore and Malaysia. AMDA was
replaced by the Five Power Defence Arrangementsamong Britain,
Australia, New Zealand, Malaysia, and Singaporewhich obligated all
partner states to consult one another in the event of external aggression
against Malaysia and Singapore, but with no obligation for the partners to
act.28 At around the same time, the United States also started to reduce its
ground troops in mainland Southeast Asia as enunciated by President
Nixons Guam Doctrine in 1969.
These developments, which highlighted the risks of abandonment, were
watershed moments for Malaysias security planners. They convinced the
smaller states elite that they could no longer find security in the protective
arms of their Western allies as in the past. This realization compelled the
elite to stress self-reliance and regionalism in their security planning.29 In
adjusting to the new realities that the British lion no longer had any teeth,
the Australian umbrella was leaking, and the American eagle was winging its
way out of Asia,30 the Malaysian elite realized that they now had to cope
with their own security problems, and to reckon with their giant neighbour
largely by themselves.
These changing structural conditions thus called for major adjustments in
the smaller states external policy. They compelled the ruling Perikatan
elitenow under the leadership of Tun Abdul Razakto abandon the
countrys long-standing pro-West stance, and to replace it with a posture
of non-alignment and regional neutralization, first enunciated by Tun Dr
Ismail in 1968. This policy shift was formalized in April 1970, when Ghazali
31
32
33
34
35
Ghazali Shafie, Statement to the Preparatory Non-Aligned Conference at Dar-es-Salam

on April 15, 1970; later published in Ghazali, Malaysia: International Relations (Kuala
Lumpur: Creative, 1982), p. 157.
Ibid.
Noordin Sopiee, The Neutralisation of South-East Asia, p. 149.
Quoted in Charles E. Morrison and Astri Suhrke, Strategies of Survival: The Foreign
Policy Dilemmas of Smaller Asian States (New York: St Martins Press, 1979), p. 160.
Zakaria Mohd Ali, Normalisation of Relations with China, in Fauziah Mohamad Taib,
ed., Number One Wisma Putra (Kuala Lumpur: Institute of Diplomacy and Foreign
Affairs, 2006), pp. 1245.
Shafie, the foreign ministrys permanent secretary, called for the endorsement of the neutralization not only of the Indo-China area but of the entire
region of South East Asia, guaranteed by the three major powers, the
Peoples Republic of China, the Soviet Union and the United States, against
any form of external interference, threat or pressure.31 The Malaysian
policy elite judged that, in order to get the big powers to recognize, undertake, and guarantee Southeast Asia as an area of neutrality, the ASEAN
states should acknowledge and accommodate each of the big powers legitimate interests, while observing a policy of equidistance with all the
powers.32
The new strategic outlook necessitated a shift in Malaysias China policy,
because neutralization required formal relations between the neutralised
and the guarantor.33 Tun Ismailthe then Deputy Prime Minister of the
Razak governmentstated it plainly: We cannot ask Communist China to
guarantee the neutrality of Southeast Asia and at the same time say we do
not approve of her.34 That China had now shown a more moderate external
posture made it easier for Malaysia to explore reconciliation with the giant
neighbour.
The policy shift was driven in part by the ruling elites domestic security
concerns. The elites calculated that, given the perceived pending departure
of their Western patrons, establishing relations with Beijing was a move
necessary to reduce the threat of the MCP guerillas, who were then restricted
mainly to the MalaysiaThailand border. Zakaria Ali, who led the
Malaysian team in the normalization negotiations during the 19731974
period, recalls that normalization was necessary to sever the line of support
given by the PRC, certainly by the Chinese Communist Party, to the
MCP.35
The early 1970s thus saw a process of engagement and normalization
negotiations between Malaysia and China, which culminated in Razaks
historic visit to Beijing and the establishment of diplomatic ties on 31
May 1974, making the country the first ASEAN member to do so.
In a well-documented and well-analysed study of Malaysias normalization of relations with China, Abdul Razak Abdullah Baginda argues that
while the external changes in the late 1960s and early 1970s provided opportunities for policy rethinking, it was domestic developments that influenced
443
36
37
38
39
40
Abdul Razak Abdullah Baginda, The Normalisation of Malaysias Relations with China,
19701974, Ph.D. dissertation, Oxford University, 2009.
Scholars like Chee and Crouch see this as a watershed event in Malaysian politics, which
marked the end of the consociational model that had served as the foundation of intercommunal compromises and domestic political order in the multi-ethnic country for the
first two decades. See Stephen Chee, Consociational Political Leadership and Conflict
Regulation in Malaysia, in Stephen Chee, ed., Leadership and Security in South East Asia:
Institutional Aspects (Singapore: Institute of Southeast Asian Studies, 1991), pp. 5386;
and Harold Crouch, Government and Society in Malaysia (Ithaca: Cornell University Press,
1996), pp. 2027.
Gordon P. Means, Malaysian Politics: The Second Generation (Singapore: Oxford
University Press, 1991), pp. 1932; James V. Jesudason, Ethnicity and the Economy: The
State, Chinese Business, and Multinationals in Malaysia (Singapore: Oxford University
Press, 1989).
Razak Baginda, Malaysian Perceptions of China, p. 235. See also Razak Baginda, The
Normalisation of Malaysias Relations with China.
J. Saravanamuttu, Malaysia-China Ties, Pre and Post 1974: An Overview, in Loh Kok
Wah, Phang Chung Nyap and J. Saravanamuttu, The Chinese Community and MalaysiaChina Ties: Elite Perspectives (Tokyo: The Institute of Developing Economies, 1981).
the timing of Malaysias rapprochement with China.36 In the wake of the

ruling Perikatans unprecedented electoral setback in May 1969, as well as
the ensuing ethnic riots between the two major communitiesthe Malays
and the Chinesethe new Razak government needed to formulate new directions for the countrys internal and external policies that would serve to
restore internal stability and justify their authority. Internally, the government moved to prioritize Malay interests by introducing the pro-Malay
affirmative action programme, in the form of the New Economic Policy
in 1971. It also moved to consolidate the United Malays National
Organisation (UMNO)s dominance within the ruling coalition by coopting most opposition parties, thereby transforming Perikatan into the
enlarged Barisan Nasional (BN; the National Front) in 1973.37 These political changes dramatically reduced and limited the role of non-Malays in
Malaysias political and economic life.38 In order to balance the situation
and allay the fears of the local Chinese voters, Razak decided that a move
towards rapprochement with China would help to pacify the ethnic
Chinese.39
The Razak governments move to redirect Malaysias foreign policy posture towards non-alignment appealed particularly to Malay nationalists and
leftist groups. Given that neutralization required Malaysia to drop its earlier
anti-Chinese stance and make overtures to Beijing, this new posture also had
the effect of alleviating the alienation of ethnic Chinese, winning over their
support for the BN and improving inter-ethnic reconciliation in the post1969 environment.40 As observed by Saravanamuttu, the vast majority of
local Chinese saw the rapprochement as willingness on the part of a Malaydominated government to acknowledge their ancestral home. In addition,
with the resolution of the nationality issue for the 200 000-odd stateless
Chinese in Malaysia, the rapprochement also helped clarify the communitys
legal status in the country. It was for these reasons that the ethnic Chinese
Growing Economic Pragmatism amid Lingering Political

Vigilance (19751989)
Notwithstanding these political and security anxieties, Malaysias China
policy during this period was motivated by a growing pragmatism on the
41
42
43
44
45
Ibid., p. 29.
Shafruddin Hashim, Malaysian Domestic Politics and Foreign Policy: The Impact of
Ethnicity, in Karl D. Jackson et al., eds, ASEAN in Regional and Global Context
(Berkeley: Institute of East Asian Studies, University of California, 1986), p. 159.
Robert O. Tilman and Jo H. Tilman, Malaysia and Singapore 1976: A Year of Challenge,
A Year of Change, Asian Survey, Vol. 17, No. 2 (1977), p. 153.
Joseph Liow, Malaysias Post-Cold War China Policy, p. 53.
Amitav Acharya, Constructing a Security Community in Southeast Asia: ASEAN and the
Problem of Regional Order (London & New York: Routledge, 2001), p. 84.
could now look more favourably and confidently on the Razak

Government coming into power in the aftermath of the traumatic May 13
riots.41 Shafruddin Hashim similarly notes that the rapprochement served
to promote inter-communal conciliation, chiefly by enabling the Malays to
view the PRC, communism, and the local Chinese as separate entities.42 In
the general elections that were held barely two months after Razaks China
visit, the BN coalition clinched an overwhelming victory. This boosted the
new governments authority.
These developments, however, did not erase the problem of power asymmetry. Despite the rapprochement, Malaysian leaders, from Razak through
Tun Hussein Onn to Tun Mahathir Mohamad, had continued to view
Beijing with distrust throughout the 1970s and 1980s. They were upset
over Chinas dual-track policy of separating government-to-government
relations and party-to-party ties [which meant the relationship between
the Chinese Communist Party (CCP) and the communist parties elsewhere,
including the MCP, were separate from government-to-government relations].43 Joseph Liow notes that while China attempted to placate
Malaysian elites concerns by stressing that its support for the MCP was
necessary in order to prevent the Soviets from exerting influence on the
party, and was limited to only moral support, Malaysia remained unconvinced.44 The Malaysian elite was also concerned about Beijings policy of
treating the ethnic Chinese in Malaysia as returned Overseas Chinese. In
view of these reservations, Malaysian leaders had remained wary of Chinas
intentions. Neither Chinese Vice-Premier Deng Xiaopings visit to Malaysia
in November 1978 nor Hussein Onns trip to China in May 1979 altered this.
In fact, Beijings large-scale punitive war against Vietnam from February
to March 1979 further convinced Malaysian elites of Chinas inclination to
use force in solving inter-state problems. During the Indochina conflict,
Malaysia thus perceived China rather than Vietnam as the real long-term
threat to Southeast Asia.45
445
46
47
48
49
50
Authors interview with Dato Abdul Majid Ahmad Khan, the former Malaysian
Ambassador to China 19982005, November 4 2009, Selangor, Malaysia. Majid served
as the Political Counselor at the Malaysian Embassy in Beijing during Mahathirs historic
visit in 1985.
See James Clad, An Affair of the Head, Far Eastern Economic Review, July 4, 1985, pp.
1214.
Stephen Leong, Malaysia and the Peoples Republic of China in the 1980s: Political
Vigilance and Economic Pragmatism, Asian Survey, Vol. 27, No. 10 (1987), pp. 110926.
Ibid.
Ibid.; J. N. Mak, The Chinese Navy and the South China Sea: A Malaysian Assessment,
Pacific Review, Vol. 4, No. 2 (1991), pp. 15061.
part of the BN elite to gain economic benefits from China. This was especially so after Mahathir came to power in 1981. At the beginning of his
administration the new premier paid attention to strengthening Malaysias
economic ties with Japan under his Look East Policy, but also sought to
develop closer economic links with potential big markets such as China.
Indeed, it was during the first decade of Mahathirs tenure that economic
pragmatism was made a central theme of Malaysias China policy. This was
in part due to the premiers desire to reduce Malaysias dependency on the
West, and in part to the Malaysian elites conviction that Dengs economic
reform was likely to continue.46 Such desire was further reinforced by the
mid-1980s world economic recession, which exposed Malaysias vulnerabilities as a result of the countrys heavy dependency on the American and
European markets. It was against this backdrop that Mahathir led a big
delegation to China in late 1985. The trip was significant not only because it
was Mahathirs first visit to the giant neighbour, but also because it signalled
his decision to concentrate on economic matters as the way forward to
managing what was then considered to be the most sensitive foreign relationship for Malaysia.47 This top-down pragmatism cleared bureaucratic
hurdles and smoothed the path towards the signing of a series of important
documents aimed at facilitating bilateral trade and investment. In addition,
the two governments also agreed in 1988 to establish the Joint Committee on
Economic and Trade Cooperation. These arrangements laid the foundation
for future economic collaboration between the two countries.
Nevertheless, despite growing pragmatism in the interests of forging closer
economic ties, political vigilance remained.48 The Malaysian governments
suspicions of Chinas overseas Chinese policy were confirmed in 1984, when
it discovered that Chinese Malaysians were allowed to make clandestine
visits to China through special visas issued by the Chinese authorities in
Hong Kong, and that they were looked after and treated like returning
overseas Chinese by the Commission for Overseas Chinese Affairs in
China.49 Overlapping territorial claims in the South China Sea added to
this mistrust.50
The Malaysian elites lingering suspicions about China were evident in

Mahathirs speech to students and faculty at Tsinghua University during
his 1985 visit:
These statements vividly portrayed a smaller states deep-seated apprehension towards a giant neighbour (and more broadly, the problems of power
asymmetry). That was November 1985. Today, 28 years later, China is much
more powerful economically and militarily. According to the Waltzian and
Waltian logics, Malaysia should have become even more fearful of the giant,
and opted to join an alliance to balance against it. Empirical records, as
noted, suggest otherwise. While there are lingering concerns among the
Malaysian armed forces about Chinas future intentions in the area, the
countrys political leadership has, by and large, held a positive perception
of the power to the north.52
In fact, as shall be discussed, the past three decades have witnessed a
turnaround in MalaysiaChina relations, from mutual suspicion to cordiality and partnership. Politically, present day bilateral ties are at their best.
Diplomatically, the two countries have developed a strategic cooperative
partnership, with institutionalized consultative mechanisms at the senior
official level. Economically, China has since 2009 become Malaysias top
trading partner and Malaysia is Chinas largest trading partner in ASEAN,
with total trade volume reaching US$100 billion in 2012. At the people-topeople level, the two countries have also seen a surge in tourism and
educational links.
51
52
Dato Seri Dr Mahathir Mohamad, Prime Minister of Malaysia, Regional Co-operation:

Challenges and Prospects, speech at the Tsinghua University, Beijing, November 22, 1985,
http://www.pmo.gov.my/ucapan/?mp&pmahathir&id846
Cheng-Chwee Kuik, Malaysias China Policy in the Post-Mahathir Era, p. 31.
Many wonder how, and in what ways, China will exercise its political and
military potency. Your neighbours, the smaller states in the region particularly,
worry how this would impinge upon their territorial integrity and sovereignty.
To be frank, some of us wonder whether China will seek to enhance its political
influence at our expense. In a comparative sense, we are defenceless and we have
no desire to seek recourse to massive defence build-ups or alliances both of
which are anathema to our way of life. If these concerns appear baseless to
you, I ask you to remember that historically small countries on the peripheries
of a big and powerful state have always had reason to be wary. In this connection, we welcome the many assurances of your leaders that China will never seek
hegemony and will never do anything to harm us. We also note your assurances
that Chinas developing military capacity is purely for its own defence. We
appreciate the enormous burden of self-restraint and responsibility that this
entails. I ask that you understand us, if despite these assurances, some concerns
linger on, for we are extremely jealous of our sovereignty and trust does not
come easily to us in view of our past experiences. Our experiences with China
have not entirely been free of problems and it would take time and mutual
efforts for us to put to rest some of the things left over from history.51
447
The Turnaround in MalaysiaChina Relations During the

Post-Cold War Era
53
54
55
Wang Gungwu, China: 1989 in Perspective, in Ng Chee Yuen, ed., Southeast Asian
Affairs 1990 (Singapore: Institute of Southeast Asian Studies, 1990), p. 72.
Chai Ching Hau, DasarLuar Malaysia Terhadap China: Era Dr Mahathir Mohamad
(Malaysias Foreign Policy towards China: The Mahathir Mohamad Era), M.A. Thesis,
National University of Malaysia, 2000.
This transformation indicates that power asymmetryeven when the gap is

growinghas no inherent logic of its own. A rising powers growing capabilities may indeed induce fear among weaker actors, but this is not necessarily the case. Post-Cold War MalaysiaChina interactions, discussed
below, are a story not so much about resisting power asymmetry as about
living with, accommodating, and even capitalizing on power asymmetry for
the advantages it brings.
The question, then, is: What explains this transformation? What explains
the shift in the smaller states perception of and policy vis-a`-vis the giant
neighbour from that of hostility during the Cold War to sustained collaboration, cordiality and limited-bandwagoning during the post-Cold War
era?
In retrospect, the contributing factors are multiple, but three stand out as
most important. They are: First, the removal of long-standing political barriers paved the way to a new era. In December 1989, Chin Peng, the MCP
leader who had been residing in China for years, signed a Peace Accord with
the Malaysian government in Thailand.53 The accord put an end to the
decades-long MCP armed struggle and also eliminated a key obstacle to
MalaysiaChina relations. Also in 1989, China formulated a new Law on
Citizenship, which severed ties between the PRC and the overseas Chinese
diaspora.
This development overlapped with the transformation within Malaysian
society, whereby local Chinese have since the 1970s become more aware of
their status as Malaysian citizens, and the primordial links with the homeland feature little, if at all, to them.54 By the 1990s, the ethnic Chinese issue
was no longer an impediment to bilateral ties. In August and September
1990, the Malaysian government lifted all restrictions on visits to China, in
effect terminating its managed and controlled policy that had been aimed
at insulating local Chinese from Chinas influence.55
Secondly, the changing source of threat to the ruling elite led Mahathir to
reassess Chinas role in relation to Malaysia. With the dissolution of the
MCP and the growing pressures of economic globalization, Mahathir had,
by the early 1990s, come to view protectionism and unfair practices in international trade as a principal threat to his rule.
For the leader, these were not purely economic problems, but issues with
profound political ramifications affecting the ruling partys domestic
56
57
58
59
Chandran Jeshurun, Malaysia: Fifty Years of Diplomacy, pp. 1645.

Mahathir Mohamad, The Way Forward, a working paper presented at the inaugural
meeting of the Malaysian Business Council, Kuala Lumpur, February 28, 1991, pp. 23.
Ibid. On Malaysias enduring ambivalence toward the United States over economic and
other issues, see Cheng-Chwee Kuik, Malaysias U.S. Policy under Najib: Ambivalence No
More? RSIS Working Paper No. 250 (Singapore: Rajaratnam School of International
Studies, November 2012).
Allen Whiting reveals that this view was shared with him by an informed official in Kuala
Lumpur during one of his interviews in the mid-1990s. See his ASEAN Eyes China: The
Security Dimension, Asian Survey, Vol. 37, No. 4 (1997), p. 311.
authority. According to Chandran Jeshurun, Mahathirs domestic power

base was threatened in 1987 because of a political crisis that was sparked
by the prolonged recession of the mid-1980s, and this was one of the major
factors that motivated much of his new thinking on national economic
strategy and how to deal with the emerging realities of a new international
economic order.56 This concern was clearly reflected in Mahathirs Vision
2020 speech in 1991: To grow we have to export. Our domestic market is
far too small. It is important to us that free trade is maintained. The trend
towards the formation of trading blocs will damage our progress and we
must oppose it. We must therefore play our part and not passively accept the
dictates of those powerful nations who may not even notice what their
decisions have done to us.57 He continued: A country without adequate
economic defence capabilities and the ability to marshal influence and create
coalitions in the international economic arena is an economically defenceless
nation and an economically powerless state. This Malaysia cannot afford to
be.58
The regional developments in the 1990sparticularly the lukewarm
response from Japan and fellow ASEAN members to his idea of the East
Asian Economic Grouping (EAEG), in contrast to Chinas supportive
stancemight have convinced Mahathir, in the later part of the decade,
to view Beijing as an indispensable partner in his quest to marshal influence
and create coalitions in the post-Cold War international economic arena. In
part because of Chinas continuous growth, its privileged position as a permanent member of the United Nations Security Council, as well as the
prevailing view that China would eventually replace Japan as an economic
leader in the region,59 the Malaysian elite had begun to perceive China as an
emerging actor that would play an increasingly vital role in regional and
global affairs. The fact that Malaysia and China saw eye-to-eye on issues
like the Asian values debate and multipolarity further contributed to the
elites reassessment of Chinas role from that of a source of fear to a source
of support and strength that would benefit Malaysia economically and geopolitically. Power asymmetry, therefore, has become a basis of attraction,
inducement, and partnership to the smaller state in the new era.
Thirdly, Chinas corresponding actions and a process of mutual engagementat both bilateral and multilateral levelsmade the transformation
449
60
61
62
63
64
Cheng-Chwee Kuik, Chinas Evolving Multilateralism in Asia: The Aussenpolitik and

Innenpolitik Explanations, in Kent E. Calder and Francis Fukuyama, eds, East Asian
Multilateralism: Prospects for Regional Stability (Baltimore: Johns Hopkins University
Press, 2008), pp. 10942.
See Alice Ba, China and ASEAN: Renavigating Relations for a 21st Century-Asia, Asian
Survey, Vol. 43, No. 4 (2003), pp. 63034.
PM Calls for Asia Pacific Trade Bloc: China Can Play Vital Role, Says Mahathir, New
Straits Times, December 11, 1990, p. 1.
Since its inception in 1991, this mechanism of foreign policy consultation has been held in
Malaysia and China on a rotating basis. The second meeting was held in Beijing in 1993,
the third in Kuala Lumpur. The consultative meeting was headed by the Secretary General
of the Malaysian Foreign Minister and his Chinese counterpart. Authors interview with a
senior official of Wisma Putra (Malaysian Foreign Ministry), Putrajaya, September 29,
2009.
Mohamad Sadik Bin Kethergany, Malaysias China Policy, MA unpublished paper,
Universiti Kebangsaan Malaysia and Institute of Diplomacy and Foreign Relations,
Kuala Lumpur, 2001, p. 23.
possible.60 Mahathirs desire to reset bilateral ties overlapped with the CCP
elites determination to improve Chinas relations with all ASEAN states in
the wake of Western sanctions after the Tiananmen incident in June 1989.
In order to counter the Wests isolation policy and ensure its continuing
access to markets and foreign investments, China embarked on a good
neighbourhood policy, aimed at engaging and stabilizing its relations with
peripheral countries, including the ASEAN states.61 Malaysia, on its part,
made concerted efforts to engage China, a convergence that gave rise to a
process of mutual engagement between them. In December 1990, Chinese
Premier Li Peng made a four-day visit to Malaysia. It was at a banquet for
his Chinese counterpart that Mahathir proposed his EAEG idea, stating
that countries in the region should further strengthen their economic and
market ties to counter the growing economic blocs in the West, and that
China ought to play an important role in the formation of such a bloc for
the promotion of fair trade in the world.62 Four months later, in April 1991,
Malaysia and China held their first bilateral consultative meeting.63 It created an institutionalized platform that allows senior officials of the two
countries foreign ministries to meet regularly for consultations on bilateral,
regional and international issues of mutual concern.64 Over the years, these
meetings have been instrumental in promoting understanding and building
confidence between the two countries, which not long ago had harboured
mutual suspicions of one another.
Bilateral interactions, importantly, helped initiate and set the stage for a
multilateral process between China and ASEAN countries. Together with its
ASEAN partners, Malaysia enthusiastically made efforts to integrate China
into ASEAN activities, to which Beijing responded positively. In July 1991,
three months after the first consultative meeting between the two countries,
Chinese Foreign Minister Qian Qichen was invited by the Malaysian
Foreign Minister Abdullah Ahmad Badawi to attend the opening session
of the 24th ASEAN Ministerial Meeting in Kuala Lumpur. Qians
65
66
67
Authors interview with Tun Abdullah Ahmad Badawi, the former Prime Minister of
Malaysia, Putrajaya, March 18, 2010.
Jusuf Wanandi, ASEANs China Strategy: Towards Deeper Engagement, Survival, Vol.
38, No. 3 (1996), pp. 11728; Yong Deng, Managing Chinas Hegemonic Ascension:
Engagement from Southeast Asia, The Journal of Strategic Studies, Vol. 21, No. 1
(1998), pp. 2143.
Cheng-Chwee Kuik, Multilateralism in Chinas ASEAN Policy: Its Evolution,
Characteristics, and Aspiration, Contemporary Southeast Asia, Vol. 27, No. 1 (2005),
pp. 10222.
attendance at the meeting, during which he also held informal talks with
ASEAN foreign ministers, marked the beginning of the ASEANChina dialogue process.65 In 1992, China attended the ASEAN meeting in Manila in
its capacity as the groups consultative partner. In 1993, China was invited
to the founding dinner of the ASEAN Regional Forum (ARF) in Singapore.
In 1994, China attended the first ARF meeting in Bangkok. It also agreed to
ASEANs suggestion to embark on an annual consultation on political and
security issues. In 1995, the first ASEANChina Senior Officials
Consultations at the vice foreign ministers level was held in Hangzhou,
China. In 1996, China became ASEANs dialogue partner.
Looking back, these interactions were crucial because they marked a process of mutual engagement between ASEAN countries and their giant neighbour via these embryonic regional multilateral forums, in spite of (and
because of) the overlapping territorial claims in the South China Sea.66
While the development of ASEANChina cooperation in the immediate
post-Cold War era was more a product of collective action than the work
of any single state, Malaysias instrumental role at the critical juncture
should not be overlooked.
Malaysias proactive diplomatic efforts are essentially the manifestation of
what can be called the binding-engagement policy. On its part, Chinas
actions in engaging Malaysia and other ASEAN states as well as in responding positively to ASEANs various regional initiativesdespite its earlier
hesitation about multilateralismhave made the transformation of
MalaysiaChina relations and development of ASEANChina cooperation
possible.67 Without Beijings positive response to invitations to take part in
various ASEAN-based activities (the ASEAN meetings from 1991 to 1992,
the ARF from 1993 to 1994, the ASEANChina Senior Officials Meeting
(SOM) from 1994 to 1995, and later the APT in 1997), it would have been
difficult for medium- and small-sized ASEAN states to engage, bind, and
integrate the giant into a web of norm-based multilateral institutions.
ASEANChina relations would consequently have developed on different
trajectories. Similarly, without Beijings firm support for Kuala Lumpurs
EAEG, APT, and EAS proposals, it would have been difficult for the policy
elite of both capitals to transform MalaysiaChina relations within a decade
from those of guarded rapprochement to cordial partnership.
451
68
69
70
71
Cheng-Chwee Kuik, Zhongguo canyu Dongmeng zhudao de diqu jizhi de liyi fenxi
(An Interest-based Analysis of Chinas Participation in the ASEAN-led Regional
Institutions), Shijie jingji yu zhengzhi [World Economics and Politics], No. 9 (2004),
pp. 539.
Razak Baginda, Malaysian Perceptions of China, p. 244.
Leong Shenli, Petronas Clinches RM92bil China Deal, The Star, October 31, 2006.
Beijings receptivity to these regional initiatives, of course, is not entirely a

function of ChinaMalaysia and ChinaASEAN ties, but due primarily to
Chinas considerations about its broader geopolitical, geo-economic, and
ideational interests.68 But the level of importance that China has attached
to its bilateral relations with the smaller statewhich transcends leadership
changes in both capitalsshould not be disregarded.
Indeed, many analysts inside and outside of Malaysia observe that
throughout the post-Cold War era China seems to have pursued a more
favourable policy towards the smaller state, even with respect to the South
China Sea issue. Joseph Liow, for instance, notes that although Beijing
sternly condemned Vietnam for making inspection tours of the
Vietnamese-held Spratlys in 1989, it remained silent over the visit in May
1992 by Malaysian King Sultan Azlan Shah to the Malaysian-occupied atoll
of Terumbu Layang-Layang.69 In 1999, when Malaysia erected structures
on Terumbu Peninjau (Investigator Shoal) and Terumbu Siput (Erica Reef),
Chinas reaction was low-key. Bearing in mind that the Malaysian Foreign
Minister was in Beijing just before the construction took place, Razak
Baginda, a well-informed Malaysian analyst, writes that it is a matter of
conjecture whether or not the minister was actually dispatched to Beijing in
order to explain the latest development over Malaysias position.70
The benign and reciprocally productive nature of MalaysiaChina relations has endured beyond the Mahathir administration. His successors
Abdullah Badawi and Najib Razak (the son of the second Prime Minister
Tun Abdul Razak) both chose China as the first country outside ASEAN to
visit upon taking office, respectively, in 2003 and 2009. In what can be
described as the manifestation of the smaller states limited bandwagoning
policy, Malaysian leaders have continued to give deference to China over
selected issues, and chosen to strengthen Malaysias strategic links with the
rising power. Both have stressed use of diplomacy as the preferred means to
manage the South China Sea disputes. China, on its part, has reciprocated
Malaysias goodwill. Examples are: offering a US$25 billion contract to
Malaysias state-owned oil company Petronas in July 2006 to supply up to
3.03 million metric tons of liquefied natural gas (LNG) annually to China
for 25 years;71 approving in July 2007 a US$800 million loan facility to build
a bridge in Abdullahs home state of Penang at an interest rate of 3% per
annum over 20 years (reportedly the largest and most favourable loan
Proximity: The Tyranny (and Benevolence) of

Geography
The consequences of power asymmetry as discussed above are often heightened and intensified by geographical proximity. In international politics,
proximity is a permanent factor because countries cannot choose with whom
to neighbour.
When power asymmetry meets geographical proximity, their combined
effects on smaller states can be particularly profound. For smaller, weaker
actors, a rising powers growing capabilitiesin both absolute and relative
termscould signify a widening power gap and increasing effects of power
disparity. If the rising power is geographically proximate, such effects are
likely to be multiplied. This is because proximity more often than not results
in a greater range and higher intensity of contacts between the states, thus
rendering the smaller actors more vulnerable to the consequences of the
72
73
Mazwin Nik Anis, Penang Bridge Loan Deal Signed, The Star, July 14, 2007.
Keynote Address by YAB Dato Seri Abdullah Haji Ahmad Badawi, Prime Minister of
Malaysia, to the ChinaMalaysia Economic Conference, Bandar Sunway, February 24,
2004.
facility China has ever offered for a single project in a foreign country);72
granting Malaysia Qualified Domestic Institutional Investor (QDII) status
in June 2010, making the country one of the approved investment destinations for Chinas portfolio funds; and supporting Najibs proposal to set up
a joint-venture Kuantan Industrial Park in the Prime Ministers home state
of Pahang.
In a 2004 speech, Prime Minister Abdullah Badawi said: Malaysias
China policy has been a triumph of good diplomacy and good sense. . . . I
believe that we blazed a trail for others to follow. Our China policy showed
that if you can look beyond your fears and inadequacies, and can think and act
from principled positions, rewards will follow [emphasis added].73
In short, the transformation of MalaysiaChina relations since 1989 has
been made possible by each of three interrelated factors: (i) the removal of
political barriers; (ii) the Malaysian elites reassessmentbased on changing
sources of domestic legitimation and consolidationof Chinas role; and
(iii) Chinas corresponding actionsdriven by the CCP elites desire to consolidate domestic power basethat have contributed to a sustained and
mutually beneficial engagement process between the two countries.
This transformation shows that the consequences of power asymmetry are
far from fixed. Rather, they are the outcome of actionsreactions among
state elites who seek to consolidate their political authority at home. The
elite of a smaller state cannot deny the reality of power asymmetry, but they
can choose how to respond to it.
453
74
The station became operational in 1969 and was shut down after 1981 at the instruction of
Deng Xiaoping. See Chin Peng, Alias Chin Peng: My Side of History (Singapore: Media
Master, 2003), pp. 45060.
giants growing capabilities. This is particularly so when the powerful neighbour has the will to flex its muscles and make its presence felt. But even
when the colossus takes a more subdued approach to regional affairs, it is
still likely to cast a shadow over its smaller neighbours, either by its actions
or by its mere existence. Consequently, a proximate power tends to be
viewed as a permanent factor that smaller states must reckon with at all
times. After all, unlike a faraway-giant whose presence may be transient, a
giant next door will always be there.
Significantly, the logic of geography is not necessarily malign. The presence of a proximate and powerful giant can also have benevolent aspects.
Indeed, the effects of a giant neighbour are rarely completely negative or
positive, but often mixed and ambivalent. A giant next door may be a source
of threat to a small state, but may also be an indispensable source of support
to the same actor, either in mitigating a certain risk or in promoting a certain
goal. This may seem obvious, but it is an issue not duly addressed by
neorealist theorists, who tend to overemphasize the negative consequences
of proximity.
The case of MalaysiaChina interactions indicates that the consequences
of proximity are far from uni-directional; rather, they are multifaceted.
To the Malaysian ruling elite, during the Cold War, when Communist
China provided support and assistance to local communist insurgents, proximity to China constituted a security threat and political subversion.
The MCPs radio station, Suara Revolusi Malaya (Voice of the Malayan
Revolution), which was broadcast to communist supporters in Malaysia and
Singapore, was based in Chinas southern province of Hunan.74 During the
post-Cold War era, the negative ramifications of proximity include territorial disputes over the South China Sea, and various forms of trans-boundary
challenges.
On the other hand, however, the story of Malaysias post-Cold War interactions with the giant shows that proximity has positively shaped the bilateral ties. Geographical closeness, for instance, has encouraged a growing
two-way flow of goods, services, capital, and people between the two countries. This has created a growing need for more bilateral cooperation.
Geographical proximity per se does not cause bilateral cooperation. It is
the growing convergence of interests and exigenciesfrom the perspective of
the ruling elitesthat has driven the two countries to seek greater collaboration. Once the elites political will is in place, proximity plays a role in
fostering, facilitating, and further enhancing bilateral cooperation in various
sectors.
75
76
Authors personal communication with a former senior Malaysian diplomat, Kuala

Lumpur, February 2010.
Malaysia Proposes East Asia Summit, The Star, May 30, 2004; Hardev Kaur, East Asia
Summit Proposal to Discuss New Era of Regional Co-operation , New Straits Times,
May 30, 2004.
This is accomplished at three levels, with mutually reinforcing effects.

First, the awareness that proximity is a permanent factor tends to instil a
sense of long-term purpose and togetherness at leadership level, especially
when a certain crisis has led to an awareness of interdependence among
them. Secondly, proximity and the resultant cross-boundary processes necessitate functional cooperation and policy coordination at the level of officialdom, especially when increasing transnational activities have brought
about the realization that no single country can manage them alone.
Thirdly, proximity tends to nurture economic and socio-cultural linkages
at the people-to-people level, especially when the countries economic structures are more complementary than competitive, and when their citizens (or
segments of the populace) share a common cultural background.
All three aspects are evident in post-Cold War MalaysiaChina relations.
The 19971998 Asian financial crises highlighted a deepening economic
interdependence among countries in the East Asian region. Then came
Chinas decision not to devalue its currencya move lauded by Mahathir
and other regional leaders as a responsible act in helping avert another
currency crisis. These contributed to the emerging perception of China as
both a positive and long-term factor in regional affairs, in contrast to the
image of the United States, which was seen during the crisis as not doing
enough for its Southeast Asian friends and allies. Chinas positive response
to Malaysias suggestion in June 1997 of holding an informal ASEAN plus
China, Japan, and South Korea summit in Kuala Lumpur (the summit, held
in December that year, marked the beginning of the ASEAN Plus Three
cooperation)75along with Beijings increasingly active participation in the
various ASEAN-based regional multilateral forums since the mid-1990s
reinforced the Malaysian elites assessment of China as an important
regional partner. Hence, when Malaysia raised the idea of setting up an
APT secretariat in Kuala Lumpur in 2002 (unsuccessful because of opposition from other ASEAN members), and later to push for the hosting of the
inaugural EAS in Kuala Lumpur in 2005, Beijings strong backing was
regarded as a sine qua non.
On May 30, 2004, a few months after assuming office, Abdullah used the
occasion of the 30th anniversary commemorative dinner in Beijing of
MalaysiaChina diplomatic relations to announce the idea of an EAS.
Abdullah said the summit could be built upon the existing APT process to
raise the regional dialogue to a higher plane, and that Malaysia and China
should cooperate in setting the agenda for a new era of regional co-operation.76 In July that year, in his first key foreign policy speech in Putrajaya,
455
77
78
79
Malaysian Foreign Policy in the Era of Globalisation, Keynote Address by YAB Dato
Seri Abdullah Haji Ahmad Badawi, Prime Minister of Malaysia, to the Conference of the
Malaysian Heads of Missions, Putrajaya, July 5, 2004.
Dato Seri Dr. Mahathir bin Mohamad, Malaysia and China in the 21st Century:
Prosperity through Cooperation, Speech at the International Trade and Investment
Conference, Kuala Lumpur, January 23, 1995, http://www.pmo.gov.my/ucapan/?mp&
pmahathir&id1189.
Authors interview with Tun Dr Mahathir Mohamad, the former Prime Minister of
Malaysia, Kuala Lumpur, April 29, 2010.
the countrys administrative capital, Abdullah told the annual conference

of Malaysian heads of missions that Malaysia must persevere in the diplomatic efforts required to find consensus to upgrade the ASEAN 3 process
to a gathering of equal partnership such as in an East Asia Summit meeting.77 Four months later, at the APT Summit in Vientiane on November
29, 2004, the Malaysian leader officially proposed to his regional counterparts that Malaysia host the inaugural EAS the following year. The proposal
was supported by Chinese Premier Wen Jiabao, and accepted by the
Summit. Although the December 2005 EAS eventually included India,
Australia, and New Zealand (and did not limit its membership to the 13
APT countries as initially preferred by Kuala Lumpur and Beijing),
MalaysiaChina interactions during the period 19972005 towards advancing East Asian cooperation illustrates how a smaller state chose to work
withand capitalize onthe growing clout of a proximate big power to
promote a shared geopolitical goal and interests in other areas, as defined by
state elites.
Malaysian leaders outlook on China reflects a pragmatic acceptance of
the reality of living with a proximate and rising power, which entails a
determination to proactively shape bilateral relations for mutual long-term
benefits. In January 1995, in a landmark speech on Malaysias China policy,
Mahathir remarked: Big powers cannot but cast big shadows over neighbours. How light or how dark the shadows are depends not just on the
power concerned but also on those overshadowed.78 In 2010, when asked
about his rationale for choosing to engage China and integrate the giant into
ASEAN activities back in the early 1990s, Mahathir replied: My personal
thinking is that, if China opens up and becomes like us, then it will be
beneficial for Malaysia-China relations as well as Southeast Asia-China relations. So I think it is important that we show to the Chinese leaders that
we are not against them, even if in the past we were against Communism and
all that. We are not against them, and if they join the community as such,
then there is much to gain.79
The leaders remarks demonstrate that, in spite of and because of the dual
realities of power asymmetry and proximity, the smaller state is determined
to shape its relations with the giant neighbour through a process of engaging
and community building (rather than isolation and confrontation). This has
endured beyond the Mahathir administration. The disposition is rooted in

both economic and geopolitical grounds.
The Economic Rationale of Elites Pragmatism
80
81
Kian-Teng Kwek and Siew-Yean Tham, Trade between Malaysia and China:
Opportunities and Challenges for Growth, in Emile Kok-Kheng Yeoh and Evelyn
Devadason, eds, Emerging Trading Nation in An Integrating World: Global Impacts and
Domestic Challenges of Chinas Economic Reform (Kuala Lumpur: Institute of China
Studies, University of Malaya, 2007), pp. 12337.
Simrit Kaur, Najib Following in Dads Footsteps, The Star, May 31, 2009.
Malaysias pragmatic China policy is, first and foremost, driven by the
ruling elites desire to maximize commercial benefits from Chinas huge,
proximate, and growing economy. Such economic pragmatism is well illustrated by its successive leaders high-level visits to China that have always
been accompanied by large business delegations, resulting in many jointventure projects. Mahathir made seven such trips during his tenure, whereas
Abdullah made two (May 2004 and October 2006). The current Prime
Minister, Najib, has thus far made two visits, the first to Beijing in June
2009, the other in April 2012 while attending the eighth ChinaASEAN
Expo in Nanning, Guangxi Zhuang Autonomous Region.
That this economic pragmatism has persisted and indeed flourished under
different leaderships reflects a sustained political will on the part of the
ruling elite to prioritize mutually beneficial economic ties over other
issues. The fact that the two countries economic structure is by and large
more complementary than competitive has further contributed to the momentum of such policy.
During the Mahathir years, MalaysiaChina trade climbed from US$307
million in 1982 to US$1.4 billion in 1992 and to US$14 billion in 2002.
During this period, the increase in the volume of bilateral trade was accompanied by a shift in trade patterns, with the scope of traded products expanding from traditional primary commodities (mainly rubber and palm oil)
to a wide range of manufactured goods like machinery, transport equipment, and electronic products.80 Intra-industry trade has become a feature
of bilateral economic ties. In 2002 and 2003, Malaysia overtook Singapore
for the first time as Chinas largest trading partner in the ASEAN region.
This trend has resumed since 2008.
In the post-Mahathir era, Malaysias trade with China grew at a rate
faster than that with the United States and Japan, the countrys two traditional key trading partners. Under Abdullah, bilateral trade doubled from
US$20 billion in 2003 to US$39 billion in 2008.81 Under Najib, Malaysias
economic ties with China have grown even faster and broader, in part due to
the ASEANChina Free Trade Agreement that took effect on January 1,
2010. Since 2009, China has become Malaysias largest trading partner,
457
82
83
84
85
China-Malaysia Trade to touch US$100b, The Star, March 16, 2012.

Zainal Aznam Yusof, Malaysias Response to Chinas Challenge, Asian Economic
Papers, Vol. 2, No. 2 (2003), pp. 4673. A more recent study, however, challenges the
view that Chinas rise as a global manufacturing hub is having an adverse impact on FDI
inflow to Malaysia. The study contends that the conventional view ignores the fact that
migration of some production processes (mostly final assembly) within vertically integrated electronics and electrical industries to China does not necessary imply a zero-sum
competition for FDI. It thus concludes that given Malaysias position as a favoured
location for the major MNEs for component production/assembly, Malaysia is well
placed to benefit from Chinas rise as the major final assembly centre within global production networks of electronics and electrical goods. See Prema-chandra Athukorala and
SwarnimWagle, Foreign Direct Investment in Southeast Asia: Is Malaysia Falling
Behind?, ASEAN Economic Bulletin, Vol. 28, No. 2 (2011), pp. 11533.
Ibid.; Yunhua Liu and BeoyKui Ng, Facing the Challenge of the Rising Chinese
Economy: ASEANs Responses, Review of Development Economics, Vol. 14, No. 3
(2010), pp. 66682.
Cheng-Chwee Kuik, Malaysias China Policy in the Post-Mahathir Era, pp. 1721.
overtaking Singapore, Japan, and the United States. In 2011, bilateral trade
reached a new high of US$90 billion wherein Malaysia enjoyed a US$30
billion surplus. The same year, China displaced Singapore as Malaysias
biggest export market. Palm oil was one of the key commodities exported
to China; other goods included information technology products such as
chips.82
Table 1 shows MalaysiaChina bilateral trade during the period 2001
2010. Tables 2 and 3, respectively, show Malaysias top five export destinations and top five import destinations for the period 20052010. This data
as a whole indicate not only the rapid growth of bilateral trade but also
Chinas growing economic importance to Malaysia.
To be sure, Chinas economic rise has brought both opportunities and
challenges to Malaysia (and for that matter, other regional countries with
similar resource endowments). The challenges take the two forms of competition in export markets for manufactured goods and diversion of foreign
direct investment to China.83 Malaysia has responded to them with efforts to
move up the technological ladder, promoting the service sector as the new
engines of growth, strengthening trade arrangements with selected countries,
and attracting capital inflows from China.84
Accordingly, post-Mahathir MalaysiaChina economic ties have been
characterized by the Malaysian governments intensified efforts to enhance
bilateral investment and financial cooperation.85 Under Abdullah, a bilateral currency swap arrangement was established, and more governmentlinked companies were encouraged to carve out a presence in China.
Under Najib, a number of initiatives have been taken to boost bilateral
investment and financial flows. In November 2009, Bank Negara
Malaysia (the countrys central bank) and the China Banking Regulatory
Commission (CBRC) signed an MOU to forge deeper cooperation between
the two regulatory authorities on banking supervision. In June 2010, the
CBRC granted Malaysia China Qualified Domestic Institutional Investor
Table 1 MalaysiaChina Trade, 20012010

Year
Export
Import
(Unit: RM million)
Total Trade
Volume
Balance of
Payment
14 682.9
14 472.7
29 155.6
210.2
20 008.0
23 329.1
43 337.1
3321.1
2003
25 791.3
27 630.4
53 421.7
1839.1
2004
2005
32 286.0
35 153.1
39 273.7
49 879.9
71 559.7
85 033.0
6987.7
14 726.8
2006
42 620.0
58 259.6
100 879.6
15 639.6
2007
53 037.9
64 712.7
117 750.6
11 674.8
2008
63 435.0
66 853.7
130 288.7
3418.7
2009
67 358.5
61 025.7
138 384.2
6332.8
2010
80 595.1
66 432.9
147 028.0
14 162.2
Sources: Yearbook of Statistics Malaysia, various years from 2005 to 2010 (Department of Statistics, Malaysia).
(QDII) status, which was expected to increase the inflow of Chinese investments into Malaysia. In April 2011, the two countries inked an agreement to
set up a Bank Negara Malaysia representative office in Beijing to facilitate
trade in local currencies.86 In February 2012, Bank Negara Malaysia and the
Peoples Bank of China renewed their bilateral currency swap deal for
RM90 billion.87
Najib has, perhaps more than other prime ministers before him, endeavoured to leverage Malaysias geographical proximity and multi-ethnic demographic structure to boost bilateral economic ties with China. Speaking at
the Second World Chinese Economic Forum in Kuala Lumpur in
November 2010, the leader said:
The rise of China over the last two decades has brought overwhelmingly positive
developments to the Southeast Asian region, and Malaysia has done well in
tapping investments and technological transfers from China. With the global
financial crisis hitting the most exposed economies, China remains largely unaffected by the crisis, with well-grounded economic policies, strong fundamentals and significant domestic capacity. Chinas strength and future prospects
bode well for countries with large Chinese populations from the Chinese
diasporas.88
86
87
88
Farrah Naz Karim, Bank Negara in Beijing, New Straits Times, April 29, 2011, p. 1.
Chow How Ban, Fostering Closer Ties with China, The Star, April 28, 2012, http://thes
tar.com.my/columnists/story.asp?file/2012/4/28/columnists/madeinchina/11191625&
secmadeinchina
Dato Sri Najib Tun Abdul Razak, Prime Minister of Malaysia, Welcoming Address at the
Second World Chinese Economic Forum, November 2 2010, Kuala Lumpur, http://
1malaysia.com.my/zh/speeches/world-chinese-economic-forum/
2001
2002
Table 2 Malaysias Top Five Export Destinations, 20052010

1
2005
(Unit: RM million)
Singapore
Japan
China
Hong Kong
105 238.1
83 595.8
50 509.5
35 153.1
31 221.3
2006
United States
Singapore
Japan
Hong Kong
China
2007
110 134.7
United States
90 198.9
Singapore
52 475.5
Japan
49 201.8
China
42 620.0
Thailand
94 485.4
87 884.0
55 648.2
53 037.9
29 576.5
Singapore
United States
Japan
China
Thailand
97 018.6
82 700.2
70 687.9
63 435.0
31 625.2
Singapore
China
United States
Japan
Thailand
77 009.1
67 358.5
60 811.2
53 345.5
29 808.2
Singapore
China
Japan
United States
Thailand
85 430.0
80 595.1
66 284.5
60 958.4
34 188.9
2009
2010
Total
Export
536 233.7
589 240.3
604 299.6
663 013.5
552 518.1
639 428.1
Sources: Yearbook of Statistics Malaysia, various years from 2005 to 2010 (Department of Statistics,
Malaysia). Bold values highlight values related to China.
Table 3 Malaysias Top Five Import Destinations, 20052010

1
Japan
United States
Singapore
China
Taiwan
62 733.5
55 869.1
50 586.2
49 879.9
23 958.0
2006
Japan
63 512.8
United States
60 068.1
China
58 259.6
Singapore
55 844.0
Thailand
26 269.4
2007
Japan
China
Singapore
United States
Taiwan
64 799.1
64 712.7
57 559.5
54 157.7
28 706.4
China
Japan
United States
Singapore
Thailand
88 853.7
64 877.8
59 135.0
57 138.9
29 152.2
China
Japan
Singapore
United States
Thailand
61 025.7
54 316.4
49 359.1
48 833.5
26 298.7
Japan
66 545.6
China
66 432.9
Singapore
60 443.0
United States
56 305.3
Thailand
32 977.6
2005
2008
2009
2010
(Unit: RM million)
5
Total
Import
432 870.8
478 147.9
502 044.6
519 804.3
434 669.8
529 194.6
Sources: Yearbook of Statistics Malaysia, various years from 2005 to 2010 (Department of Statistics,
Malaysia). Bold values highlight values related to China.
Najibs intent to translate the countrys proximity (to China) and its multiethnic demographic structure into an economic asset is well illustrated by the
twin industrial parks designed to boost bilateral economic cooperation. In
April 2012, merely a year after the idea was first mooted during Premier
United States
2008
459
89
90
91
92
The QIP project is the third industrial park jointly developed by China with a foreign
country after the ChinaSingapore Suzhou Industrial Park and the ChinaSingapore
Tianjin Eco-City. See Qinzhou Industrial Park in Nanning Heralds Closer Ties between
China and Malaysia, New Straits Times, April 6, 2012, p. 12.
PM Proposes Sister Industrial Park in Malaysia, Bernama, April 1, 2012, http://www.
pmo.gov.my/?menunewslist&news_id9516&news_cat13&cl1&page1731&sort_
year2012&sort_month
MalaysiaChina Business Council, Council Update: Tan Sri Ong Ka Ting Expects
MCKIP to be Launched End of the Year, October 12, 2012, http://www.mcbc.com.
my/council-update/1873?langen.
Upon its full completion by 2020, MCKIP is expected to attract nearly RM7 billion investments and create 5500 new jobs for the local populace in Pahang, the prime ministers
home state. East Coast Economic Region Development Council (ECERDC), Media
Releases: MCKIP Expected to Attract RM7 Billion Investments, Generate 5,500 New
Jobs by 2020, September 20, 2012, http://www.ecerdc.com.my/ecerdc/mediareleases_
200912.htm
Wens visit to Kuala Lumpur, the ChinaMalaysia Qinzhou Industrial Park

(QIP) was launched. The 55 km2 industrial park is located near the Qinzhou
Free Port (150 km from Nanning, where the ChinaASEAN Expo is held
annually), which is one of the closest Chinese ports to the ASEAN region.
It is expected to serve as the most convenient gateway to Chinas southeast.89 At the QIP launch, Najib proposed a sister industrial project in
Malaysia, to be located at Gebeng town in Kuantan. He said Kuantan
was chosen because a deep-water port located nearby was suitable and
accessible from the South China Sea.90
Ong Ka Ting, the Prime Ministers Special Envoy to China and Chairman
of the MalaysiaChina Business Council who, together with the Pahang
State Government and the East Coast Economic Region Development
Council, has played an instrumental role in materializing the Malaysia
China Kuantan Industrial Park (MCKIP), said in October 2012 that
Kuantan had been selected to house the QIP sister park because both it
and Qinzhou have well developed sea ports providing the shortest links
across the South China Sea. Onga former cabinet member and former
President of the Malaysian Chinese Association (MCA), a key component
party of the UMNO-led BN coalitionalso stated that Najib had expressed
hope that the twin parks would lead to an influx of Chinese investments
and that the MCKIP would spearhead Chinese investments to other areas
and thus broaden and deepen our bilateral economic cooperation.91 A joint
venture company that is 51% Malaysia-owned and 49% China-owned will
develop the park. The leading investors from Malaysia comprise the
Rimbunan Hijau (RH) Group and SP Setia Berhad (both also leading
QIP corporations). The RH Group is a multinational diversified conglomerate controlled by Chinese Malaysian Tiong Hiew-King, whereas SP Setia
is a leading property developer founded by Liew Kee-Sin and controlled by
the government-linked Permodalan Nasional Berhad (PNB).92
Besides industrial parks, Malaysia has identified tourism and higher education as key sectors whereby proximity and socio-cultural links can
461
The Geopolitical Rationale of Elites Pragmatism

The Malaysian elites pragmatic disposition towards China is motivated not
only by economic reasons but also by geopolitical considerations. The
awareness that a giant neighbour is a key permanent factor in the countrys
external environmentalong with deep-seated concerns about the uncertainties of great power commitments, a painful lesson the elite learned
from the Cold War yearshave prompted the Malaysian elite to take a
long-term view of the countrys relations with China. Answering a question
on the importance of China to Malaysia, a former senior diplomat
commented:
Economically, China is important for Malaysia just as it is important to other
countries. Strategically speaking, China is important to Malaysia because it is a
permanent neighbour in the region, unlike say the United States which can
decide to retreat to its own regional domain far away from Asia. China is
here to stay forever, and it will assume super-power status sooner or later. It
is pragmatic to establish friendship and understanding with super-powers.
Malaysia has always held the view that the correct approach towards China is
not to isolate China but to engage China. This is the best way to enable
93
94
Malaysia, China Seek Stronger Ties in Higher Education, Tourism, Bernama, April 28,
2011.
Recognition for 146 Institutions from China, New Straits Times, March 14, 2012, p. 2.
generate lucrative commercial gains from its giant neighbour. Najib noted
on April 28, 2011 at a joint media conference with visiting Chinese Premier
Wen, after witnessing the inking of several agreements on higher education,
banking, energy, and infrastructure, that tourist arrivals from China had
rapidly increased, 1.1 million having visited Malaysia in 2010. He described
this trend as a promising development for the country.93 One of the documents signed that day was a mutual recognition agreement on higher education designed to boost student exchanges between the two nations. As of
March 14, 2012, a total of 146 higher learning institutions in China had been
accredited and recognized by the Malaysian Ministry of Higher Education,
while a list of 54 public and private higher learning institutions in Malaysia
had been submitted to the Chinese education authorities for accreditation.94
Robust and fruitful two-way economic links between Malaysia and China,
therefore, are the result of various factors, inter alia: cordial political relations, geographical proximity, complementary economic structure, and
socio-cultural linkages. Increasingly robust commercial links have constituted, justified, and consolidated the Malaysian elites long-held policy of
economic pragmatism. These economic benefits are particularly crucial to
the present government, which seeks to promote the Economic
Transformation Programme in efforts to shore up its performance legitimacy before the upcoming 13th general elections.
Malaysia to maintain its non-aligned posture and sustain its own independence
in the international arena.95
95
96
97
98
Authors personal communication with a former senior official who headed the Malaysian
Foreign Service, February 16, 2010.
Chen Weihua, Malaysian PM Able to Work with assertive China, China Daily,
September 29, 2010, http://www.chinadaily.com.cn/usa/2010-09/29/content_11364039.htm
Ibid.
I Am Still Here: Asiaweeks Complete Interview with Mahathir Mohamad, Asiaweek,
May 9, 1997.
This pragmatic and long-term view has profound bearing on the smaller
states policy choice. It has, for instance, led successive Malaysian leaders to
prefer diplomatic engagement and consultationrather than antagonism
and confrontationin their dealings with China in general, and with respect
to the Spratlys issue in particular.
Malaysia does not seem to have changed this policy preference, even
though Chinas increasingly assertive actions in the South China Sea over
the past few years have pushed the Philippines and Vietnamthe other
ASEAN claimant states in the disputed areato gradually embrace a military approach by moving closer to the United States. Malaysias views and
reactions, in comparison, are much more sanguine. In September 2010,
Prime Minister Najib said in New York: Malaysia does not see China as
indulging in power projection but wants to engage with major powers to
achieve a balance in the region.96 He added that although China has
become more assertive than ever before, we believe China would not want
to destabilize the region, and that there are mechanisms for us to undertake
conflict resolutions with China because Chinese people tend to be quite
pragmatic people. We believe we can work and consult with the Chinese.97
The geographical factorthat Malaysias claimed territory in the disputed
area is relatively distant from Chinacertainly plays a part in accounting
for Malaysias more relaxed posture. But there are structural and domestic
factors that explain why Malaysia, a long-time US security partner that has
generally welcomed Obamas pivot to Asia policy, has stopped short of
embracing US military power as leverage to counter-balance China, in the
way Manila and Hanoi have chosen to do in recent years. These factors will
be elaborated shortly. Here, suffice it to say that Malaysias more ambivalent policya tendency to hedge, but one limited by a prudent reluctance to
unnecessarily antagonize the giant neighbouris informed by its leaders
belief that the notion of a China threat is nothing more than a self-fulfilling-prophecy. As Mahathir categorically stressed in 1997, Why should we
fear China? If you identify a country as your future enemy, it becomes your
present enemybecause then they will identify you as an enemy and there
will be tension.98
463
This belief seems to have evolved into a deliberate policy of not viewing
China as a threat. As stated by a Malaysian veteran diplomat in February
2010:
The question of whether China is in fact a threat to the region, including
Malaysia, or is not a threat is a complex and debatable issue. But this point
must not be confused with Malaysias conscious and deliberate policy of
not viewing China as a threat. The transformation of the Malaysian attitude
towards China is very much the product of applying and putting into practice
one of the fundamental principles of Malaysian foreign policy, that is pragmatism [emphasis in original].99
Elites Domestic Legitimation
99
Authors personal communication with a former senior official who headed the Malaysian
Foreign Service, February 16, 2010.
All in all, Malaysias economic and geopolitical pragmatism towards China

is rooted in the domestic political needs of the UMNO-led BN coalition.
Performance legitimacythe primary source of political authority for the
multi-ethnic coalition since the late 1980snecessitates an external policy
that prioritizes concrete economic and geopolitical benefits over potential
security concerns, so long as this is not at the cost of undermining the
smaller states sacrosanct sovereignty. It is this imperative that has led
Mahathir and his successors to pursue a pragmatic China policy. Chinas
reciprocally positive policy towards Malaysia at both the bilateral and multilateral level has justified and consolidated this policy, thereby turning a once
problematic relationship into one of the most cordial and productive bilateral ties in the post-Cold War Asia-Pacific.
Performance imperative aside, some may add that Malaysias pragmatic
China policy is also attributable to the ethnic Chinese factor. Given that
ethnic Chinese are a sizeable minority constituting some 25% of Malaysias
29 million population, it is perhaps natural to expect that this factor may
have played some role in shaping Malaysias policy towards China.
However, while it is true that the presence of ethnic Chinese has been an
important factor in the development of bilateral ties at various levels, its
impact on Malaysias China policy should not be overestimated. This is so
for two reasons. First, Malaysias foreign policy decision-making process
especially on critical issues like Chinahas remained centralized and elitist
in nature. Secondly, in a Malay-dominated political system, Malaysian
elites decisions on critical issues have always been more reflective of the
ruling partys political interests of the day, which may or may not overlap
with minority groups outlook. As such, the factor has only indirect impact.
The ruling elites may, to some extent, take into consideration local Chinese
needs and preferences in formulating Malaysias China policy, but decisions
would eventually be based on the elites political calculations.
Pragmatism and Hedging

Malaysias pragmatism in developing an increasingly close and productive
bilateral relationship with China does not mean that Kuala Lumpur now
favours a Beijing-dominated regional order. Najib Razaks remarks in 2006
are very telling. He stressed that accepting the reality of Chinas rise is by no
means a reflection of our fatalism or adopting a subservient position towards China.102 Given Malaysia sensitivity about sovereignty and the complexity of its ethnic structure, a pure bandwagoning approach is a nonstarter for the Malaysian government. In fact, preventing and denying the
possibility of domination by any big power in Southeast Asia continues to
be a bottom line goal in Malaysias strategic outlook. This is implied by the
smaller states emphasis on safeguarding its independence, as well as its
insistence on keeping an equidistant relationship with all major powers.
Indeed, Malaysias China policy throughout the post-Cold War era has
continued to be quintessentially that of hedging behaviour. That is to say,
while the smaller state is determined to develop closer ties with China in
order to maximize near-term economic, diplomatic, and geopolitical rewards
(as evidenced in its policies of economic pragmatism, binding engagement,
and limited bandwagoning, discussed above), it is equally determined to
100
101
102
Lee Kam Hing and Tan Chee-Beng, eds., The Chinese in Malaysia (Shah Alam: Oxford
University Press, 2000).
An online survey conducted by Sin Chew Daily (formerly Sin Chew Jit Poh), the largest
Chinese-language newspaper in Malaysia, indicates that an overwhelming majority of
respondents (i.e. 92% or 8244 votes) oppose the loan of pandas, and only 8% (752
votes) are supportive of it. See Sin Chew Daily, June 18, 2012.
Mohd Najib Tun Abdul Razak, Deputy Prime Minister of Malaysia, Strategic Outlook
for East Asia: A Malaysian Perspective, Keynote Address to the Malaysia and East Asia
International Conference, Kuala Lumpur, March 9, 2006.
In this regard, it should be noted that most of the younger generation of

Chinese Malaysians are today much more conscious of, and have greater
confidence in their national identity as Malaysians.100 To the extent that
they welcome a positive, cordial, and stable MalaysiaChina relationship,
this preference has more to do with a pragmatic and practical rationalei.e.
because there are concrete benefits to be gained from a productive relationship with the giant neighbourthan cultural reasons. Hence, although the
Chinese community has lauded the governments various efforts to
strengthen economic ties with China, many of them have reacted negatively
to the governments move to sign an agreement with the PRC on the 10-year
loan to Malaysia of a pair of pandasat the cost of RM20 millionpurportedly to mark the 40th anniversary of bilateral relations.101 This pattern
of reactionswhen compared with situations in the 1970s and earlier periodsvividly reflects the changing identity and outlook of Chinese voters in
the multi-ethnic country.
465
103
104
Cheng-Chwee Kuik, Smaller States Alignment Choices, p. 302.

Chen Weihua, Malaysian PM Able to Work with Assertive China., http://www.chi
nadaily.com.cn/usa/2010-09/29/content_11364039.htm
adopt countering and contradictory measures aimed at reducing the longerterm risks of putting itself at the mercy of other states. Malaysia, like other
rational actors, wants to keep its options open and preserve its autonomy for
as long as the structural conditions allow.103
These measures are implemented through the smaller states long-standing
practices of dominance denial (a political hedge whereby the state attempts
to use diplomatic and other non-military means to cultivate a balance of
political power in regional affairs, so that no single power can dominate or
impose its will over the others in the long run) and indirect balancing
(a military hedge whereby the state attempts to pursue a limited form of
alignment and armament to develop a fallback position without directly
targeting any specific actor).
Malaysias dominance denial can be observed from its leaders preference
for a stable distribution of power in the Asia-Pacific. In September 2010,
while speaking at the Council on Foreign Relations in New York, Prime
Minister Najib said that ASEAN wants to engage with China as much as it
wants to engage with the United States, and that ASEAN states do not see
the region as exclusive to one power. There must be a nice equilibrium, so
the region will be a region of peace and stability.104
The countrys indirect balancing act is most evident in its successive leaders decisions in maintaining Malaysias traditional military ties with the
Western powers, especially the United States. In 2005, Malaysia under
Abdullah decided to renew the Acquisition and Cross-Servicing
Agreement with America (first signed in 1994 under Mahathir), which
enabled the two armed forces to share logistics and supplies for the next
10 years. In 2011, Malaysia under Najib decided to upgrade its status in the
US-led Cobra Gold military exercises from observer to participant. These
consistent decisions suggest that, although Malaysia is currently not confronted with any immediate threat, its leaders remain mindful of the contingent need to maintain the countrys military links with the United States
as a fallback measure to hedge against the uncertain strategic environment.
Such a hedging posture is reflected in Malaysias handling of the South
China Sea imbroglio. While the smaller state has made clear that it prefers to
manage the issue through diplomatic rather than military means, it has at
the same time attempted to hedge this position by quietly supporting a US
military presence in the region, and by emphasizing that territorial and jurisdictional disputes should be resolved peacefully through mechanisms
under international law. In April 2012, Najib and other ASEAN leaders
agreed that a framework on the Code of Conduct for the South China
Sea should first be discussed and finalized among ASEAN countries
105
Hamidah Atan, Resolve Disputes Peacefully, New Straits Times, April 5, 2012, p. 4.
before being presented to China for discussion.105 Three months later in July
2012, Malaysia and several other ASEAN members took the position of
including a reference in the draft joint statement to recent developments
in Scarborough Shoal.
These moves, however, do not signify that Malaysia is adopting a different approach to the South China Sea disputes. It is true that Malaysia,
like other ASEAN states, is increasingly concerned about rising tensions in
the South China Sea, especially since the strong protest that China issued
against the Joint Submission by Malaysia and Vietnam in May 2009 to the
UNCLCS. Nevertheless, this has not led the Malaysian political elite to
view China as a threat to Malaysia, mainly because Chinas actions thus
far have not directly undermined Malaysias physical interests in the
Spratlys. Unless China does threaten Malaysias security and interests in
the area, the Malaysian government is expected to adhere to its longstanding policy of not allowing the Spratlys issue to affect overall development of MalaysiaChina ties, and to continue emphasizing the use of
diplomatic means to manage the issue.
There are both domestic and structural reasons why Malaysian elites have
opted for diplomacy and persistently rejected a pure military approach to
handling the South China Sea issue. Malaysias relatively limited military
capability means that to counter China militarily it would have to align with
an external power strong enough to confront the giant. The United States is
the only candidate on the horizon. But joining a US-led alliance is not an
option that the Malaysian elite would consider, as it is bound to engender
other risks. Structurally, putting all eggs in the US basket would expose
Malaysia to the multiple risks of entrapment (being entrapped into great
power conflicts), abandonment (being abandoned by ones security
patron), and antagonism (unnecessarily antagonizing a proximate and
rising power).
Domestically, the option of joining the US camp would erode the very
bases of the UMNO-led coalition governments domestic legitimation,
because it would invite fierce domestic opposition, especially from the
Malay-Muslim majority, many of whom have been critical of US policy
on the IsraeliPalestinian conflict. Reliance on a foreign power is also
likely to erode Malaysias sacrosanct independence and sovereigntyan
important base of UMNOs domestic moral authority.
Domestic political considerations aside, such a military approach is strategically unjustified, for China is merely a security concern and notat least
not yetan immediate threat that must be managed by military means.
Moreover, the approach is strategically counter-productive, as it could
galvanize a potential problem into an actual threat. The approach is also
economically unwise, because a military confrontation would result in the
467
Conclusion
The preceding analysis has demonstrated that power asymmetry and geographical proximity have no inherent logic of their own. Contrary to neorealist deterministic view of the effects of power and proximity (that growing
capability and geographical closeness of a rising power tend to induce fear
and apprehension among smaller states), the case of Malaysias China policy
suggests that the effects of the two variables are at best mixed, i.e. they have
both positive and negative impact on a smaller states perception and policy
vis-a`-vis a giant neighbour. Our discussion in tracing the transformation of
Malaysias China policyfrom hostility during the Cold War to cordial
partnership in the post-Cold War eraindicates that their net effects have
been filtered through the imperative of the elites domestic legitimation.
Specifically, it is the ruling elites efforts to capitalize on the big powers
risefor the ultimate purpose of enhancing their own political authority at
homethat have driven the smaller state to reject both pure balancing and
pure bandwagoning, and instead adopt a hedging approach that is characterized by a desire to prioritize near-term economic and diplomatic benefits
over potential security concerns, as well as a determination to keep all options open. Future works on Malaysias foreign policyand more broadly,
smaller states alignment choicesmay focus on how this hedging proclivity
would affect the smaller states evolving policy towards the other great
powers, neighbouring countries, and regional multilateral institutions in
the face of enduring uncertainty.
loss of the vast commercial benefits that can be tapped from China. This is
not merely an economic issue, but a critical political concern, given the
growing salience of economic performance as a key source of domestic
legitimation for the ruling elite.
These bases of domestic legitimation have thus compelled Abdullah and
Najib to continue the major thrusts of their predecessors China policy,
largely by prioritizing practical economic and diplomatic gains over potential security concerns. Given that a stronger bilateral relationship with China
has helped to enhance the Malaysian ruling elites capacity to strengthen
both their economic foundations and political base over the past few decades, and given that China has remained more a potential than an imminent
security concern, the current policy of pragmatically engaging China while
keeping some fallback options on the table are deemed strategically sufficient, politically acceptable, and economically rewarding. It is precisely such
a goal prioritization and ends-means calculationon the grounds of the
elites domestic legitimationthat has contributed to the continuity of the
hedging approach in Malaysias China policy. Such an approach is likely to
continue for years to come.

Chinese Journal of International Politics 2013 Kuik 429 67

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The Chinese Journal of International Politics, Vol.

Making Sense of Malaysias

Cheng-Chwee Kuik is Associate Professor in the Strategic Studies and International

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Using Malaysias China policy as a case study of a smaller

430 Cheng-Chwee Kuik

Kenneth N. Waltz, Theory of International Politics (Reading: Addison-Wesley, 1979).

The Chinese Journal of International Politics, Vol. 6, 2013

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For many students of International Relations and Asian security, Malaysias

Malaysias China Policy

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developments at the regional level in recent years, which point to a marked

432 Cheng-Chwee Kuik

Cheng-Chwee Kuik, Malaysias China Policy in the Post-Mahathir Era: A Neoclassical

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successive leaders in a row.4 Under the premierships of Mahathir Mohamad,

Malaysias China Policy

Between Concepts and Facts: Balancing,

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Perhaps the best example through which to illustrate Malaysias absence

434 Cheng-Chwee Kuik

On bandwagoning, see Randall Schweller, Bandwagoning for Profit: Bringing the

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reach. None of these features characterizes Malaysias post-Cold War China

Malaysias China Policy

Cheng-Chwee Kuik, The Essence of Hedging: Malaysia and Singapores Response to a

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position but also an opposite position. Specifically, hedging is an act

436 Cheng-Chwee Kuik

Degree of Power Rejection

Degree of Power Acceptance

Fig. 1 Balancing, Hedging, and Bandwagoning.

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preparing for risk contingencyand vice versashould not be regarded as

Malaysias China Policy

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is often a function of intervening factors at the domestic level. This third

438 Cheng-Chwee Kuik

Asymmetry: Size and Strength does Matter

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The magnitude of their effects may go up or down (i.e. when there is an

Malaysias China Policy

by the Portuguese (15111641), Dutch (16411795), and British (1795

Threats and Balancing (19571969)

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Fast forward to the 20th century, the consequences of power asymmetry

440 Cheng-Chwee Kuik

Structural Uncertainties, Domestic Exigencies, and the Elites

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Malaysias China Policy

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442 Cheng-Chwee Kuik

Ghazali Shafie, Statement to the Preparatory Non-Aligned Conference at Dar-es-Salam

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