ABSTRACT

Four decades of Malaysia-China relations have led to strong bilateral interactions coupled with deepening economic collaborations. China became Malaysia’s largest trading partner in 2009 but this soon resulted in large trade deficits from 2015 onwards. The Malaysian government was frantically trying to attract foreign direct investments following the repatriation of investments in the aftermath of the global financial crisis. The launch of China’s Belt and Road Initiative coincided with numerous incentives offered by the Malaysian government to bring investments into its flagging economy. The slew of Chinese investments into infrastructure and real estate projects led to concerns that the government had sold out Malaysia’s interest by providing incentives that were too favourable to the Chinese. This chapter examines the model for collaboration between Malaysian companies and their Chinese counterparts in establishing these joint venture projects. It is argued that projects which require advanced technical capabilities of these Chinese firms and financial support from the state-owned enterprises are seen as favourable and often attain commercial success. However, projects that are more speculative and funded through long-term loans are viewed with suspicion. There is enormous concern that these projects are only benefitting the Chinese project partners while the risks are borne by the Malaysian side. China has yet to demonstrate that its aim of mutual economic prosperity is implemented in a fair and balanced manner.