Malaysia’s election a de facto vote on China

When Malaysians head to the polls on May 9, their choice will also determine the nation’s future relations with China.

Mahathir Mohamad, the four-party opposition alliance’s nonagenarian prime ministerial candidate and a previous premier, is campaigning in part on resetting Malaysia’s ties to China, a relationship he says has become too one-sided under incumbent Prime Minister Najib Razak.

In a recent media interview, Mahathir vowed if elected to put Chinese investments under greater scrutiny, saying that Chinese companies would be welcome to set up operations in Malaysia provided they hire locals while bringing in capital and technology.

The former premier said in the interview that Malaysians currently “gain nothing” from China’s investments in the country.

Though Mahathir’s Pakatan Harapan alliance pledged in its election manifesto to encourage continued investment from China and other Asian countries, it has also vowed to review all foreign-funded mega-projects.

That includes the China-backed US$13 billion East Coast Rail Line, the US$7.3 billion Melaka Gateway port project, as well as other billions pledged by Beijing toward urban infrastructure, land reclamation and industrial parks.

Investment from China, now Malaysia’s largest trade partner and foreign investor, rose coincident with Najib’s political troubles over the 1 Malaysia Development Berhad (1MDB) scandal, in which the premier stands accused of pilfering billions of dollars from a state fund he created and oversaw. Najib has consistently denied any foul play.

Mahathir has campaigned heavily on the scandal in a bid to portray his coalition as a comparatively clean choice for voters. He has insinuated Najib’s dealings with Beijing have ceded sovereignty to China in exchange for massive investments.

Some observers believe the sale of two land parcels from 1MDB-related entities to firms linked to Chinese state enterprises last year may have rescued the beleaguered fund from defaulting, thereby extending a political lifeline to Najib and adding impetus to the strategic importance of Sino-Malaysian bilateral ties.

As Chinese President Xi Jinping’s ambitious Belt and Road Initiative (BRI) gains momentum, Association of Southeast Asian Nations (Asean) members are vying for Chinese tourists and investments. Najib has embraced the ascendency of a China-led regional order as Beijing becomes the top trading partner of many Asean countries.

Malaysia is among the founding members of China’s Asian Infrastructure Investment Bank (AIIB), a new rival to the World Bank and Asian Development Bank, and a party to the Regional Comprehensive Economic Partnership (RCEP), a China-backed free trade agreement among 16 Asia-Pacific countries that excludes the US.

Joint military exercises between Malaysia and China’s People’s Liberation Army Navy (PLAN) also took place in 2015, the largest ever between China and an Asean country, and again in 2016.

Though Malaysia is a claimant to territorial disputes in the South China Sea, observers believe it has largely soft-pedaled its stance to avoid confrontation with Beijing. Mahathir has said he would restart negotiations on rights and access to the South China Sea should his opposition coalition claim victory at the polls.

In addition to accusing Najib of selling off sectors of Malaysia’s economy to China for short-term political gains, he has also raised concerns over Chinese-led property projects in Malaysia that cater to mainland Chinese buyers.

Though Mahathir’s swipes are nationalistic in tone and tenor, many regard the former premier’s remarks as race-based politicking that appeals to fears of Chinese economic domination to galvanize ethnic Malay support. Ethnic Malay politicians who play the race card have long complicated relations with Malaysia’s large ethnic Chinese minority, representing around 22% of the population.

Najib defends his ties to China as enabling robust economic growth. The premier alleges in turn that Mahathir, his former mentor, has allowed himself to become a puppet of ethnic Chinese opposition leader Lim Kit Siang, head of the Democratic Action Party. Najib has also played up fears of Islam’s erosion and the loss of Malay political power should Umno lose at the polls.

Najib is projected to win a third term at the May 9 polls, with strong support from rural ethnic Malay voters. Though urban middle class voters and ethnic Chinese minorities supported the opposition in the past two elections, it’s not clear Mahathir’s alliance can win key rural support.

Some observers, however, believe Mahathir’s barbs against the incumbent premier, including on his alleged compromised dealings with China, have begun to sway the mood in certain Umno strongholds, prompting expectations of a tight race.  

Despite his criticisms, Mahathir has also said he views China as ultimately benign, though he has cautioned against military alliances with Beijing on the grounds that Malaysia would risk being “part of the Chinese bloc” and “no longer free to criticize or say anything.” The ex-premier was previously a major supporter of the Non-Aligned Movement and continues to favor political neutrality.

Times have changed. Trade with Beijing stood at US$289 million when Mahathir took office in 1981 and grew to US$20 billion by the time he resigned in 2003. Total trade now stands at US$54.5 billion a year. Mahathir has taken credit for encouraging Chinese trade and investment and should he lead Malaysia again Beijing would not regard him as an unknown quantity.

The former premier announced plans earlier this month to contest for a seat in Langkawi, an island in his home state of Kedah which he helped develop into a major tourist destination during his tenure. Mahathir will contest the election under the Harapan component party Parti Keadilan Rakyat (PKR) and is expected to win the seat from an Umno incumbent.

Opposition alliance parties will also drop their respective party logos for the first time, opting for the symbol of PKR, the mainstay of jailed opposition leader Anwar Ibrahim, now serving a five-year jail term on what is widely seen as a politically motivated sodomy conviction. The move aims to ease regulatory hurdles for Harapan and demonstrate unity.

PKR was established in the wake of the Anwar-led Reformasi protest movement in 1998, initiated following his dismissal as deputy prime minister by then-premier Mahathir. Having come full circle by welcoming Mahathir into PKR’s ranks, victory would likely see the ex-premier serve as a transitional leader until Anwar is granted a royal pardon upon his release.

Anwar’s views on China’s rising influence are less clear because he has been held behind bars while the trend accelerated under Najib. The detained politician, however, did lean toward Washington following his initial fall from grace in the Mahathir era and was known to have close ties with George W Bush administration neoconservatives.

“There has to be a fair and balanced assessment of Chinese investments and the Chinese role in the Malaysian economy,” says Chandra Muzaffar, a Malaysian political scientist.

“Mahathir like a handful of other politicians knows that criticism of Chinese investments resonates with a segment of the Malay electorate. It is a way of winning votes in a society in which ethnicity colors almost every facet of public life,” he says.

“One suspects that he is also sending a message to certain international actors that he shares some of their concerns about China,” says Chandra. “Mahathir should not allow himself to be perceived as someone reinforcing the Sinophobia so pronounced in certain circles at this juncture.”