Malaysia's Unlikely Prominence in China's Belt and Road Initiative

Wednesday - December 27 2023, 10:17 UTC - 11 months ago

China celebrated the 10-year anniversary of its Belt and Road Initiative (BRI) in October 2023. Through the expansion of the BRI, China is extending its global influence, particularly in developing regions. Despite Indonesia’s comparative advantages, Malaysia has attracted a far larger volume of BRI spending in recent years. This has been supported by the Digital Sino Silk Road, whereby Malaysia has committed over $5.7 billion to digital infrastructure by 2023.

China currently faces daunting challenges in its domestic economy. But weakness in the real estate market and consumer spending at home is unlikely to stem its rising influence abroad.In mid-October 2023, China celebrated the 10-year anniversary of its Belt and Road Initiative, or BRI. The BRI seeks to connect China with countries around the world via land and maritime networks, with the aim of improving regional integration, increasing trade and stimulating economic growth .

Through the expansion of the BRI, China also sought to extend its global influence, especially in developing regions.During its first decade, the initiative has faced a barrage of criticism from the West, mainly for saddling countries with debt, inattention to environmental impact, and corruption. It has also encountered unexpected challenges – notably the COVID-19 pandemic, which led to massive supply chain issues and restrictions on the movement of Chinese workers overseas .

Yet, as the BRI heads into its second decade, global economic trends suggest it will continue to play an important role in spreading Chinese influence.I'm an associate professor of global studies at the Chinese University of Hong Kong, Shenzhen, where I teach about business-government relations in emerging economies. In my new book, "China’s Chance to Lead," I discuss which countries have already and are now most likely to seek out and benefit from Chinese spending .

Understanding this helps explain why China and the Belt and Road Initiative are poised to benefit greatly from the global economy over the next several decades.Malaysia’s unlikely prominence In October 2013, China President Xi Jinping announced the launch of the maritime portion of the BRI during a speech in Jakarta. At the time, Indonesia appeared to be an ideal candidate for Chinese infrastructure spending, yet it was Malaysia – surprisingly – that emerged as a far more avid participant .

In comparison to Malaysia, Indonesia’s economy was three times larger and its population nearly nine times bigger, yet its gross domestic product per capita only was one-third as high. Indonesia also had enormous potential to increase its already substantial natural resources exports to China. Taken together, these factors point to Indonesia’s far greater demand for infrastructure that would aid its economic development .

Furthermore, Indonesia’s democratic institutions were more conducive to attracting foreign investment. Its checks and balances enhanced policy stability and reduced political risk. By contrast, Malaysia’s government, which was dominated by a single ruling party coalition, lacked comparable checks and balances.Despite Indonesia’s numerous advantages, Malaysia attracted a far larger volume of BRI spending during its first several years .

Data provided by the China Global Investment Tracker indicates the value of newly announced infrastructure projects in Malaysia surged from US$3.5 billion in 2012 to over $8.6 billion in 2016. Spending in Indonesia, meanwhile, rose modestly from $3.75 billion to $3.77 billion over the same period.Malaysia also enthusiastically participated in the Digital Sino Silk Road, a digital infrastructure portion of the BRI that modernizes communications networks .

By Infrastructure Lab estimates, Malaysia has already committed over $5.7 billion to electronic infrastructure by 2023, second only to Indonesia in Southeast Asia.