China Power

China Promotes Trade, Maritime Silk Road in Malaysia

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China Power

China Promotes Trade, Maritime Silk Road in Malaysia

While visiting Malaysia, China’s premier offered loans and rhetoric designed to boost the Maritime Silk Road.

Chinese Premier Li Keqiang paid his first official visit to Malaysia this weekend. While in town for the various ASEAN-related summits in Kuala Lumpur, Li expanded his trip to include bilateral meetings and a tour of the port of Malacca.

Overall, trade and economic relations were the major focus of Li’s visit, although there were some strategic and military components (my colleague Prashanth Parameswaran has more on the agreement to allow China to use Malaysia’s port of Kota Kinabalu). Following up on similar themes during President Xi Jinping’s trips to Vietnam, Singapore, and the Philippines, Li used his time in Malaysia to emphasize the benefits China’s rise will have for the region – and downplay concerns about China’s “assertiveness.” As I wrote earlier, China is trying to use economic incentives to smooth over worries in Kuala Lumpur that the “special relationship” between China and Malaysia has hit a snag.

In keeping with his emphasis on trade, Li made a symbolic visit to Malacca, a side trip Chinese media described as “an explicit gesture of China’s commitment to peaceful development and common prosperity in East Asia.” Malacca has served as an important international port for centuries – including playing host to the fleet of Chinese explorer Zheng He in the 15th century. Li visited the Zheng He Museum in Malacca, which is dedicated to the explorer China hails as the originator of the Maritime Silk Road.

China frequently uses Zheng’s voyages a symbol of China’s friendship and benign intentions towards its neighbors – historical proof that relations with China are to be welcomed, not feared. “Commanding the largest and most advanced fleets in his time, Zheng did not bring hostility and conflicts. That embodies the very essence of the traditional Chinese philosophy, where peace and good-neighborliness always come first,” Xinhua paraphrased Li as saying during his tour of the museum.

By calling out to this history, Li hoped to assuage modern-day fears about China’s behavior and intentions, as well as promoting the 21st century version of the Maritime Silk Road (MSR). Malaysia – and, more specifically, Malacca – will play a crucial role in China’s plan to establish a coherent maritime network stretching from China to Europe.

Li listened approvingly to an update on an industrial park initiative spearheaded by Malacca state and Guangdong province, part of Malaysia’s “Malacca Gateway” project to expand the port facilities. He told Malacca’s chief minister, Idris Haron, that he hopes cooperation in Malacca can serve as a model for cooperation, both between China and Malaysia and for all the countries interested in taking part in the MSR.

“China’s development will first benefit its neighbors, including Malaysia, and I expect that everyone can seize the opportunity to contribute to the friendship and common development between China and ASEAN nations,” Li added.

As proof of the benefits of working with China, Li offered up $10 billion in loans to the ASEAN members, to be used for infrastructure building.  Li made the offer during the 18th China-ASEAN (10+1) leaders’ meeting, one of the many summits that took place in Malaysia this weekend. That pledge comes in addition to China’s establishment of the new Asian Infrastructure Investment Bank, which is expected to begin operations in 2016.

On Monday, Li met with a group of Malaysian businesspeople to urge them to contribute to China-Malaysia cooperation. He pointed to a recent agreement to upgrade the China-ASEAN free trade agreement as a potential boon for Malaysia’s business community, and said China also hopes to complete the Regional Comprehensive Economic Partnership trade deal (which will include ASEAN, Australia, China, India, Japan, New Zealand, and South Korea) as soon as possible.

In addition, Li promised to hold an $7.8 billion (50 billion renminbi) quota for Malaysian investors under the Renminbi Qualified Foreign Institutional Investor (RQFII), paving the way for more Malaysian investment in China. Li particularly invited them to take part in China’s booming service sector.