China and Malaysia: A new era of rapport

Thirty five years ago, my late father Tun Abdul Razak, then prime minister of Malaysia, set foot in China marking the beginning of a new era in bilateral relations that opened up a historic chapter in Sino-Malaysian relationship. It was a brave, bold and momentous decision that prompted other South East Asian nations to follow Malaysia's lead in establishing diplomatic relations with China.

Bilateral relations, formally established with the signing of the Joint Communiqu on May 31 1974, based on mutual respect have grown from strength to strength and have progressed by leaps and bounds. Those responsible for establishing the relations were ahead of their time and probably did not envision that the relations would flourish and blossom the way they have.

I am a great believer in the value and significance of our bilateral relations and have made several visits to this country in different capacities - as deputy prime minister, minister of defense and minister of education. And since assuming the office of Prime Minister in April, this is my first official visit to a country outside of ASEAN. I will continue to seek ways and means to further strengthen and deepen our relations.

Undoubtedly, the China of today is vastly different from the one that my father saw in 1974. The millions of bicycles and Mao suits have been replaced with cars that travel on super highways. China is increasingly being courted by the developed West and not shunned as previously. It is today the second largest economy in the world in purchasing power parity (PPP) terms and the third largest, after the US and Japan, in nominal GDP terms. It is home to the world's largest foreign reserves and is an increasingly important and influential player on the world stage.

China and Malaysia have much in common. Our two nations share similar aspirations and objectives to ensure lasting peace and stability in the region. China has demonstrated that it is a responsible economic power. It won the appreciation and trust of Asian nations during the financial crisis in 1997-1998 by not depreciating its currency. If it had it would have made the already difficult situation even worse for the affected nations, including Malaysia.

Today, our two countries can work together to deal with the global economic recession. There are several ways in which this can be done. Among them is to ensure that the domestic demand in both our countries remains high. An increase in Chinese domestic demand will help the export sectors of countries in the region and their recovery.

Bilateral trade between Malaysia and China reached $39.06 billion in 2008 an increase of 10.3 percent compared with 2007. Two-way trade was less than $100 million in 1974 when Tun Razak made the historic visit. China is now Malaysia's fourth largest trading partner and fourth largest export market. Most of Malaysia's imports come from China. China is also a very important destination for Malaysian investments. Last year Malaysia was the 19th largest foreign investor in China. There are numerous opportunities for Chinese investors in Malaysia. We welcome them and encourage their participation in our success. I recently announced two packages of economic reforms relating to the services and financial sectors. These measures will make foreign investment easier and more attractive, and we would like to see an increase in the number and profile of Chinese investments.

Bilateral relations between Malaysia and China are further characterized by the good personal rapport between leaders and business communities alike, as well as with regular exchanges of visits at all levels. People to people contacts have also grown. Malaysia is today a major destination for Chinese tourists. Last year more than 949,800 Chinese visitors came to Malaysia - the fifth largest number after Singapore, Indonesia, Thailand and Brunei - the largest number from outside ASEAN. With direct flights and increased frequency, the number of Chinese tourists to Malaysia this year could well exceed one million. China is also an important destination for Malaysian tourists.

China and Malaysia also share an unprecedented challenge. The global economy is likely to shrink this year for the first time since the middle of the last century, and the World Bank predicts that during 2009 world trade is likely to record its largest decline in 80 years. We should confront this challenge head on. The power of trade and value of markets is undeniable, but the global economic crisis demonstrates that government, too, has a critical role to play.

I applaud China's quick and decisive implementation of its $586 billion economic stimulus package, which is already paying off with positive changes taking place in the economy. In recent months, my government, too, has announced two historic, targeted stimulus packages. The second alone, at RM60 billion, is the biggest in Malaysia's history and accounts for 9 per cent of our gross domestic product. According to Bank Negara (Malaysia's Central Bank), the packages will boost economic growth by 1 to 1.5 percent.

If we are to promote stable economic development, these packages are just one measure. In the long term, we must create knowledge economies. Doing so, especially in this uncertain time, is key to achieving global competitiveness; to realizing the latent talent of our people; and to ensuring that the benefits of economic growth are shared. The future prosperity of any nation depends on the performance of its people. Education is our most important tool in breaking the cycle of poverty - and it is our surest route to long-term economic growth. That is why my government is forging a new economic model that puts knowledge first.

Putting knowledge first also means tapping the diversity of our countries. In Malaysia it is our diversity that has been the source of our economic strength. Harnessing talent from every section of society provides a foundation not just for economic growth but also for political stability. People from all over Malaysia have joined me in supporting "One Malaysia", an effort to spread mutual acceptance and respect between genders, cultures, races, religions and nations.

China and Malaysia are both true economic success stories. Our future is filled with hope and opportunity. But the challenges we face are real, and there is much to do. Of course, it is still true that a journey of a thousand miles begins with a single step. And, in the pursuit of national economic and social development, some countries have further to go than others, and some will want to find their own path. Those nations with the ambition to emerge from this economic crisis stronger need to take urgent measures now. I believe that China and Malaysia are taking the necessary steps.

Thirty five years after Zhou Enlai and my father established diplomatic relations in Beijing, our friendship has strengthened. As the Chinese proverb goes "When people are true friends, even shared water tastes sweet" and I have great hope for our future with one another. I am confident that our already strong relationship will strengthen and deepen, heralding a new era in bilateral relations with shared objectives in the spirit of ancient ties, current friendship and future partnership.

The author is prime minister of Malaysia.

(China Daily 06/02/2009 page9)