- POSTED: 04 Oct 2013 21:14
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China and Malaysia have announced plans to significantly boost trade through measures, such as supporting industrial parks in each other's countries, that will increase two-way trade to US$160 billion by 2017.
KUALA LUMPUR: China and Malaysia have announced plans to significantly boost trade in the next five years, through measures such as supporting industrial parks in each other's countries.
During Chinese President Xi Jinping's visit to Malaysia, the leaders of both countries said the plans will increase two-way trade to US$160 billion by 2017.
Prime Minister Najib's father, Abdul Razak Hussein, who was then Malaysia's second prime minister, established diplomatic ties with Beijing in 1974, when China was shunned by many countries at the height of the Cold War.
Now, nearly 40 years on, both Malaysia and China have gained immensely from close economic and trade ties.
China has overtaken the United States as Malaysia's largest trading partner, with two-way trade totalling over US$90 billion last year.
For the first half of this year alone, two-way trade already stood at over US$50 billion, and looks set to exceed US$100 billion this year.
Both leaders now want to boost it further to US$160 billion by 2017, making Malaysia not only China's biggest trading partner in ASEAN, but the third largest in Asia after Japan and South Korea.
Chinese President Xi spoke of the importance of ties with Malaysia after meeting Prime Minister Najib in Putrajaya.
President Xi said: "It's easy to find fair-weather friends but tough to find friends who will share your burden. China and Malaysia are good friends and we have proven we can trust and rely on each other.
“Among countries in Southeast Asia, Malaysia's relationship with China is at the forefront. Cooperation will benefit citizens of both Malaysia and China, and promote stability and growth."
Going forward, Malaysia is hoping to sell more to China, especially crude palm oil.
But it will be competing with other countries like Indonesia, and China itself has invested heavily in oil palm plantations in Africa and Latin America.
However, with the global economy still recovering, Malaysia has no choice but to rely heavily on China.
Prime Minister Najib wants to attract Chinese investment and draw in its tourist dollars, to shore up Malaysia's shrinking current account surplus and trim its fiscal deficit.
He said: "I strongly believe that the prospects of our bilateral relationship between China and Malaysia are, indeed, very exciting.
“And there is a great promise that we can achieve, and much progress that we can attain, between our two countries."
At a business summit in Kuala Lumpur, both countries unveiled a five-year economic blueprint to drive bilateral trade and investment to the next level.
This includes exploring new areas of cooperation in IT, green technology, bio-tech and space technology.
China and Malaysia are already jointly developing a multi-billion dollar twin industrial park in Qinzhou and Kuantan.
And Beijing has expressed keen interest to take part in the high-speed rail project linking Kuala Lumpur to Singapore.
Earlier on Friday, the Export-Import Bank of China and Malaysia state investment fund, 1MDB, agreed to enter into a joint venture to explore opportunities in the region, including the Tun Razak Exchange, or TRX, in downtown Kuala Lumpur.
Analysts said China's move is timely, reaching out to build trust and friendships with its Southeast Asian neighbours at a time when the global economy is struggling to regain its footing.
Political analyst Keith Leong from KRA Group said: "It’s chequebook diplomacy, really -- because China now has the money, you know, to actually win friends and influence people. "
With a whopping half a trillion US dollars of investment outflow and 80 million tourists from China each year, Malaysia, like many Asian countries, will be eyeing a piece of the giant economic pie.