Food For Thought : China’s New BFF – Malaysia ? Boleh ? No Way ?

A moment of silence for all on board MH370.

We would hardly expect China Malaysia ties to be rosy after what has been condemned as a badly handled aeronautical mishap although I cannot imagine any other way of handling such a baffling situation.

China Malaysia ties are on the mend with the announcement of a sister port partnership 2 days ago in the spirit of the ancient Silk Route. http://news.xinhuanet.com/english/china/2014-09/15/c_133644182.htm

This is after China’s Guangxi Beibu Gulf International Port Group bought a 40% stake in Malaysia’s Kuantan Port Consortium in Sept last year. http://www.thestar.com.my/Business/Business-News/2013/09/10/IJM-sells-40-stake-in-Kuantan-Port-Chinas-Guangxi-Beibu-buys-the-equity-interest-for-RM334mil/

I am not a logistics expert here and am thinking out loud. What if they can just truck the stuff across to Klang and sail away from there, managing to by pass half the treacherous Malacca Straits ? Even better if they can go further North towards Penang where they can just scoot off pretty scot-free.

straits of malacca

That could well leave Singapore out cold, for selfish reasons.

Worst still, my childhood nightmare is about to materialise – the Kra Isthmus canal.  As a teenager, I remember being quite obsessed with the idea of the Kra Isthmus canal after my dear aunt told me it had been Dr Mahatir pet project back in the 70’s.  I wrote about it at length in school projects, like a good Singaporean student, hoping that my teachers would take it to alert the authorities about the threat.

With Wikipedia, I now know that the idea for that canal has been floated for a few hundred years ! And Malaysia was not able to make it work then because the southern Thai border has always been a trouble spot for rebels and the cost was estimated at billions which would have made many a corrupt politician rich and the rest envious enough to take bribes to veto the idea ?

If any country can make it happen now, in this world where billion is the new million and a trillion is not really a lot of money, it would be China. And it looks like China is serious this time.

It started with Xi’s maiden visit to Asean last year and his intention to re-create a modern Silk Route (http://news.xinhuanet.com/english/china/2013-10/09/c_125496979.htm). He skipped Singapore, then, which got me wondering a little and in Mar this year, it was announced that China will undertake the Kra Isthmus project (although we are not sure on the status with the new government of Thailand). http://chinadailymail.com/2014/03/16/china-to-bypass-malacca-strait-by-kra-isthmus-canal-in-thailand/

In any case, China also has a backup plan via the Northeast passage through the Arctic, which has melted away enough for a permanent shipping route to be established. China recently announced a navigational guide for that trade route which spells the end for trade in this region and a big boon for Rotterdam. http://www.channelnewsasia.com/news/business/international/china-to-publish-arctic/1183054.html

China has plans to be a global maritime nation and the timing is good, when America is in her decline. Maritime ambitions have to be matched with military fleets, strong bilateral political ties and lots of money to buy friendships. China has all of that as US resources are stretched amongst her commitments around the world in the face of spending cuts on her military prowess. American friends in Asia are starting to realise that America may not there as China pushes for regional security initiatives with the main intention to eliminate US meddling in Asian affairs.
http://thediplomat.com/2014/09/the-new-improved-shanghai-cooperation-organization/

http://www.foreignpolicy.com/articles/2014/09/12/all_your_pivots_are_belong_to_us_china_american_power_asia_rebalance?utm_content=buffer42529&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

Singapore should have little to worry about with 25 years of Chinese ties and President Xi of China will finally visit us next year to mark that milestone. http://www.straitstimes.com/news/asia/east-asia/story/xi-jinping-visit-singapore-next-year-mark-25-years-ties-20140816

But deep inside, I now understand why I am secretly bullish Malaysia of late. It has become a global hub of sorts for the Arab world and the Chinese, a thriving centre for Islamic finance and booming commerce. Just today it was announced that the “expelled” Muslim Brotherhood leaders may head to Malaysia. http://www.thestar.com.my/News/Nation/2014/09/17/Muslim-Brotherhood-leaders-expelled-from-Qatar-Malaysia/

It does not take away the worry of empty ports and shipyards and falling trade numbers given that a huge component of our total trade consists of re-exports.

singapore total trade1

Just some food for thought.