Is The Chinese Cheap Goods A Threat?

After China-ASEAN FTA started, many ASEAN countries fear that the cheap Chinese textiles and other goods will have bad impact on the local basic industries, Trade deficit with China will expand and the market competitiveness will decline. But it seems Malaysia is an exception.  Simona Mocuta the Southeast Asia senior researcher of Global Insight explained that Malaysia's economy is relatively mature, industry chain prefers to the high-end development. Malaysia has get ride of the dependence on low-end industry such as clothing.

She said: "Indonesia and other countries may worry that free trade with China will increase the competition towards textile and other low value-added industry. Malaysia is not worried about it. Malaysia and China's manufacturing rarely overlap. Malaysia tends to develop high value-added industry such as electronic technology products. Malaysia can benefit more from the China's market access.

 Besides the high value-added industry, Malaysia's trade surplus with China also comes from the exports increase of commodities such as palm oil and rubber. Tan Khee Giap, the president of Singapore National Committee for Pacific Economic Cooperation said, “palm oil is the main staple products in Malaysia, it competes with the Soybean in America in the international market. Thus Malaysia expands markets in China, which is in line with Malaysia economic interests.

Mutual investment between the two countries also increased in recent years. Malaysian investment in China reached 5.36 billion U.S. dollars till 2009. Driven by the local Chinese, Malaysian investment to Chinese has been extended to energy, transportation, infrastructure, finance, insurance, real estate, IT and related services industries. The investment area is also extended from the coast to the mainland. More well-known investment is Parkson Department Store opened by Malaysian Lion Group and the Shangri-La hotel invested by Kuok Brothers Group.

 Compaired with Malaysian’s investment, the Chinese investment in Malaysia is only 379 million, which is just a fraction of Malaysian’s investment. Moku Cha said that it is related to the strict regulatory mechanisms in Malaysia, but China recently increased the intensity of investment in infrastructure. At the same time, China also pay much attention to develop the e-commerce industry to encourage the export, thus they can fully plays its strengths. Among them, the large-scale online supermarket dinodirect.com is a successful model, which would bring 10billion US dollar each year buy promotions activites such as Crazy week activities and  clearance sale The e-commerce industry develops dramatically help China to gain big trade surplus.

Watershed of economic trading with China

Another key factor for Malaysian’s increased trade is that the former Prime Minister Mahathir Mohamad. After he started his politic career in 1982, had publicly criticized China for the support for Malaysia’s communist insurgency .This attitude has shifted in the 1990s. After 1997 Asian financial crisis, Malaysia's economic and trade relations with China significantly improved. Then 1997 is regarded as an important watershed inn the economic trading between Malaysia and China.

 As a Muslim country, Mahathir’ is out of tune with American diplomacy. Although China affected Malaysia with export of revolution in the 1960s, it is just history. After Deng Xiaoping's reform and development, as regards to the overseas Chinese in Malaysia, China also called for their allegiance to Malaysia. At this point, there is no conflict of interest between Malaysia and China. SO in the following, the relationship has improved better and better. "

Actively improved the economic trade with the United States

Prime Minister Najib Tun Razak came to power in 2009, then he actively improved the economic trade with the United States, Malaysia's bilateral trade volume with the U.S increased to 31 billion U.S. dollars in 2009, United States became the third largest trading partner of Malaysia followed China. Najib also signed the controversial nuclear non-proliferation laws this year. It clearly shows that the Malaysia current government wants to be the better partner of Malaysia United states.”

U.S. Secretary of state Hillary Clinton visited Malaysia earlier this month, she praised the Malaysian sign the Strategic Trade Act is an important measure to prevent nuclear proliferation, reducing the possibility of components of nuclear fuel and weapons falling into the hands of Iran and North Korea. Local media commented that this is the first time for the U.S. Secretary of state to visit Malaysia for the economic trading, since Warren Christopher, the former U.S. Secretary of State visited in 1995.Former Secretary of State Condoleezza Rice visited Malaysia in 2006, is to attend the multilateral regional forum.