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Asia Today ISSN 1861-4604 Friday, May 25, 2018

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Malaysian Prime Minister Najib Razak signs 14 agreements with China, in warning to U.S.

Malaysia China Business

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BEIJING, China - The Malaysian Prime Minister Najib Razak has secured a defence deal with China after a meeting with the Chinese Premier Li Keqiang at Beijing's Great Hall of the People on Tuesday. 

Razak’s meeting with Keqiang ended with signing a total of 14 agreements including a deal on navy vessels. 

The two countries will jointly develop the navy vessels, known as littoral mission ships, according to the agreement. 

During his seven-day trip to Beijing, Razak is also expected to meet Chinese President Xi Jinping and Zhang Dejiang, the head of the legislature, to secure multi-billion dollar investments in port construction, gas-pipe laying and water desalination plants, e-commerce, solar panel manufacturing and construction to further strengthen economic relations with China. 

Earlier, Razak said that economic and trade relations between Malaysia and China had grown significantly in recent times. 

Last year, China had invested $2 billion in Malaysia and the figure would increase based on the uptrend in investments over the past five years, he added.

Razak, after the roundtable meeting with 30 Chinese Captains of Industry in Beijing said, “China was Malaysia's largest trading partner in 2015, a position maintained since 2009. Total bilateral trade in 2015 was $100 billion.” 

He also said that Malaysia’s economy is headed towards a positive trajectory, with the gross domestic product growth projected to be 4 percent to 4.5 percent this year, and up to 5 percent in 2017. 

According to him, in the first-half of 2016, approved FDI has already reached 83.3 percent of the total approved for the whole of last year.

“With our strong economic fundamentals, Malaysia continues to be a very attractive destination for foreign direct investments (FDI),” he added.

But analysts believe that Razak is trying to rebuild his image at home and warn the U.S. as he is in the middle of a U.S. government investigation following his involvement in a financial scandal at a Malaysian investment fund, 1MDB that he founded. 

The Department of Justice has said in a lawsuit that at least $3.5 billion was stolen from the fund and diverted through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the U.S. 

From Malaysia’s perspective, the country would earn China’s largest single investment till date as both the countries are expected to sign the framework financing agreement and engineering, procurement, construction contract for the $13.10 billion East Coast Railway Line (ECRL) project.

According to James Chin, Director of the Asia Institute at Australia's University of Tasmania, Razak wanted to attract more Chinese money to make up for a drop in foreign direct investment from Western countries unnerved by the scandal. 

“He's showing the Malaysian domestic audience that a new upcoming power like China is still willing to host him, because it is quite obvious that he can't get the same treatment in Western capitals anymore,” Chin said.

However, it comes as a blow for the United States as it’s losing its control in Southeast Asia amidst mounting tensions with China in regards to the South China Sea. 

What’s causing more trouble for Washington, is that Malaysia’s defence deal with China comes after Philippines President Rodrigo Duterte recently switched his allegiance to China, ending a long-term alliance with the U.S.

While China and the U.S. are fighting to get a hold of the Asian market through political and economical alliances, the countries that have partners together are actually benefiting from their tactical battle and progressing towards a better economic growth.

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