Malaysia’s Hedging Strategy Towards China Under Mahathir Mohamad (2018–2020): Direct Engagement, Limited Balancing, and Limited Bandwagoning

Abstract

To mitigate the risks and maximise the opportunities arising from China’s great power behaviour, Malaysia employed a hedging strategy during Mahathir Mohamad’s second term as prime minister. From 2018 until 2020, the middle power Malaysia applied direct engagement and elements of limited balancing and limited bandwagoning in a flexible yet consistent manner. Neither China’s Belt and Road Initiative (BRI) nor its actions in the South China Sea caused a sea change in Malaysia’s hedging strategy. Crucially, the policies towards China were embedded in omnidirectional, friendly, and well-balanced relations with the United States, Japan, and the Association of Southeast Asian Nations (ASEAN). Theoretically, this contribution applies an updated concept of hedging, initially introduced by Cheng-Chwee Kuik. As an important innovation, it adds a specific component to assess the perceptions of the political leader(s) of risks and opportunities related to the hedging target as well as the strategic value of potential balancing partners.

Perceptions of social credit systems in Southeast Asia: An external technology acceptance model

“…Despite the territorial conflicts between China and Malaysia in the South China Sea (Gerstl, 2020), Malaysia seems to have accepted China's regional architecture (Abuza, 2020, p. 116). Although Malaysia has canceled some Chinese investment projects recently (Gerstl, 2020), Chinese FDI in Malaysia amounted to USD 10.4 billion in 2021 (MOFCOM et al., 2022).…”

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“…While Thailand has turned towards China since the military junta's rule in 2014 (Hewison, 2018), public anti-government protests in 2020 and 2021 on the other hand expressed solidarity with protestors in Hong Kong (Yang, 2021). Malaysia, despite cancelling several key projects of the Belt and Road Initiative during Mahathir Mohammad's second term, used to follow a hedging strategy towards China by balancing it with a friendly relationship with other Asian countries and the US (Gerstl, 2020). Indonesia was also found to have maintained a balanced relationship between China and the US (Fitriani, 2018, p. 402-403), whereas in 2021, the Philippines sought to secure increased US military commitments while showing disappointment with the US's weak support of the country vis-a-vis China's military presence along the Scarborough Shoal (Aljazeera, 2021).…”

Malaysian Perceptions of China Following the Asian Financial Crisis

“…In fact, this situation has led Malaysia down an uncertain and constrained strategic path. At the time, Mahathir Mohammad recognized that economic dependence on China posed a risk of reducing autonomy in politics and security (Gerstl, 2020). Malaysia's approach to China is more likely to back down and demand militarization.…”

“…This perception, however, indicates that Malaysia would rather maintain its sovereignty and territorial integrity than confront China for hard balancing. Despite their opposing ideologies, Malaysia was the first country in Southeast Asia to establish diplomatic relations with China in 1974, shortly before the financial crisis (Gerstl, 2020). The crisis has forced Mahathir Mohammad to approach China more pragmatically, promoting exchanges and economic cooperation (Gerstl, 2020).…”