Will Malaysia Gravitate Further Towards China After President Xi’s Visit?

The Chinese President’s three-day visit to Malaysia in mid-April has been described in glowing terms by both countries’ leaders. President Xi enthused that China’s relationship with Malaysia is entering a “new golden era”.  Prime Minister Anwar Ibrahim affirmed that “Malaysia will remain an unwavering and principled friend to China”. 

The effusive statements from the two leaders undoubtedly signal closer diplomatic and economic cooperation in the future.  This is evidenced by the exchange of 31 Memoranda of Understanding (MoUs), agreements, and notes between Malaysia and China during President Xi’s visit. These follow the 14 MoUs signed during Premier Li Qiang’s visit in June 2024 to celebrate the 50th anniversary of the establishment of China-Malaysia diplomatic relations. Although the MOUs and agreements are only meaningful if they are implemented, they collectively indicate the direction of bilateral cooperation between the two countries. 

One important MoU involves the extension of mutual visa exemption. The current reciprocal visa-free arrangement, which is scheduled to end in December 2025, will be extended by the MoU for another five years. This will boost business relations and tourism between the two countries in the medium to long term.

Many of the MoUs are expected to enhance connectivity between Malaysia and China. An MoU was signed to strengthen railway cooperation, a natural follow-up to the East Coast Rail Link (ECRL) project due for completion and operation in 2027. It has also sparked chatter about the possibility of reviving the Kuala Lumpur – Singapore high-speed rail project with the involvement of state-owned enterprises from China. Additionally, the countries’ joint statement expressed support for the ambitious Pan-Asian Railway vision. Though the Pan-Asia Railway network will take a long time to realise, it is a key project that will strengthen China’s rail connectivity with countries in this region. 

Aside from railways, air logistics between China and Malaysia will be consolidated through the development of a twin hub involving the Kuala Lumpur International Airport and Zhengzhou Xinzheng International Airport in Henan province, a major airport serving Central China. The airport is a major cargo hub with an adjacent economic zone hosting the Foxconn Zhengzhou Technology Park, the world’s largest iPhone factory. The twin-hub air logistics project will potentially strengthen supply chain linkages for the electrical and electronic industries in both countries.

Malaysia has long been keen to upgrade its technological capabilities and expand its digital economy. One of the just-signed MoUs will lead to the establishment of joint laboratories in emerging technologies, which include artificial intelligence (AI), blockchain, biotechnology, advanced material science, and renewable energy. 

In the area of AI, both countries have committed to undertake technical exchange programmes and collaborations to strengthen AI infrastructure in Malaysia.  Another MoU will pave the way for the establishment of an AI and new materials joint laboratory (chip design and fabrication) by the University of Malaya and Peking University. These new developments follow an earlier agreement inked in 2025 between MyEG Services Berhad (a company heavily involved in e-government services projects) and Beitou IT Innovation (a wholly owned state enterprise of the Guangxi Autonomous Region Government) to establish the Malaysia–China AI Innovation and Cooperation Centre (part of China–Asean AI Lab). The Centre will develop national digital IDs that are mutually recognised by Malaysia and China (starting with Guangxi Province). This project signals significant trust between the two countries.

Enhanced connectivity and collaborations will facilitate greater economic integration between Malaysia and China, suggesting that Malaysia is set to play an important role in the supply chain bifurcation driven by the US-China trade and technology war.

In the past, Malaysia has collaborated with China to develop its digital economy. Previous initiatives include the Digital Free Trade Zone which has operated at the Kuala Lumpur International Airport since 2017, and the China-Malaysia Digital and Green Technology Industrial Park under way near Malaysia’s shipping centre of Port Klang (initiated by another MoUsigned in June 2024).

The April 2025 MoU on the digital economy will expand collaborations in this area by covering “policy coordination and regulatory alignment; industrial digital transformation; digital technology innovation; and talent development”.  Concurrently, a letter of intent was signed by the Malaysia Digital Economy Corporation (an agency under the Ministry of Digital) and Zhejiang University to collaborate on digital transformation, AI, and smart city initiatives. These collaborations in the digital economy clearly signal a move toward greater digital economic integration between the two countries. Earlier collaborations will also enjoy further progress, notably the “Two Countries, Twin Park” approach which established the China-Malaysia Qinzhou Industrial Park (launched in 2012) and its sister project, the Malaysia-China Kuantan Industrial Park (2013), which will be upgraded as announced during President Xi’s visit.

China’s digital footprint in Malaysia is expected to increase with the MoU on the application of satellite technologies developed by the BeiDou Navigation Satellite System across various sectors. In the joint statement issued by both countries, Malaysia also welcomed the participation of firms from China in the construction of the country’s 5G network. This dovetails with the announcement by Malaysia’s telecommunications operator U-Mobile on the participation of Huawei and ZTE in the second 5G network rollout in Peninsular Malaysia and East Malaysia, respectively.

The flurry of MoUs and agreements signed during President Xi’s visit indicates a high likelihood that Malaysia will economically gravitate further towards China. This gravitational pull could be reinforced by the push from the “Liberation Day” tariffs imposed by the United States. Enhanced connectivity and collaborations will facilitate greater economic integration between Malaysia and China, suggesting that Malaysia is set to play an important role in the supply chain bifurcation driven by the US-China trade and technology war. Before President Xi’s visit, Prime Minister Anwar Ibrahim had emphasised the importance of remaining neutral amidst the US–China rivalry. This balancing act will undoubtedly become more difficult to maintain in the future amidst the warm embrace from China in the wake of an increasingly protectionist and inward-looking US.

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