Malaysian PM Najib also tilts toward China

BEIJING—Malaysia’s premier on Tuesday began an official visit to China where he is expected to sign a “significant defense deal,” in a potential strategic shift as his ties with the United States fray over a corruption scandal.

The seven-day trip by Prime Minister Najib Razak marks another potential blow for Washington’s “pivot” toward Asia, two weeks after President Duterte of the Philippines, longtime US ally, visited China with an olive branch in hand.

Malaysia and China will be finalizing “the first significant defense deal” between the two countries during his visit, Najib told the Chinese state news agency, Xinhua.

10 agreements

A total of 10 agreements spanning business, defense and other spheres will be signed, Malaysia has said.

Najib said last week that Malaysia and China “are committed to achieving new highs and entering into new areas of cooperation.”

Last month in Beijing, President Duterte stunned observers by announcing his country’s “separation” from long-standing partner the United States. Though he subsequently backed off, saying the Philippine alliance with America remained intact, the episode underlined Beijing’s increasing diplomatic and economic gravitational pull at the expense of Washington.

New regional norm

Najib’s visit provides fresh evidence, according to Southeast Asia politics analyst Bridget Welsh.

“This is the new regional norm. Now China is implementing the power and the US is in retreat,” Welsh said, adding Washington’s Asia “pivot” was “dead in the water.”

China welcomes Najib, who arrived on Monday, with a state dinner on Tuesday night in Beijing, followed by a meeting with Premier Li Keqiang. Later this week, Najib will meet President Xi Jinping, as well as Jack Ma, founder of e-commerce giant Alibaba.

Drawn into China’s arms

Taking office in 2009, Najib reached out to Washington, and relations warmed following decades of periodic distrust.

But he has increasingly leaned toward China as it became Malaysia’s biggest trading partner, and especially after the eruption last year of a massive corruption scandal implicating Najib and a state investment fund he founded.

Billions are alleged to have been siphoned from the fund, 1MDB, in a stunning international campaign of embezzlement and money laundering that has sparked investigations in several countries.

$1B in assets seized

Najib’s ties with Washington became strained when the US justice department moved in July to seize more than $1 billion in assets allegedly purchased by Najib relatives and associates using stolen 1MDB money.

Justice department filings said a “Malaysian Official 1” took part in the looting. Malaysia has since admitted that official was Najib.

Najib and 1MDB deny wrongdoing and have railed at foreign forces they say concocted the scandal.

1MDB launched a fire sale of assets to stay solvent, and China’s biggest nuclear energy producer, China General Nuclear Power Corp., came to the rescue last year, purchasing its power assets for $2.3 billion.

Welsh said the trip could result in “multiple billions of dollars in deals” for Najib’s cash-strapped government.

Depressed oil prices have slashed government revenue in energy-exporting Malaysia, which also faces rising public sector debt.

‘Regional banker’

“This trip reflects not only Malaysia’s geostrategic realignment to China as the ‘regional banker’ but also the reality that Najib is desperate for alternative financial sources,” Welsh said.

A key question is whether there will be a “quid pro quo” in which Malaysia sides more with Beijing rather than the United States on strategic issues like the South China Sea territorial disputes, she said.

China has increasingly won major infrastructure and other projects in Malaysia, and Chinese companies are widely expected to be handed a planned high-speed rail project linking Kuala Lumpur and Singapore, which is expected to cost up to $15 billion. —AFP

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