BY UNA GALANI

China has won another enthusiastic friend. Malaysian Prime Minister Najib Razak struck the country’s first major defense deal with China and says relations with its eastern neighbor are “set to reach new highs”. He is the latest Asian leader after Philippine President Rodrigo Duterte to cozy up to Beijing. But his motivations for singing the praise of the People’s Republic, while bashing Western allies, appear unique.

Unlike the Philippines, Malaysia already counts China as its largest trading partner, and the middle-income nation is not desperate for foreign capital to finance basic infrastructure. However, a warm embrace is a good way for Najib to express gratitude for China’s continuing investment support during the ongoing corruption scandal engulfing state fund 1Malaysia Development Berhad.

The carefully cultivated relationship between the leader of the majority-Muslim nation and his former golf buddy President Barack Obama was ruined in July when the U.S. Department of Justice alleged over $3.5 billion was misappropriated from the fund. The agency indirectly linked the corruption to Najib, who denied any wrongdoing.

Ahead of that, Chinese buyers, mostly state-backed, stepped up to buy 1MDB’s energy and real estate assets at generous prices. The $4 billion proceeds helped Malaysia to protect its delicate public finances – and took some pressure off the embattled leader.

Now more Chinese capital is heading for the country, including into a major railway project spanning four states, in what some observers see as quid pro quo. Net foreign direct investment into Malaysia from Hong Kong and China totalled $3.5 billion in the first six months of fiscal 2016, over triple the amount from the United States since 2014.

Chinese investment could help Najib meet his ambitious goal of making Malaysia a “high-income” country by 2020. The tilt east may also be a vote-winner in a nation where anti-U.S. sentiment has always been present; there are signs that Najib is preparing for a general election next year.

But the gamble is not without risks. One reason Malaysia’s economy has proved resilient in a world of low oil prices is because of robust demand from the West for its higher value manufactured exports, whereas Chinese imports from Malaysia are down nearly 20 percent year to date. If the pivot east jeopardises other valuable trade links, the political payback to China will be costly.

First published Nov. 3, 2016

(Image: REUTERS/Wang Zhao/Pool)