China and Malaysia stand to benefit from trade agreements as bilateral cooperation flourishes<br /> <br /> China in 1974 was a country on the cusp of an extraordinary transformation. Its leadership was evolving, and the foundations of what would be the world's fastest-growing economy were about to be put in place.<br /> <br /> It was against this climate of change that Abdul Razak, Malaysia's second prime minister, made a historic visit to Beijing in May, 1974. On the eve of his trip, he declared at a news conference: "I am going on a journey of goodwill and friendship to sow the seeds of mutual understanding between Malaysia and China."<br /> <br /> Shortly after, Malaysia became the first Southeast Asian nation to establish diplomatic ties with China - a diplomatic coup that still bears significant goodwill to this day. Abdul Razak's hand of friendship paved the way for strong bilateral relations that have been on a continuous upward trend over the last 39 years.<br /> <br /> "Mutual trade dependence; the turbulent US and European economic climate; the emergence of China as the economic superpower; as well as Malaysia's potential to act as a gateway for China into other Southeast Asian countries and regional markets, have all fueled the growth of this relationship," says Baharom Abdul Hamid, a senior lecturer at Taylor's University, Malaysia.<br /> <br /> Trade is at the cornerstone of Sino-Malaysian ties. China became Malaysia's biggest trading partner in 2009 after overtaking the United States, while Malaysia topped the 10-member Association of Southeast Asian Nations (ASEAN) as China's largest trading partner over the last five years.<br /> <br /> According to Khor Yu Leng, a visiting fellow at the Institute of Southeast Asian Studies, writing in ISEAS Perspective, this relationship is heavily focused on electronics and electrical products.<br /> <br /> Her report, titled The Significance of China-Malaysia Industrial Parks, states that some key imports to Malaysia from China are electronic integrated circuits, automatic data-processing machines, information and communication technology equipment, office equipment, printed circuits, electrical transformers and transport equipment.<br /> <br /> Malaysia's main exports to China are electronic integrated circuits, palm oil and derivatives, automatic data-processing machines, rubber, oil and gas, processed edible oils and semiconductors.<br /> <br /> Bilateral trade between the two countries reached $94.8 billion last year, closing in on the $100 billion mark that will make Malaysia the number three trading partner in Asia for China after Japan and South Korea.<br /> <br /> But this is significantly imbalanced in favor of the Chinese. Malaysia's foreign direct investment (FDI) into China in 2012 was 6.3 billion. Conversely, the cross flow from China to Malaysia was only about 10 percent of that - although this has been rising since 2010.<br /> <br /> Malaysia is also lagging behind other countries in the region in terms of its share of outbound investments by the Chinese. "There is a lot of room to play catch up," noted the Economic-Treasury Research unit at United Overseas Bank (UOB).<br /> <br /> According to the Heritage Foundation's China Global Investment Tracker, the combined investment and contracts out of China into ASEAN amounted to $66.6 billion as of June, about a tenth of the worldwide total of $688 billion.<br /> <br /> "Of this, the amount invested in Malaysia is about $9 billion, which is behind Indonesia ($25.9 billion) and Vietnam ($11.2 billion), but ahead of Singapore ($8 billion) and Laos ($7.1 billion)," UOB reported.<br /> <br /> <p> Nevertheless, Sino-Malaysian ties are on an upward trajectory with Chinese President Xi Jinping visiting Kuala Lumpur in October - his second visit to a Southeast Asian country, after Indonesia, since assuming office in March. </p> <p align="center"> <img src="/upfiles/news/image/20131209/20131209165520_8822.jpg" alt="" /> </p>