(June 20): China is definitely the new Japan. For Mahathir Mohamad, at least.

 

That’s not because of its demographic challenges or the trade war with Washington, which has evoked comparisons with the U.S.-Japan tussle of the 1980s. Malaysia's prime minister needs China the way he needed Asia’s biggest economy decades ago. In his first spell as his country’s leader, Mahathir dubbed this approach “Look East.”

 

Having returned to office after a 15-year gap, he now finds China the giant kid on the block. Japan is still in the picture, along with South Korea, but the Chinese footprint in Malaysia grew significantly during Mahathir's absence. China’s economy, while slowing, is exerting more gravitational pull; few leaders in the region can afford to ignore that.

 

Malaysia wants to tap that strength – to a point. Mahathir has always been wary of hegemons and throughout his time in public life sought to play off competing forces. In particular, he’s inclined to pick up rhetorical cudgels on behalf of Asians who he argues are being picked on by the West. It’s reflexive for him.

 

That doesn't mean Mahathir spurns Western investment – far from it – or that he’s naive about neighbors. It’s just that opportunities to poke Britain or America in the eye have always been hard to resist. That's how to read his recent support of Huawei Technologies Inc. This isn't so much a bow to China as a chance to take a shot at the U.S. Malaysia will use Huawei’s gear “as much as possible'” because the Chinese firm offers a “tremendous advance over American technology,” the prime minister said at a forum in Tokyo on May 30.

 

Having watched Malaysia’s leader closely, first in the late 1990s as Kuala Lumpur bureau chief for Bloomberg News and now as a columnist based in Singapore, his Huawei remarks struck me as classic Mahathir. The cast may have changed; the basic plot line is the same. Given the choice between regional and Western options, he'll stump for the former and push back against the latter. And enjoy it.

 

During a visit to Malaysia last week, one legislator from Mahathir's coalition put it to me this way: “Look East” is still his preferred route to industrial and technological development. That used to mean Japan, South Korea and Taiwan. Now it means that trio and China. Japan, with its economic and strategic ties to the U.S., hasn't been abandoned. His respect and affection for Japan still run deep, the politician told me.

 

In fact, SoftBank Group Corp. founder Masayoshi Son was offered a seat on the board of Khazanah Nasional Bhd., Malaysia's state investment firm, the Star reported late last year. Son turned it down, the newspaper said. Khazanah did hold preliminary talks about an investment in SoftBank's $100 billion Vision Fund, according to Nikkei.

 

This doesn't sound like Malaysia is all-in for China.

 

Proton Holdings Bhd., the national car project beloved of Mahathir during his first spell running Malaysia, was established in 1983 in partnership with Japan's Mitsubishi group. The vehicles were ubiquitous on the streets, thanks in part to subsidies and other benefits of state patronage. (I used to own one.)

 

When China’s Zhejiang Geely Holding Group Co. bought almost half of Proton in 2017, during the premiership of Najib Razak, Mahathir viewed it as a blow to national pride. Mahathir has spoken of starting yet another car project. Again, this doesn't sound like someone who’s all-in for China, either.

 

Also instructive is the story of a Chinese-backed rail project linking the laid-back east coast of peninsular Malaysia with the more prosperous and populous west coast. When elected in 2018, Mahathir complained about the costs to Malaysia and the debt that would be racked up. He suspended the venture, which was seen as a tilt away from China. Wrong again. The project was revived, in an amended, less expensive form.

 

Mahathir sees the need to deal with China. His strategy is to tack toward it when opportune, without becoming a satellite. That’s a prudent approach that reflects reality and makes for a sound template for relations beyond Southeast Asia.

 

If it doesn’t work out, there’s always Japan.

 

 - Bloomberg