Chinese Investment in Malaysia: COVID-19, Democracy and Beyond

Abstract

China’s rising influence in parts of the developing world has raised concerns among the US and its allies. In the wake of the COVID-19 outbreak, the provision of vaccines and aid to countries in the Global South have further heightened anxieties over the potential for diffusion of China’s ideals. China’s investments are thought to promote the diffusion of its perspectives of rule of law and democracy, posing a challenge to the global dominance of Western liberal democratic values. Nonetheless, few studies have examined how the diffusion of China’s ideals may occur through its investments and infrastructure projects in young democracies such as Malaysia whose governance and legal system significantly outperform China’s according to various global indexes. This article investigates the increasing engagement with China and the reasons for this trend against the backdrop of Malaysia’s legal and political institutions inherited from the West. It considers how young democracies like Malaysia are vulnerable to China’s influence, intentional or unintentional, through investment. The analysis sheds light on the mechanisms that give rise to such vulnerability, exploring how the electoral system and rule of law may facilitate and amplify the impact of Chinese investment, with broader implications for democracy. Shared tacit understandings, such as the instrumentality of law and the nexus between state and business, which facilitate cross-country cooperation are also examined.

Keywords: democracy, rule of law, human rights, investment, state-owned companies