Can Malaysia afford to alienate trade with China?

Image Credit: Russian Presidential Press and Information Office
Remember the Eurasian Economic Union?
Oh yeah, that…how’s that going?
By Catherine Putz
January 13, 2018
The Eurasian Economic Union (EAEU or EEU*) turned three on January 1, 2018. With four founding members — Russia, Kazakhstan, Belarus and Armenia — the Union was formally established on January 1, 2015. Kyrgyzstan joined officially in August 2015 but since, no other states in Eurasia have made efforts to join. For New Eastern Europe recently, Alexander Libman did a thorough job of asking, and then answering, “What does the Eurasian Economic Union (EAEU) actually do?” As Libman notes, while the organization is prominent in scholarly and political debates, “many students of the EAEU do not study the organisation as such: they seem to be more interested in learning the place the Eurasian idea plays in the Russian foreign policy and rhetoric rather than understanding what exactly the EAEU as an international organisation is about.” … for more, go to 

Can Malaysia afford to alienate trade with China?

KUALA LUMPUR (May 2018): Following the toppling of the Barisan Nasional (BN) federal government in the May 9 14th General Election in Malaysia, there had been much media attention on China’s investments and trade.

The media and Malaysians had been debating whether the new Pakatan Harapan (PH) federal government would be “unfriendly” to China, and thus cancel all the mega projects linked to the Chinese.

However, I Love Malaysia-China Silk Road opines that the question should instead be whether Malaysia can afford to alienate China’s investments and trade.

To have an inkling on the question, Vietnam saw Russian investment into its country rise from close to zero to US$10 billion in two years, after signing a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU).

And, China is also set sign a similar FTA with the EAEU. Other countries, among them Iran, Indonesia and Singapore, are also scheduled to formally announce similar signings.

China is Malaysia’s second biggest trading partner and it is unthinkable that the latter would want to jeopardise economic ties with the former by cancelling mega projects that had been launched by the Chinese in Malaysia.

Not only would it be a folly for Malaysia to do so, it must also sign a similar FTA to keep abreast with the times and developments of trading nations.

If China deemed it necessary to sign a FTA with EAEU, can Malaysia afford to not do the same?

Here’s a China Briefing news report on the FTA signing:

"Posted on May 15, 2018 by China Briefing

By Dezan Shira & Associates

China is set to sign a free trade agreement (FTA) with the Eurasian Economic Union (EAEU) this Thursday in Astana, Kazakhstan. Acting Russian Presidential Aide Yuri Ushakov made the statement to the Tass News Agency yesterday, confirming that the agreement on trade and economic cooperation would be going ahead.

The deal was predicted by Chris Devonshire-Ellis of Dezan Shira & Associates back in 2015.

The EAEU comprises Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan. The economic union has a population of 183 million people and a gross domestic product of more than US$4 trillion, and has been growing at trade volume rates of 30 percent per annum.

Russia and China have already been in talks to link the EAEU with China’s Belt & Road Initiative in plans outlined by presidents Putin and Xi last December. Bilateral trade between China and Russia is set to hit US$100 billion this year, according to Chinese Premier Li Keqiang, while the pace of growth within the China-Russia trade corridor has been outstripping that of China-EU trade, and is also growing at a 30 percent annual rate.

“This FTA is a game-changer”, comments Chris Devonshire-Ellis. He continued, “It opens up the Russia-China and Central Asia-China trade corridors completely and provides alternative markets both for Russia and China. The trade impact of this agreement will be worth hundreds of billions of dollars per annum.”

Dezan Shira & Associates have been ahead of the game in this regard, possessing multiple offices throughout China and recently entering into cooperation agreements with Russian firms in Moscow, St.Petersburg, and Vladivostok. The practice also publishes Russia Briefing and is the only independent professional services firm with a presence across Eurasia.

Numerous other countries are scheduled to formally announce FTA with the EAEU, among them Iran, Indonesia, and Singapore.

Vietnam is currently the only other Asian nation to possess an FTA with the EAEU, in a deal that has seen Russian investment into the country rise from close to zero to US$10 billion in just two years. A copy of the Vietnam FTA with the EAEU can be accessed here."
Putin's and Russian-led Eurasian Economic Union: A hybrid half-economics and half-political “Janus Bifrons”
The Eurasian Economic Union is an institution formalized in January 2015 for the purpose of regional economic integration; it includes five countries: Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan, and may include Mongolia and Tajikistan in the future. With a GDP of $1.59 trillion in 2015, an industrial production of $1.3 trillion in 2014, and population of almost 200 million as of 2016, the EEAU could represent a geopolitical success that supports both Putin's ambitious political agenda and the Union's economic prospects. Although the efforts of this Union are ongoing and long-term success is not certain, the Russia-led Eurasian Economic Union can be considered a hybrid half-economics and half-political “Janus Bifrons” that serves as a powerful illustration of what Putin envisions for the post-Soviet space. Despite promising steps so far, more should be done toward the achievement of economic development and balanced opportunity for all Eurasian countries. Russia's longstanding role within the Union, as well as its power and political motivations, are all considerations that must be accounted for.