China Won't Match U.S. as Military Power, Malaysia's Najib Says

(Bloomberg) -- China will become the dominant economic power in Asia in the near term but will not displace the U.S. militarily, according to Malaysia’s Prime Minister Najib Razak.

In an hour-long interview with Bloomberg on April 24, his first one-on-one with international media in more than three years, Najib spoke warmly of Malaysia’s relationship with both China and the U.S. He also stressed the need for the major powers to act in a "constructive” way in the region and avoid a potential Thucydides trap, named after the Greek historian who warned of war when an emerging power challenges a mature one.

“We don’t want a so-called rising power and an old power to be at odds with one another,” Najib said. “China will be the biggest economy, certainly, that’s a fact. But China will not be able to match the United States in terms of being the military superpower as such.”

Najib, 64, who expects his ruling coalition to return to power in a May 9 election, leads a country that sits along a key global trading route through the Malacca Strait into the disputed South China Sea. As a smaller nation, it risks getting caught in the middle as China expands its economic and military clout in Southeast Asia, a region the U.S. has dominated for decades.

China Won't Match U.S. as Military Power, Malaysia's Najib Says

“The rise of China is inevitable, you know, whatever you say, you can’t stop it,” Najib said of his country’s biggest trading partner. “It’s a big market and we can do a lot of things with China, provided that China doesn’t use its size of economy and embark on policies that would be hurting us,” he said. “I know it’s a cliche to talk peaceful rise but we believe there’s no reasons for us to doubt that will happen.”

Since coming to office, President Donald Trump has spurred doubt over the future of the U.S. commitment to the region, leading to concerns that China may rise at an accelerated pace. He withdrew from a blockbuster Pacific trade pact that many Asian nations saw as a hallmark of the U.S.’s staying power, and now remaining members such as Malaysia say they don’t want to renegotiate the deal to accommodate a potential U.S. return.

Trump’s ambiguous approach toward U.S. partners has persisted even after the Pentagon warned the U.S. must prepare to wage a great power competition with China and Russia as those nations seek to “co-opt or replace the free and open order that has enabled global security and prosperity since World War II.” Chinese leaders have repeatedly sought to reassure smaller countries, saying they don’t seek hegemony in the region.

China Won't Match U.S. as Military Power, Malaysia's Najib Says

Najib knew Trump before he reached his current levels of fame. As well as meeting in person and speaking on the phone, they’ve played golf together.

“I have a good, warm, I mean a personal relationship with President Donald Trump,” Najib said.

“He’s not bothered about things that don’t matter to him, in a sense,” he added. “I think the two important things that matter to him would be, you know, how to make the United States great and create more jobs. Number two, how to make the United States safe.”

Despite Malaysia’s disappointment with Trump over the Trans-Pacific Partnership trade pact, it also faces differences with China. That’s even as economic ties increase, with Malaysia increasingly a part of President Xi Jinping’s Belt and Road infrastructure program. China was the country’s top source of foreign direct investment last year.

South China Sea

China and Malaysia have competing claims to parts of the South China Sea, a key waterway for trade, fishing and -- increasingly -- militaries. China asserts ownership of more than 80 percent of the waters, and has built runways and other installations supportive of a military presence on reclaimed reefs.

Admiral Philip Davidson, who was nominated as commander of the U.S. Pacific Command, said in written testimony to Congress this month that Beijing had largely completed building forward bases in the South China Sea.

“Once occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania,” he said. “In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States.”

Najib said he was hopeful China would respect the views of other claimants. He expressed caution when asked if he would consider joint exploration with China of oil and gas resources in the area, saying it could be seen as tacit acceptance of another nation’s claims.

“We have been trying to tell the Chinese government that it should not be a militarized South China Sea, and whatever it is, it should be done on peaceful negotiations and in accordance with international law,” he said. “They do have three man-made islands, atolls that have become major islands but they have not really been fully deployed as military bases so to speak, but they do have some assets.”

China Won't Match U.S. as Military Power, Malaysia's Najib Says

Malaysian opposition leader Mahathir Mohamad said in a recent interview that if he wins the election he will restart negotiations on rights and access to the South China Sea while ensuring “friendly” relations with all countries. He also said that Chinese companies currently don’t employ locals or bring in capital and technology to Malaysia.

“Lots of people don’t like Chinese investments,” Mahathir said. “We want to defend the rights of Malaysians. We don’t want to sell chunks of this country to foreign companies who will develop whole towns.”

Mahathir’s comments reflect broader concerns about Chinese investment across Asia that have stoked political tensions from Australia to Sri Lanka. While many countries are eager to benefit from Xi’s largess, they are also wary of becoming too dependent on China.

Najib said the government had written guarantees into Belt and Road contracts to protect local workers. “For example a lot of the infrastructure work will be done by Malaysian companies and they are to employ Malaysian people to work on that project,” he said.

While he said Belt and Road projects would increase China’s influence in the region, he maintained that Malaysia and other Southeast Asian states could manage the issue and refuted any suggestion the projects came with strings attached.

China is “more obsessed” with economic growth than military expansion, Najib said. “I don’t think China will risk any irresponsible action that will undermine its rise to become the largest economy in the world.”

©2018 Bloomberg L.P.