President Xi’s Visit To Malaysia Signals Stronger Malaysia-China Ties, Boosts Economic Prospects - MIDF

KUALA LUMPUR, April 15 (Bernama) -- The visit of China's President Xi Jinping to Malaysia highlights China's commitment to strengthening ties with ASEAN, advancing regional cooperation, and deepening the bilateral relations between Malaysia and China. 

According to MIDF Amanah Investment Bhd (MIDF Research), the visit is expected to bolster major initiatives such as the Belt and Road projects in Malaysia, including the East Coast Rail Link, and enhance connectivity and economic integration between the two nations. 

“We view President Xi’s visit as a catalyst, reinforcing the confidence in bilateral engagements which bodes well for the prospects of Malaysia’s construction sector,” it said in a statement. 

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It noted that infrastructure remains the cornerstone of the Belt and Road Initiative (BRI), with Malaysia poised to benefit significantly from Chinese investments in railways, ports and transportation infrastructure.

Enhanced Malaysia-China ties are also expected to open substantial opportunities for data centre development in Malaysia, particularly as China's technological giants expand their digital footprints internationally, said MIDF Research. 

At the same time, Xi is expected to address concerns related to the impact of the United States (US)-China trade tariffs on Malaysia's economy and explore ways to strengthen economic ties between the two nations. 

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“Tariff imposed on Malaysia by the US may hit the industrial property development in Malaysia going forward due to a softer economic outlook.

“With stronger ties with China, which may increase investment of Chinese companies in Malaysia, that should partially offset the adverse impact of tariffs on the industrial property market in Malaysia,” it said. 

The trade relationship between Malaysia and China is primarily structured under the ASEAN China Free Trade Area (ACFTA), a multilateral agreement that entered into force in July 2005. 

While Malaysia does not have a direct bilateral free trade agreement (FTA) with China, the ACFTA encompasses tariff reduction and elimination across a broad spectrum of goods.

Currently, ASEAN and China are engaged in active negotiations to upgrade the ACFTA to version 3.0, aiming to address non-tariff barriers, enhance market access, and expand cooperation into emerging sectors such as the digital economy and green development.

Furthermore, both Malaysia and China are signatories to the Regional Comprehensive Economic Partnership (RCEP).

This mega-regional trade agreement, which includes all ten ASEAN nations alongside China, Japan, South Korea, Australia, and New Zealand, complements the ACFTA by fostering deeper economic integration across the wider Asia-Pacific region through a comprehensive framework covering trade in goods, services, investment, intellectual property, and dispute resolution.

Looking ahead, MIDF Research noted that the prospect for the industrial property segment should remain stable and sustain the growth of industrial-focused real estate investment trusts with a stronger tie with China as it may increase investment of Chinese companies in Malaysia to set up factories in Malaysia and should cushion the impact of tariffs by the US.

Furthermore, a stronger collaboration between Malaysia and China would allow for better knowledge sharing and technology transfer, especially for the utilities or power industry. 

Other sectors likely to benefit from stronger China-Malaysia relations are tourism related and technology. 

-- BERNAMA