Share to help stimulate good governance, ensure future of people & M’sia
No News Is Bad News
For image info, go to https://www.channelnewsasia.com/asia/malaysia-us-trade-deal-sovereignty-criticism-tengku-zafrul-asean-5431891
What the UG is not telling you about the US-Malaysia trade deal inked at the 47th Asean Summit
KUALA LUMPUR, Nov 8, 2025: Did Malaysia’s 10th Prime Minister (PMX) Anwar Ibrashim and his so-called Madani Unity Government (UG) sell Malaysia’s sovereignty in the US-Malaysia trade deal inked at the 47th Asean Summit?
The Coverage has posted a detailed damning article on the lopsided agreement.
Whether Malaysia’s sovereignty was sold to the US or not, it is up to you to judge after reading the following article:
What Tengku Zafrul Isn’t Telling You: The Economic Danger of Siding with the US Over China – China’s Wrath Is More Catastrophic Than Trump’s Tariffs8 November, 2025
In recent weeks, Tengku Zafrul Abdul Aziz, Malaysia’s Minister of Investment, Trade and Industry, has been touting the shiny new US-Malaysia Agreement on Reciprocal Trade (ART) as a major win. He highlights how negotiations slashed US tariffs from 25% to 19%—a 6% saving on roughly US$20 billion in annual Malaysian exports to the US, particularly in electronics and machinery.
Sounds great on paper—Malaysia as America’s “trusted partner,” dodging the Trump tariff hammer. But here’s what Tengku never mentions in his victory laps: the deal’s fine print in Articles 5.1 and 5.2 could drag us into the US-China crossfire, turning us into a reluctant enforcer of American sanctions and export controls. And if that offends Beijing?
We’re staring down the barrel of economic retaliation, just like what happened to Nexperia this year.
China doesn’t take betrayal lightly, and our economy—still 16.8% hooked on bilateral trade with them (RM484 billion in 2024)—could pay dearly.
The Trap in Articles 5.1 and 5.2: From “Cooperation” to Coercion
Article 5.1 (“Complementary Actions”) requires Malaysia to “align” with US national-security measures, including sanctions and trade restrictions, before we can slap back with our own countermeasures. Article 5.2 ramps it up, mandating “cooperation” on export controls for “sensitive” tech and goods—think semiconductors, AI, and dual-use items that Washington wants to keep out of Chinese hands. Critics call it a “charter for annexation,” forcing us to act as a US proxy in economic warfare against China.
If the US invokes these—say, to block Malaysian firms from supplying China with chip tech—we’re compelled to comply or face US penalties. But Beijing sees that as siding with the enemy. Enter the Nexperia nightmare: A Dutch-Chinese semiconductor giant (owned by China’s Wingtech) with factories in Malaysia (Seremban) and China.
In October 2025, US export curbs on advanced chips triggered China’s Ministry of Commerce to slap a full export ban on Nexperia’s China operations, halting global supplies and threatening car production worldwide. Payments froze, quality dipped (chips made post-Oct 13 couldn’t be “guaranteed”), and the ripple hit EU and Asian auto giants. It took a Trump-Xi deal to lift the ban last week, but not before weeks of chaos.
Malaysia isn’t Nexperia, but we’re next in line. Our E&E sector (50% of exports to China) is a prime target. If we enforce US controls, China could mirror this: Tariffs, bans, or worse—pulling the plug on investments and projects.
The Real Price Tag: Economic Blowback from Offending China
Tengku’s 6% tariff save? Peanuts compared to a Chinese backlash. Based on current ties (China: our top partner, US$103B trade in 2024) and precedents like the US-China trade war (where affected trade dropped 10-20%), here’s what a 30-50% bilateral trade/FDI hit could cost us in a “Nexperia-style” retaliation scenario. Short-term (Year 1) shock, assuming we “break away” by enforcing US rules.
Malaysia and China share deep economic interdependence, with China serving as Malaysia’s largest trading partner for the 16th consecutive year. In 2024, bilateral trade reached approximately RM484 billion (about US$103 billion, using an average exchange rate of RM4.7 per USD), accounting for 16.8% of Malaysia’s total global trade of RM2.879 trillion (US$612 billion). Malaysia’s total exports were US$329 billion, with exports to China comprising about 14% (US$46 billion), primarily in electrical and electronics (E&E), palm oil, chemicals, and machinery. Imports from China totaled US$65 billion (21% of Malaysia’s total imports of US$311 billion), mainly machinery, electronics, and consumer goods.
Chinese foreign direct investment (FDI) in Malaysia was robust, with approved investments of RM28.2-31 billion (US$6-6.6 billion) in 2024, focusing on manufacturing (especially E&E and semiconductors), infrastructure, renewable energy, and digital technologies. The cumulative Chinese FDI stock stood at US$13.5 billion by end-2023, supporting key sectors like green and digital economies. Malaysia’s overall GDP in 2024 was US$422 billion, with exports contributing about 78% directly or indirectly through supply chains.
Category | Baseline (2025 Est.) | Estimated Loss (Year 1) | % Impact | Long-Term Fallout (2-3 Years) |
GDP | US$445B (5% growth from 2024) | US$18-31B (4-7% contraction) | 4-7% of GDP | 2-4% drag; recession risk if exports (78% of GDP) stall |
Exports | US$50B to China (14% of total) | US$15-25B (30-50% drop) | 30-50% bilateral | Supply chains reroute to Vietnam/India, but +10-20% costs |
Jobs | ~400K tied to China exports/FDI | 120K-240K (manufacturing focus) | 30-60% in E&E sector | Unemployment up 1.5-2.5%; 50K from stalled projects alone |
Investment (FDI) | US$7B annual from China (15% total) | US$3.5-5.5B inflow halt | 50-80% drop | Cumulative US$2-3B stock loss; US/EU gains offset only 30% |
Ongoing Projects | RM30B+ (e.g., ECRL, data centers) | RM10-15B stalled/frozen | 30-50% pipeline | Delays in green/digital tech; 20K jobs at risk in infra |
· Exports & Economy: E&E (US$23B to China) gets hammered first—tariffs or bans could wipe 40% of that, cascading to 5-6% GDP hit via multipliers (downstream industries like autos). Palm oil/chemicals follow, as China sources alternatives from Indonesia/Brazil.
· Jobs: Penang and Johor (E&E hubs) lose big—100K+ direct, plus 50K indirect from factory slowdowns.
· Investments: China pledged RM31B in 2024; retaliation kills new flows, yanking support for semiconductors (e.g., Huawei ties) and EVs. Ongoing: East Coast Rail Link (RM50B, 30% Chinese-funded) grinds to halt, costing 15K construction jobs.
· Tech Ripple: Lose 25% of high-tech inflows (AI, 5G), delaying Industry 4.0 by 2-3 years. Nexperia’s quality woes show how fast trust erodes—Malaysian firms like Infineon partners get tainted by association.
MITI insists the deal “doesn’t undermine sovereignty,” but Article 5.2’s “cooperation” on sanctions smells like a leash. We’re not a superpower; we’re a middle-income trader squeezed between giants. The US save is real but tiny (US$1.2B annually on that 6%). China’s wrath? Catastrophic.
Anwar’s government must level with us: Is short-term tariff relief worth long-term vassalage? Demand a full impact assessment on China risks before it’s too late. Otherwise, we’re not “trusted partners”—we’re expendable pawns in someone else’s game.
Estimated Economic Impacts
1. GDP Loss
· Direct hit: Lost exports to China (US$14-23 billion, or 30-50% of US$46 billion baseline) reduce GDP by 3.3-5.5% initially (exports are ~11% of GDP directly).
· Indirect: Supply chain disruptions, higher import costs (e.g., +10-20% on US$65 billion imports), and reduced FDI flows add 1-2% drag via lower investment and consumption.
· Total estimated GDP impact: 4-7% contraction in Year 1 (US$17-30 billion loss), tapering to 2-4% in Years 2-3 as diversification kicks in. Malaysia’s 2024 growth (5.1%) could flip to recession (-1-2%).
· Comparison to benchmarks: Similar to China’s slowdown effects (already -1.9% export drop in 2024) but amplified 5-10x by targeted actions.
2. Jobs Lost
· Export-dependent sectors (E&E, manufacturing: 85% of exports) support ~2.5 million jobs total; China ties account for 10-15% (~250,000-375,000).
· Investment-related: 2024 Chinese FDI created 20,000 jobs; cumulative stock supports ~80,000-100,000 (assuming US$100,000-150,000 investment per job in manufacturing).
· Total estimated job losses: 100,000-200,000 (6-12% of manufacturing workforce) in Year 1, concentrated in Penang/Johor (E&E hubs). Trade war precedent: 50,000 at risk from milder tensions. Recovery via retraining/reskilling could reclaim 40-60% in 2 years, but unemployment could rise 1-2% overall (from 3.3% baseline).
3. Investment Losses
· Annual Chinese FDI inflow: US$6-6.6 billion (15-20% of Malaysia’s total US$39.7 billion actual FDI in 2023, rising to higher in 2024).
· Total estimated loss: US$3-5 billion annually (50-75% drop), plus stalled projects in Belt and Road Initiative (e.g., East Coast Rail Link). Cumulative stock erosion: 10-20% over 3 years (US$1.3-2.7 billion). Offsets: Potential US/EU FDI surge (e.g., semiconductors) could fill 30-50%, as in 2018-2020 trade war.
4. Technology and Innovation Losses
· China drives 20-30% of Malaysia’s high-tech inflows in digital economy (AI, data centers), green tech (solar, EVs), and blue economy (maritime tech).
· Impacts: Delayed tech transfer (e.g., 5G, semiconductors); 10-15% slowdown in R&D output; loss of 2,000-5,000 skilled TVET placements/training in China annually (100% employability rate). Malaysia’s “Industry 4.0” goals could slip 2-3 years, with E&E productivity dropping 5-10%. Mitigation: Partnerships with Japan/Taiwan could accelerate alternatives.
Look, Even the Big Players Have to U-Turn When Facing China
Don’t think this is just small fry like Nexperia getting squeezed—China’s got the leverage to make even the world’s biggest economy backpedal. Here’s proof from the headlines this year alone: When the US pokes the bear, Beijing retaliates hard, and Washington ends up begging for mercy. If Malaysia gets caught in the middle via that ART deal, we’ll be the ones folding fastest.
· Look, even Nexperia had to U-turn under pressure: In October 2025, US-backed Dutch controls on chip exports to China forced Nexperia to halt wafer shipments to its own China unit, sparking a full Chinese export ban that crippled global auto supplies. Weeks of chaos later, after frantic talks, China lifted the ban, and the Netherlands is now dropping its controls— a mutual U-turn that saved the day but exposed how quickly Beijing can weaponize supply chains. Malaysian plants like Seremban’s were collateral damage, idling thousands of jobs temporarily.
· Look, even Trump had to U-turn on tariffs when staring down China: Fresh off threatening 100% tariffs on Chinese goods in October, Trump blinked after his Xi meeting in Busan. He slashed fentanyl-related tariffs from 20% to 10% and overall rates from 57% to 47%, suspending retaliatory hikes for a year. It’s a clear de-escalation, admitting the trade war’s “not sustainable”—just like his 2020 Phase 1 pivot, but with higher stakes in 2025.
· Look, when the US hiked fees on Chinese ports and ships, China hit back with rare earth restrictions—and Trump folded: In mid-October, the US slapped extra docking fees on Chinese vessels (up to $56 per net ton) to squeeze shipping. Beijing retaliated instantly with 400 yuan fees on US-linked ships and tightened rare earth exports—critical for everything from EVs to missiles. Trump had no choice: Days later, he agreed to a one-year pause on port fees and suspended rare earth curbs, calling it an “end to the roadblock” after Xi talks.
· Look, even Trump had to bend down and beg China for soybean buys and port leases: To sweeten the truce, the US inked a deal for China to snap up 12 million tons of US soybeans in late 2025 alone—part of a multi-year pledge for 87 million tons through 2028—resuming the ag purchases Trump once touted as his “win.” And on ports? The one-year fee pause includes China leasing US facilities on favorable terms, a quiet concession that echoes how Beijing turned the tables in past spats.
These aren’t one-offs; they’re China’s playbook. Rare earths control 80% of global supply, ports handle 40% of world trade, and soybeans feed US farmers—Beijing flips them like switches. Trump talks tough, but even he bends when the pain hits home.
No comments:
Post a Comment