Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : THE CHINA WORLD HOTEL, BEIJING
PEOPLE'S REPUBLIC OF CHINA
Tarikh/Date : 19/08/99
Tajuk/Title : THE 3RD MALAYSIA-CHINA FORUM
Let me begin by saying that it is indeed my
pleasure to be back in Beijing again. In a way, I can
truly say that I feel at home in China. Why? Because,
unlike going to other parts of the world, including to
nearby Indonesia or Thailand, I did not have to
adjust my watch. For some of our Chinese friends here
who are not aware of this -- despite the long distance
between our two countries -- China and Malaysia both
have the same time zone. So we can enjoy good times
together and commiserate with each other during bad
times.
2. Humour aside, I have been asked to speak on the
subject 'China-Malaysia Relations: Challenges and
Opportunities in the 21st Century'. However, before I
start looking into the 21st century, I wish to recall
for all of us here today that in May this year, both
China and Malaysia commemorated the 25th Anniversary of
bilateral relations. A lot has changed for China and
Malaysia during the period 1974-1999. A lot has also
changed for the region of East Asia. I am reminded that
my country was the first among ASEAN nations to
establish diplomatic relations with China in 1974.
Since then, China's relations with Malaysia and with
ASEAN have been vastly different compared to the pre-
1974 era. The bold step taken by our two countries
paved the way for new directions for China-Southeast
Asia ties for the last quarter of this century.
3. On our bilateral relations, I am pleased to say
that both sides have maintained very good ties during
that period. The many important trade and investment
agreements reached helped propel our economic linkages
forward. Although we have different political and
social systems, we did not allow the differences to
obstruct our relationship. Instead, we focused on what
could bring us closer together for mutual benefit.
Besides trade and investment, we moved into other areas
in the last decade of the century. For example, the
Agreement on Cooperation in Science and Technology of
13 July 1992 encouraged joint research and
technological exchanges between the two countries. In
the field of education, the Memorandum of Understanding
of 20 June 1997 promoted academic exchanges.
4. Indeed a sure sign of closer relations between the
two countries is that of people-to-people exchanges.
Before this decade, very few Chinese visited Malaysia.
However, by 1996, the figure totalled 135,743, and
this grew to 158,679 the following year. And in the
first two months of this year, Chinese arrivals
increased by 137 per cent. From a few thousand at the
beginning of this decade, the number of visa
applications by Malaysians for visit to China increased
to 205,000 in 1996 and 239,000 in 1997.
5. By 1996, our relationship had been elevated to
that of 'partnership'. In that year, 250 Malaysians
joined me and 450 Chinese to participate in the Beijing
Dialogue on Malaysia-China Partnership. Indeed, the
mutually beneficial ties have convinced both sides of
the need and desirability to forge ahead for an even
closer relationship into the new century. The Joint
Statement Between the Government of the People's
Republic of China and the Government of Malaysia on the
Framework for Future Bilateral Cooperation signed by
both our Foreign Ministers on 31 May this year rightly
calls for a 'multi-directional relationship' in the
years ahead.
6. As we continue to build and enhance our bilateral
ties, I wish to take this opportunity to propose that
our close relationship -- our partnership -- become
more outward looking so as to involve the region which
continues to be better integrated year by year. Just as
Malaysia and China took the bold step 25 years ago to
change the situation between China and Southeast Asia,
I would like to propose that our partnership embark on
a new era-setting endeavour for the region. The
financial and economic crisis that struck our region
during the last two years of the century has warned us
clearly that there are major challenges that China and
Malaysia -- other regional countries included -- have
to meet in the 21st century.
7. China's concern for the well-being of East Asia in
financial crisis has been most laudable. The regional
economies and the global community at large greatly
appreciate China's decision -- despite strong pressures
-- not to devalue the yuan. Beijing's cooperation and
high sense of responsibility has spared the region of a
much worse consequence. A renminbi devaluation would
almost certainly result in a new round of currency
devaluation by the affected economies.
8. However, while hard challenges exist, I very much
prefer to view them as welcome opportunities to enhance
our bilateral relations. In recognising the need for
and acceptance of a positive and pro-active approach,
we can secure further benefits for East Asia as well.
ECONOMIC CHALLENGES/OPPORTUNITIES
Immediate Challenge: To Ensure Firm Economic Recovery
9. In the wake of the greatest crisis to hit the
region after several decades of unprecendeted growth
and development, there is now a need for both China and
Malaysia to work together as well with our neighbours
to ensure solid economic recovery for East Asia. Apart
from bilateral consultations on trade and investment,
both sides could lead in proposals at the end-of-year
Informal Heads of State and Government Summit of the
ASEAN 10 + 3 (China, Japan and South Korea).
For Medium term: Make Asian Monetary Fund a Reality
10. The unprecedented economic crisis has demonstrated
the vital need for the setting up of a regional fund so
that the economies encountering critical financial
problems can turn quickly for assistance so as to
prevent rapid deterioration of their economies. For the
medium term, therefore, China and Malaysia should
examine how together with our neighbours we can realise
the Asian Monetary Fund proposed by Japan. As you may
recall, the original Japanese proposal was shot down by
the United States and the International Monetary Fund
(IMF). Most recently Tokyo has revived the idea and
Malaysia believes that it is a concept worthy of
support. It would also be good to solicit Chinese
backing for the idea. Both Beijing and Kuala Lumpur
could discuss the matter to see how we could --
together with the other regional countries -- encourage
Japan, endowed with the largest financial resources, to
realise the fund. Whatever areas that might require
ironing out could be done so that the East Asian
economies facing crisis can resort to it for
assistance.
Long-Term Challenge: Strive for New International
Financial Architecture
11. A major lesson of the regional/global financial
crisis is that the present global financial system is
simply not adequate to protect small economies from the
onslaught of hedge funds and currency traders. Since
the currency crisis began in mid-1997, Malaysia has
frequently appealed for international action to stop
the destructive currency trade and to discourage short-
term investment in the stock market. In the autumn of
1997, I spoke in Hong Kong of the need to regulate the
activities of currency speculators to protect the
developing countries in particular, but mine was then a
voice in the wilderness. My views were regarded as
ridiculous in a world moving rapidly towards ever
greater globalisation, deregulation and liberalisation.
It was said that any kind of regulation would stifle
foreign investments thus bring further damage to the
developing economies.
12. Although China has not been spared of the impact
of the crisis, it nevertheless did not suffer the rapid
depreciation of the yuan because of protection derived
from non-tradibility in the international currency
market. Yet the experience of China's neighbours have
shown how devastating hard earned national wealth over
the decades can be reduced to a fraction because of
attacks on the local currencies by mainly Western
traders.
13. While China was able to avoid such catastrophy,
Hong Kong, which only a year earlier had reverted to
China, was not so fortunate. We have seen what happened
to Hong Kong. Even the world famous free-market
economy's currency and stock market were not spared
such destructive attacks. The Special Administrative
Region authorities had no choice but to intervene to
save the economy. And how the Government was condemned
for doing so! It seems it is right for attackers to
attack but defenders may not defend.
14. From Asia the contagion spread to Russia, and, in
the beginning of this year, to Brazil. Clearly what was
regional had become global. Malaysia has not stopped
urging the international community to undertake urgent
measures to check the merciless profiteering by a
small group of hedge fund and currency traders. World
trade in goods and services creates wealth and incomes
for millions of people throughout the world. But
currency trading which is said to be 20 times bigger
than world trade profit only a few thousand people.
Worse still it destroys wealth and impoverish millions
of people in the countries attacked. Clearly the
present international financial system is inadequate to
prevent destruction abuses and tragic consequences.
Reforms must therefore be undertaken to ensure the
international financial system will be good for
everyone.
15. Once again, China's position during the crisis has
been salutary. Its support for the crisis-hit regional
economies has demonstrated the Chinese people's concern
for China's neighbours. Your most notable contribution
has been not to devalue your currency. You did not do
so throughout last year. We believe that you will not
do so this year although you have every reason and
right to do so. The price that China has to pay to
help East Asia is high and we in Malaysia truly
appreciate the stand you have taken.
16. Just as important, to avoid a recurrence of such
devastation, China and Malaysia could cooperate for a
stronger voice and to work with other East Asian
countries to urge the developed nations for a concerted
effort to create a new global financial architecture.
17. Malaysia is not under any delusion that the
challenge can be readily met and overcome. The road to
reform is long. It is winding and uphill. But clearly
the opportunity is right before us. We must seize the
moment and forge ahead. The benefits are clear,
especially for the developing countries.
Formalise East Asian Economic Caucus (EAEC)
18. The regional financial and economic turmoil of the
past two years has, in my view, amply proven the
necessity for an East Asian Economic Caucus, a
consultative body where the East Asian countries could
gather to deliberate on matters of regional concern.
True, for the past few years, China -- for that matter
the region as a whole -- did not hear much about the
EAEC. To a large extent this was due to attention being
drawn to the APEC processes as well as the WTO.
Understandably so. And, even in the first year of the
crisis, there was no mention of EAEC. In fact, I would
venture to say that the crisis-hit economies did not
want to bring up the matter as most people feel that it
will not please the IMF or the US. It is not the time
to displease such entities.
19. At the same time, however, I cannot help but feel
that had there been an EAEC comprising the ASEAN
countries plus China, Japan and South Korea meeting
frequently to discuss issues pertinent to the region,
the first recourse for Thailand, Indonesia and South
Korea would not have been the IMF but the EAEC. The
reason is that these economies are fully aware of the
harsh conditions that the IMF would exact from them in
return for financial assistance. Events of the past two
years have proven so. While it is true that in such
critical situations, the IMF and the US cannot be
completely out of the picture, nevertheless, a group
consisting of members from the region would better
understand the problems and needs of the troubled
economies, especially the imperative to avoid social
disruption that would cause further and faster
deterioration of the economy. The IMF intervention in
Indonesia is a classic case to be avoided at all costs
by future economies in crisis.
20. While the EAEC concept had been realised
'informally' as the ASEAN + 3 in the Informal Heads of
State and Government Summit in the last three years and
in the Asia-Europe Meetings (ASEM), I personally feel
that it is inadequate to meet the pressing needs of the
region. In the last few month, the calls for closer
cooperation among the East Asian countries are a
distinct recognition of this fact. Most recently, no
less a person than Japan's serving ambassador to South
Korea, Kazuo Ogura, commented on the matter. In a most
stimulating essay entitled 'Creating a New Asia',
Ambassador Ogura wrote:
" The fact is that we have entered an age in which Asia
must act in a unified way and in which Japan must
shoulder a large part of the leadership needed to
achieve that. One reason has to do with America's world
dominance, the concentration of power in the hands of
the United States. To make America's world leadership
truly effective and thus easy for the world's nations
to accept, it is essential for other international
forces that can supplement the United States
economically and politically to cooperate with it and
support its leadership. At present only Western Europe
and Asia are economically and strategically capable of
taking on this role.
It is necessary for a united Asia, along with Western
Europe, to be prepared to check America so as to ensure
that its leadership is free from self-righteousness and
prejudice and that it does not lapse into protectionism
and a narrow egoism. America, for its part, should stop
obstructing Asian countries' attempts to get together
and exchange views among themselves. "
[Japan Echo, Vol.26, No.3, June 1999]
21. Malaysians also remember that China was the first
Northeast Asian country to openly declare its support
for the EAEC. Japan and South Korea have hesitated, I
believe because of pressure from the US. But, as
indicated by Ambassador Ogura's observation, Japan has
become more open and receptive to Malaysia's and
ASEAN's proposal.
22. It might well be that prospective members of the
East Asian forum would desire a change of name for the
grouping. This should not be a problem. What is
important is that we must move the process forward. I
would like to take this opportunity to urge China to
join Malaysia and other ASEAN countries to consult with
Japan and South Korea so that the EAEC or any East
Asian body with a different name can be 'formalised'
and acknowledged as a regional grouping representing
the interests of East Asian countries. There is no
doubt that a legitimately recognised EAEC would allow
for more consultations on issues vital to the region.
With an EAEC, the region's interests can be better
promoted in APEC, ASEM and WTO.
Cooperation in Science and Technology
23. In identifying the challenges that our economies
will encounter in the next century, high on the list is
the necessity for cooperation in science and
technology. As the cutting edge in global
competitiveness, for advances in communications,
medicine, energy resources and defence know-how,
science and technology calls for a 'smart partnership'
between China and Malaysia for the 21st century. Both
sides must maximise cooperation in this critical aspect
of national and regional development.
24. East Asia's credibility and testimony as an engine
of growth for the region and the global economy in the
21st century can best be attained if during that period
the regional states can become as technologically
advanced as the Western nations, or if they can
substantially narrow the gap between the two regions.
While in the present century, we have clearly been
recipients and consumers of Western technology, in the
next century, we must collectively determine to become
contributors to global technological development. The
ASEAN 10 + 3 need to adopt a wholly new mindset of not
only becoming strong industrialised nations in the 21st
century but also possessing strong scientific and
technological attributes. This calls for the
overhauling of our respective educational systems. The
biggest obstacle to becoming science and technology-
strong nations is not in our stars, as Shakespeare
would remind us, but in our thinking, in our mindsets.
Change them and we will see great changes in scientific
and technological advancement by East Asia in the next
century. This is not Mission Impossible but Mission
Possible.
POLITICAL AND SECURITY CHALLENGES/OPPORTUNITIES
Need for Setting Up Asian Media
25. Another important challenge and opportunity for
Malaysia and China in the 21st century is the urgent
need to work together with other regional states for
the setting up of an Asian Media. This is due to the
overwhelming dominance of Western media reporting on
regional and global affairs throughout the present
century. The major concern among East Asian nations has
been the slanted and distorted reporting of global
events to Asian audiences and similar reporting of Asia
to other parts of the world. This has led to attempts
by some Asian media circles to stem the tide by
providing alternative sources of newsreporting and
dissemination. During the present decade, East Asian
English-language newspaper editors have met twice in
Kuala Lumpur to discuss the need for informing Asia
about Asia by Asia'. Although since 1995, the Bangkok-
based Asia Times had sought to do just that,
unfortunately, it was shortlived. The newspaper folded
two years later. Highly commendable though these
initiatives have been, Asia has still a long way to go
before it can provide the media balance hoped for.
While individual country efforts could be undertaken,
yet owing to necessary technology and capital, regional
joint efforts would undoubtedly be far more effective.
It would be most helpful if China and Malaysia could
jointly lead in such a significant endeavour.
Restructuring of United Nations Security Council Vital
26. Reforms in the United Nations are long overdue. If
the world body after the end of the Cold War is truly
to become the central organisation for promoting world
peace and stability as it should be, it must change
itself. Unfortunately, with the exception of China and
Russia in the United Nations Security Council (UNSC),
for a body comprising other nations keen on championing
democracy for the developing countries, other permanent
members of the UNSC have shown little interest in
practising it in that body itself.
27. China and Malaysia share the common desire for an
undominated United Nations to be the highest authority
on matters affecting the international community. As
Asia's only member in the UNSC, China together with
Malaysia can work to promote reforms of the United
Nations. Expanding the membership of the UNSC to
reflect the interests of developing countries in vastly
new circumstances since the United Nations was
established more than five decades ago will help create
a more equitable political world order. Recently while
concurrently serving as president of the United Nations
General Assembly as well as chairman of the Working
Group on Security Council Reform, Malaysia's Tan Sri
Razali Ismail worked hard at advancing the reform
process. It is time for China and Malaysia to jointly
consider some bold initiatives for changing the United
Nations.
Promoting ASEAN Regional Forum (ARF)
28. The ARF should be assiduously promoted for
ensuring lasting peace and stability for East Asia and
the wider Asia Pacific. While discouraging the
formation of alliances in the region, both China and
Malaysia are clearly very much in favour of promoting
multilateral efforts for regional peace and security.
The ARF promotes confidence building and trust which is
sorely needed especially among the major-power members
of the regional forum.
29. Although some ARF members are critical of the
forum for not moving faster in resolving regional
security issues, from Malaysia's perspective, given the
great diversity among the 21 members, the forum which
met just last month for the sixth time, should be
credited with successfully providing a venue for the
member countries to voice their concerns about regional
security. While it still has a long way to go in
fulfilling its goals of promoting preventive diplomacy
and formulating approaches to conflict resolution,
ASEAN members of the forum strongly believe in the
efficacy of 'gradualism' for resolving contentious
issues among members. Presuming certain countries
would be our potential enemy and forming alliances
against them is certainly not going to contribute
towards lessening tension and ensuring peace for the
future.
Building East Asian Community of Common Peace and
Prosperity
30. Over the last three decades, the ASEAN Peace or
Pax Aseana has successfully brought down the
ideological barriers between two divided parts of
Southeast Asia for the attainment of One Southeast Asia
(ASEAN 10) as the end of the 20th century approaches.
This is a truly remarkable achievement for the
subregion as for the first time in its long history,
Southeast Asia is united under one body and will enter
the new century as a single entity.
31. China and Malaysia can also strive together to
promote peace in East Asia as a whole based on Pax
Aseana. Along with the other regional countries, we can
boldly begin to build an East Asian community, which
can secure lasting peace for the region in the 21st
century. In fact the EAEC would be an ideal instrument
for this purpose.
32. Malaysians still remember the inspiring words of
President Jiang Zemin, when he participated in the
Informal ASEAN + 3 Summit at the end of 1997. Indeed,
the desired East Asian community could be created based
on the principles he set forth. President Jiang noted:
" It has become the shared understanding of East Asian
countries to maintain regional peace and stability,
develop the economy, science and technology, expand
mutually beneficial cooperation, and promote common
prosperity. East Asian countries are committed to the
development of their relations on the basis of mutual
respect, treating one another as equals and non-
interference in one another's internal affairs and
properly addressing some existing differences through
friendly consultations. With political stability, East
Asian countries enjoy good relations among themselves.
This has provided an important prerequisite for the
sustained economic growth of East Asian countries and
the development of their economic cooperation. "
33. It should be noted that President Jiang never
mention any military alliance or cooperation against
anyone, in the region or outside.
The Best Way Forward
34. Exactly a hundred years ago, the 19th century drew
to a close and ushered in the dawn of the 20th. East
Asia then had nothing to show to the world except that
practically the whole region was under colonial rule.
British administration, by the end of the century, was
firmly established in Malaysia. China at the same time
saw the infamous imposition of spheres of influence
with the country carved up by the foreign powers
possessing extra-territorial rights. Economic
development then was mainly aimed at serving the needs
of the colonial powers.
35. Now, 100 years later, as the 20th century also
draws to a close and we are on the threshold of the
21st century, the situation has changed drastically.
Having cast off the yoke of foreign dominance, China,
Malaysia and their neighbours rose to achieve
unprecedented economic growth and development. But the
very last years of this century have shown how
vulnerable East Asia can be to external forces bent on
exploiting our weaknesses.
36. Therefore, for mutually beneficial bilateral
interests and that of the wider East Asia, both China
and Malaysia must rise to the challenges mentioned
above for the 21st century. Viewed positively as golden
opportunities and spurred on by the need to be pro-
active at all times, both sides can seek the
cooperation of the other regional countries. The
successful meeting of these challenges will bring
untold benefits for the citizens of Malaysia and China,
and for those of other regional states as well. An
East Asian community enjoying prosperity and at peace
with itself in the new century is indeed a noble
endeavour worthy of our cooperative efforts.
37. Inspired particularly by a quarter century of
close relations, China and Malaysia can now embark on
meeting the challenges of the next 25 years, and
beyond. Assisted by our fellow East Asians, I am
confident that many of you here today will agree with
me that we can further elevate our region in the eyes
of the world.
38. I thank you for your kind attention. With your
Millennium Clock on the Great Wall counting down the
last days of 1999, Malaysians join me in wishing you,
our Chinese friends, 'Happy New Century', 'Happy New
Millennium'. I don't know about you, but I don't think
I can wait for a similar occasion next time around.
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