China begins trade negotiations with Malaysia

April 8, 2006

Chinese trade representative Jia Quinglin met with Prime Minister Badawi to support increase trade, especially in energy, tourism, and infrastructure development. He said Chinese companies will invest in Malaysia, and asked Malaysian companies to invest in the undeveloped western parts of China. Prime Minister Badawi agreed, and also called for joint development of the South China Sea, and re-iterated Malaysia’s support of China’s ownership of Taiwan.

What It Means:
China is pursuing Malaysia to increase its reliance on non-MIddle East oil to meet its energy needs. It also wants to improve relations with other ASEAN countries, of which Malaysia is a leader. ASEAN countries are reluctant to admit China, which would dominate the organization due to its economic size and strength.

Action Steps:
A few weeks ago we mentioned that Malaysia was a good investment opportunity since the U.S. was entering a bilateral trade negotiation. This further proves our point, and I know that I will be reviewing my portfolio in the coming days to be sure Malaysian companies are included in my SE Asia mutual funds.