As Prime Minister Anwar Ibrahim leans further toward Beijing and further from Washington, the numbers behind the relationship tell a more complicated story than either capital's talking points.
Malaysia's prime minister has not been shy lately about where his sympathies lie. But the warming rhetoric did not appear from nowhere. It rides on top of a decade-long build-up of trade, financial, and technology ties between Kuala Lumpur and Beijing that has recently produced some of the largest numbers on record, and it has also, increasingly, drawn pointed concern from both Washington and Beijing about where those ties are headed.
A Financial Safety Net, Now Bigger Than Ever
The Edge Malaysia reported on Aug 7 that Malaysia and China had renewed and expanded their bilateral currency swap arrangement for another five years, allowing the two central banks to exchange up to RM130 billion, or 220 billion yuan, up from RM110 billion, or 180 billion yuan, previously. It is the fifth expansion of an arrangement that started in 2009 at just RM40 billion, or 80 billion yuan, according to Bank Negara Malaysia (BNM). The central bank said the deal would reaffirm the "long-standing cooperation" between the two sides and help settle bilateral trade and investment in local currencies rather than the US dollar.
That framework has already reshaped how the two countries transact. Bank of China has operated as an official renminbi clearing bank in Malaysia since January 2015, and by March 2026, renminbi-ringgit settlements accounted for 25.6% of bilateral trade, according to a recent analysis from the ISEAS – Yusof Ishak Institute. China has been Malaysia's largest trading partner for more than a decade, while Malaysia ranks as China's second-largest trading partner within Asean.
Diplomacy's Busiest Year Yet
The diplomatic traffic has followed a similar trajectory. Compiling data from senior bilateral meetings, the ISEAS paper found that memoranda of understanding signed at these meetings jumped from around five in 2021 to zero in 2022, then to 19 in 2023, 14 in 2024, and a record 31 in 2025. That was the year Xi Jinping made a rare state visit to Malaysia and met Anwar Ibrahim twice. Official language climbed in step, moving from an emphasis on mutual, win-win benefit in 2021, through repeated talk of jointly building a shared community in 2022-2024, to explicit references by 2025 to a high-level strategic partnership and a new golden 50-year era of ties.
Technology's New Gold Rush
The clearest material expression of the relationship is in technology investment. ISEAS visiting fellow James Chai compiled 67 disclosed and undisclosed Chinese technology deals in Malaysia since 2015, worth a combined RM155.1 billion (US$37.9 billion). He found that 2023-2024 alone accounted for more than half of that decade-long total, at RM84.9 billion across 22 deals. The single largest disclosed deal was Zhejiang carmaker Geely's RM45.6 billion investment in 2023, followed by solar manufacturer Risen Energy's RM42.2 billion plant from 2021 and ByteDance's RM10 billion data-centre commitment in 2024. Nearly every Malaysian state now hosts at least one large Chinese tech project, from semiconductors in Penang to data centres in Johor, batteries in Kedah, and EV assembly in Perak.
The surge continues at the institutional level too. The sixth edition of the Belt and Road-branded China-Malaysia Business Dialogue met in Yinchuan this April, producing 26 deals worth about US$72 million across trade, investment, and agriculture, according to People's Daily Online, citing Xinhua. Malaysian officials at the event pointed to energy transition and artificial intelligence as the next areas for cooperation, while the report noted that overnight visits by Malaysian tourists to the host province of Ningxia jumped 207.7% year-on-year in 2025, which state media suggested was evidence that cultural exchange is flourishing alongside the economic relationship.
The Strings Attached
But the same ISEAS analysis that documents these record numbers also flags where the relationship could come under strain, and from both directions.
Washington has attached conditions of its own. The US-Malaysia Agreement on Reciprocal Trade reportedly includes a poison-pill clause that indirectly limits how far Kuala Lumpur can partner with parties Washington views as contrary to America's core interests, functioning as an implicit check on how close Malaysia can grow to Beijing. The US Department of Justice separately brought an indictment in November 2025 over alleged transshipment of GPUs to China routed through Malaysia and Thailand, part of a broader pattern of Washington tightening semiconductor and AI-chip export controls. Those restrictions have, somewhat paradoxically, also pushed more Chinese chip investment into Malaysia as firms look for ways around them.
Beijing, for its part, is not simply a satisfied benefactor. China has voiced serious concern of its own over Malaysian deals it views as running counter to Chinese long-term interests, a reminder that Kuala Lumpur's balancing act cuts both ways and not only against US pressure.
There are homegrown risks as well. ISEAS warns that China's whole-ecosystem investment style gives Malaysia useful options but may also crowd out smaller local firms. In this style, a single conglomerate such as Huawei or Alibaba offers everything from chips to cloud services to smartphones, or an entire supply chain from raw materials to finished cells is filled almost entirely by Chinese suppliers. The investment totals are also more concentrated than they first appear: Risen Energy alone accounts for roughly 72% of all Chinese solar investment in Malaysia since 2015, meaning much of that boom rests on a handful of megadeals rather than a broad industrial shift.
The Bottom Line
Malaysia's strategy of active neutrality, courting both superpowers while formally aligning with neither, has clearly paid off in hard numbers: record currency-swap capacity, a record year for diplomatic paperwork, and the biggest wave of Chinese technology investment the country has seen. Whether that strategy can survive a prime minister who increasingly sounds like he has already picked a side may be the more interesting story from here.
