Potential Economic Impact on Malaysia – After the China’s 19th Party Congress

China is Malaysia’s largest trading partner since 2010, according to Malaysia External Trade Development Corporation (MATRADE) data.  The total trade, combining both imports and exports was RM 290.65 billion in 2017 (Read more here).

In November 2016, Malaysia and China inked 14 business-to-business agreements and 16 government-to-government Memorandums of Understanding amounting to approximately RM144 billion as part of the development of One Belt One Road (OBOR) initiative by China to enhance the connectivity between China, Asia and Europe (Read more here).

On the tourism side, there were 2.3 million Chinese tourists who visited Malaysia in 2017 (Read more here) and Malaysia was one of the top most popular destinations for Chinese travellers in 2017 (Read more here).  Given that there are only 10% of the Chinese population with outbound travel visa, the potential tourism revenue contributed by Chinese visitors is very encouraging.

As such, China’s economic and political developments could impact Malaysia’s growth.  One the of major developments of China’s 19^th Party Congress was the removal of the two-term presidency restriction.  What is the implication to Malaysia’s economic growth?

The major implication is the target of doubling China’s 2010 GDP by 2020 (Read more here) may not be as critical now because the President has more time to achieve the target.  He could focus more on high quality economic development rather than rushing to meet the target.  As such, the GDP growth may be moderated from current pace of 6 – 7% per annum.  Given that the strong economy activity between China and Malaysia,  so a slower growth in China could lead to a slower growth for Malaysia (below 5% perhaps?).