The Political Economy of Malaysia's Trade Relations with China 9789814380058

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The Political Economy of Malaysia's Trade Relations with China

by

John Wong

Occasional Paper No. 20 Institute of Southeast Asian Studies Price: $3.00

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PREFACE Sino-Southeast Asian relations seem to be undergoing a fundamental change in the wake of the American military run-down in Indochina, a general thawing of old Cold War positions and local Southeast Asian aspirations and efforts to seek, what is frequently being termed, Southeast Asian solutions to Southeast Asian problems. Not only are commercial .contacts between China and the individual Sout heast Asian countries expanding rapidly but there is a growing flurry of activity on the diplomatic front . However, while the latter aspect of Sino-Southeast Asian relat onshasbeen the subject of a fair amount of discussion and publicity the former, trade relations, has been In this light the comparatively little investigated. following study by Dr. John Wong of the political economy of Malaysia's trade relations with China is all the more In wishing Dr. John Wong all the best it is welcome. clearly understood that responsibility for facts and o p inions expressed in the work that follows rests ex~:usively with Dr. Wong, and his interpretations do not necessarily reflect the views or policy of the Institute itself or its supporters. 29 January 1974

Kernial Singh Sandhu Director

Introduction* With the recent thaw in the Cold War a new trend has been set for Southeast Asian countries to review their existing political and economic relations with the People's Republic of China on a basis free of ideological biases and Cold War assumptions . The issue of trade relations would form a natural starting po i nt for any rational assessment of the overall relationship between Southeast Asian countries and China. In quant i tat i ve terms, the two-way trade between China and Southeast Asia still appears to be relatively i ns i gnificant . Nevertheless the trade has been important to China as a source of getting such essential raw materials and commodi t i es as natural rubber and non-ferrous metals, and of earning foreign exchange. Likewise, the Southeast As i an countries have also benefitted from the trade in being able to obtain a wi de range of cheap and reliable Chinese mer handise, foodstuffs and traditional products. Be ~ ~ 1es, China can be a potent1ally active buyer in the region's · commodity markets . In 1971 trade between China and Southeast Asia amounted to US$234 mill i on, representing 6.6% of China's total trade turnover but only 1 . 5% of Southeast Asia's (see Table l wh1ch also summar1zes the growth of China's trade for the last two decades). In this trade pan-Malaya has always occupied a dominant share. Indeed, .as of 1971, Singapore and Malays1a were the only nations in the region which mainta i ned direct trade links with China. Up to 1973, Indones1 a , wh1ch once enjoyed close economic relations w1th Chi na, has not yet re-established ties severed after the coup in 1965. On the other hand, Thailand and the Philippines have just started to extend trade relations with China. It is reasonable to anticipate that trade between Southeast Asia and Ch i na 1n both absolute and relative terms will quickly pick up i n future once the region has normalized its relations with China.

*

".Malaysia" in th1s study actually rceans "West Malaysia", 'Which was Jan.m as the Federation of Malaya before 1963. "Malaysia" thus defined wi ll not inclme Singapore. Throughout this pap:!r the t.erns "Malaya" and "Malaysia" will be used interchangeably, with "Malaya" being mainly used for the historical pericxl. At various places in this paper, "pan-Malaya" is also used in order to · include Singapore.

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In 1971, China ranked as the sixth largest supplier for Malaysia, with M$138 million worth of Chinese goods. China's position can be seen to be even more important, if re-exports via Hong Kong and Singapore are taken into account, or if the focus is put on a few commodity sections. For example, in that same year, China was the third largest source of fooy supply to Malaysia, next only to Australia From the point of Malaysia's exports, and Thailand. however, China was not yet a leading buyer even though China had on many occasions in the past caused a "stir" in Malaysia's rubber market. The most remarkable feature about Sino-Malaysian trade For over two is its tenacious and persistent character. decades, trade activities between the two countries were conducted in the absence of a formal diplomatic framework . Each side was apparently contented with the ambiguous but pragmatic arrangements which had nonetheless proved to be qu i te effective in overcoming the mutual political vituperation and ideological antipathy that often cropped Yet, Sino-Malaysian up in the heyday of the Cold War. trade had not succumbed to the fate of complete breakdown as had been the case with Sino-Indonesian trade or Sino-Thai In fact, Malaysia is an example of the few countries trade. both outside and inside the socialist bloc, which have successfully maintained trade relations with China in spite of (until recently) an unfavourable political climate e This study will review Sino-Malaysian trade over the last two decades, highlighting various problems arising from the interaction of political, economic and trade factors. It will also examine the underlying economic realities which had enabled the trade to endure and survive frequent political crises and harassments. Development of Sino-Malaysian Trade, 1950-72 Trade between China and Malaysia dates back to ancient A "fair amount" of trade was recorded as early as the times.

1

In 1971, re-exports of Cllina orgin to West Malaysia via Hong Kong anounted to M$8 . 5 million and to East Malaysia, M$8.8 million ~ A greater arrount of re-exports via Singapore is expected but it is not reiX»=ted in Singapore's official statistics. Hong Kong ExtemaZ Trade (Hong Kong: Census & Statistics Departm:mt) ,

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2 Steady growth started only after the late Tanq Dynasty. nineteenth century with the influx of Chinese immigrant labour into British Malaya, and Malaya's share in China's trade then fluctuated between 172%. The pre-war peak of Sino-Malaya n trade was reached in 1926 with a turnover of US$50 million, which level had never been surpassed until after the communists came into power in China. Througho~t the 1930s, the volume of trade between the two count ri es : remained below US$10 million , China bought wood, bamboo, rattan as well as rubber and tin from Malaya, which received in return food (vegetables and lard) , traditional p~oducts and some sundry manufacture s.3 The balance of trade however was consistentl y in China's favour and such a tendency has persisted down to the present day "

The communist revolution in China did not disrupt Sino-Malaya n trade r On the contrary, China was very act1ve in Malaya's rubber market during the first year of the People's Republic. In 1950, the Chinese purchase of Malayan rubber spurted to 39,000 tons Cor 4% of Malaya's total rubber exports 1n that year), as compared with China's regular annual 1mports of 8,000 tons between 1947-49.4 Communist China's impressive debut had thus established her credential as a potentially important buyer of Malayan rubber. Between 1951 and 1952, Ch1nese exports to Malaya marked a slight increase as the Chinese economy was rapidly recovering from the civil war. But the volume declined from 1952-53 because China had started her First Five-Year Plan which was accompanied by a major trade reorientatio n towards her social1st partners. Changes in Malaya's exports to China were even more drastic , The UN strategic embargo on China caused a complete halt of Malaya's exports to China in 1952, subsequentl y reduced to a trickle between 1953-55 .

2 For a good study of trade between China and British Malaya before the war, see Ho Ping-yin, The Fore1.-gn Trade of China tShangha1: catrnercial Press, 1935), dlapter XIV. For the early developrent of trade in Malaya, see also, P. P. Courtenay, A Geography of Trade and Development in Malaya (Ialdon: G. Bell, 1972), chapter 2 . 3 See Shih Yi, "After the Visit of the Malaya-SiN;JaJ?Ore Trade Delegations to Cli.na," China News Dispatah, OCtober 16, 1956, and Nan Slan, "An Analysis of Sino-Malayan Trade," Ta Kung Pao (Hong Kong), A\.J]ust 161 1950. 4 See Rubber Stati stiaal Bulletin (Ialdon), for the relevant 1ssues.

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The turnabout came in 1956 when conditions favourable for the reactivation of Sino-Malayan trade emerged o China's success in industrialization under the First Five-Year Plan had enabled her to produce a wide range of manufactures for export to the i ndustrially less sophisticated markets . Thus Southeast As i a became the natural target for China's first major trade drive, wh ich was facilitated by the improvement of Chinese relations with the region through China's partic i pat ion in the Bandung Conference in 1955 . The proportion of Southeast Asia in China's overall trade had increased from On the Malayan side, the 2.3% in 1955 to 3.3% i n 1956. collapse of the Korean boom touched off a recession and economic hardship lent support to agitation against embargo Increasingly the on rubber exports to communist countries , embargo came to be viewed as an unreasonable United States policy in pursuit of the Amer ic an political interest , S The most telling ev1dence of the self-defeating nature of the embargo was 1ts lack of effectiveness 1n denying either China In the c as e of or the Soviet Union the necessary supplies. China, she s 1mply shifted her purchases to Ceylon. 'IV'? ; •.:::n I ndonesia removed the embargo on rubber exports to China in e arly 1956 , the pressure for Malaya and Singapore to follow suit was mounting high, especially at a time when rubber prices in the Singapore market were tumbling down to the Finally, on June 4, lowest for over one and a half years. 1956, following Sir Anthony Eden's representat1on to the United States authorities, the Malayan Government announced the relaxation of the ban on shipments of Malayan rubber to Ch1na . 6 The lift1ng of the embargo coincided with the reappearance of boom cond1t1ons in the Malayan economy, wh1ch, coupled with the defeat of the Malayan communist insurgents, had made it possible for the Malayan author1ties to be more relaxed and more open-minded towards trade relat1ons with a country On July 17, 1956, a "China following an hostile 1deology. Products Exhibition" was staged in Kuala Lumpur for the first time . A month later, the first Malayan Tra ce Delegat1on was on 1ts way to Peking . Although the trade mission had no "official capacity", it had full government blessing and support , Apart from

5

See "The Relaxation of Cllina EZrbargo and its Consequences," Far' (FEER) , J\.U'le 14, 1956, pp. 737-8. Easurn Economic Revi ew

6

Straits Ti mes (ST)

(Singapoz:e) , J\.U'le 5, 1956.

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on-the-spot trade deals contracted with China, the trade miss i on paved the way for rapid increase of two-way trade during the following few years. China agreed to resume her purchase of Malayan rubber while undertaking to supply Malaya vlith rice, saya beans, canned _goods, miscellaneous foodstuffs, fruits, vegetables, sugar, cotton textiles and a wide range of other light industrial products . 7 In 1955 the two-way trade was worth only M$27 million, but its value rose to $97 million in 1958, or showed a threefold increase. For the first t i me Malaya was flooded with Chinese merchand1se toilet soap, fountain pens, sewing machines, bicycles, clocks, household hardware as well as textile goods - all at incredibly attractive prices.8 The climax of Sino-Malayan trade during the 1950s was reached in August 1958 when China became Malaya's best customer of rubber for the month, with purchases totalling 15,000 tons . 9 In the same month, China offered to export to Malaya and Singapore first grade rice at prices alr:tost 2 5% be l ow t hose from Thailand, the traditional main ~ an­ Malayan source of supply.lO The Malayan Government soon realized that China's trade advance had gone too far and too fast and feared that Malaya might become a dump1ng ground for chinese goods, which seemed to be undercutting those of foreign competitors and undersell i ng local products . In particular, the Malayan Government was concerned over the influx of cheap Chinese textiles and cement . Between 1955-58, Ch i na's textile exports to pan-Malayan marke t s increased by 140% . In 1955, no Chinese-made cement had yet entered ~1a laya; but in 19 56, it carne in great amounts, at once capturing 15 % of the market . ll

7 "'!he Prospects of Trade Develq::m:mt between China and SingafX)reMalaya," Jen -mi n J ih -pao (People's Daily) (Peking), August 30, 1956; and "Malaya Group Signs £3.2 million Peking Deals," Hong Kong Stan da:t'd (HKS) , September 13, 1956 . 8 See T1.mg Shiu Yuen, "Sino-Malayan Trade," pp. 215-9. 9

10

FEER,

Novercber 3, 1960,

ST, September 19, 1958. FEER ,

October 9 , 1958, p . 476.

11 Daniel Wolfston, "Peking's Trade Offensive in Southeast Asia - II: Malaya," FEER , May 14, 1959, pp. 71-8; and "Malaya to Stop DLmping of Red Chinese Texti les," HK.S, Noverrber 2, 1958o

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On October 1, 1958, the Malayan Government took the textile merchants by surprise by announcing that special permits would be required for ordering cotton textiles of Chinese origin . l2 On October 17, certain types of Chinese textiles such as white and dyed cotton shirting and sheet i ng, 'i:7hlte and dyed jeans were banned from import. Pressure was put on the Singapore Government to take similar act i on , and the latter agreed to effect the ban for a period of three months.l3 Towards the end of October, the Malayan Governme nt also passed a new banking legislation which prohibited the operation of "banks under the effective control of a foreign government in the Federation", and the "only bank in the Federation today which comes within the current pol i cy is the Bank of C~ i na . l4 The immediate reaction from China was surprisingly mild . The Chinese pro test took the form of open letters to ten i mporters in Kuala Lumpur in the name of the China Council for the Promotion of International Trade which charged the Mal ayan Government for being unfriendly towards China oy tak i ng discriminatory measures against Chinese goods . l5 China also stopped her purchase of Malayan rubber and suspended credit cons i gnments of merchandise to the Singapore and Malayan businessmen. The ban had produced no discernible effect on the growth of trade between the two countries for 1958, but brought about a decl i ne for 1959. The decrease in Chinese exports to Malaya in 1959, however, was not only confined to textiles, which

12 On the follc:Ming day, the Malayan Governm:mt conducted a "fullscale prcbe into subversion through trade," and officers of the DepartJrent of CUstans and Industrial Develor:rrent harassed i.n'tpJrters and rrerchants of Olinese goods by questioning their trade practices . Soire of the dealers were rep:>rted to have been quizzed: "Are your Cllinese products being bought up in preference to those fran other cot.mtries?" ST , OctcDer 3, 1958. 13 FEER, November 13, 1958, p . 635; ST, October 29, 1958. 14

ST, Novarber 27, 1958.

15 'lhe Olina Council also a::ITiplaired about other irritations caused by the Malayan authorities: "Even the construction of a Chinese pagoda in a trade fair in Kuala Lurt"pur was not allaved. " HKS , Noverrber 26, 1958; ST, Noverrber 26, 1958.

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came under the ban, but also to other products~ This implies that the tapering-off of the trade after 1958 was due to other factors as well. In retrospect, China experienced a qrave economic recession between 1959-61 as a result of the collapse of the Great Leap Forward Movement. With drastic cutbacks of industrial and agricultural production in China, the much-publicized Chinese "trade offensive" in Southeast Asia fizzled out by 1959, providinq also a timely and convenient grace-period for both China and Malaya to cool down the1r trade dispute.l6 The downward slide in trade was arrested by 1960, and Chinese exports to Malaya began to pick up again in 1961. During the period of her economic set-back, China managed to keep up substantial supplies of rice and sugar to the pan-Malayan markets even though she herself had to import large quantit1es of food from Australia and Canada . By 1963, the Chinese domestic economy had fully recovered, and so had her trade with Malaya, despite the "anti-dumping" legislation , In 1963, Chinese textile exports to Malaya had again suared to M$21 mi llion, which marked a steep rise from the low of M$16 mill i on in 1959. The formation of Malaysia in 1963 led to Confrontation with Indonesia, which happened to be a close ally of China and a recipient of Chinese aid. This gave rise to a certain amount of trade d1version effect, especially with respect to Chinese demand for rubber . l7 While causing a sharp decline 1n Malayan exports to China, Confrontation did not actually check the steady growth of Chinese exports to Malaysia . Consequently, Malaysia's trade imbalance with China grew wider, providing the Malaysian Government with an excuse for attempting another round of curb on Chinese goods which now included not only textiles, but also iron and steel goods and paper products. Pressure was also put on the Singapore Government to close down the Bank of China . l8

16

"Red Export Offensive Said Slcwly Fizzling Out to Practically Nil, HKS I

Mardl

~I

11

1959.

1963, a·dna bought 9 1 COO tons of rd:>ber and in 1964, only 114 tons. In the early part of 1965 1 Cllina shoved oo indication of returning to the ma!Xet and the rtti:>er prices had been going dcMn fran January to Octc:ber 1 196 5. See 1 "ell ina Buys Singapore Rubber 1 " and Singapore Rul::ber Market Waits for Cllina," South China Morning Post (Hong Kong) 1 November 10 & 24 1 1965. 18 See Han Suyin 1 "Singapore Separation," FEER 1 August 19 1 19651 pp. 349-52; and Harvey Stockwin 1 "The Bank of Cllina Affair 1 FEER 1 Septarber 301 196 51 p 595.

17

In

1

11

11

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As it turned out, political intervention this time was no more effective in checking the trade than previously. The closure order on the Bank of China in Singapore had never been implemented as Singapore repealed it as soon as she was separated from Malaysia in August 1965. Likewise the import prohibition of certain Chinese imports did not prevent the increase of other items not covered by the ban. The strained political relations between the two countries were not immediately eased by the ending of Confrontation . The !1alaysian Government continued-to hold a negative attitude towards its China trade for some years more . At one point, the Malaysian Government even privately endorsed a demand from certain quarters for strengthening trade links with Taiwan as a move to counteract the increasing commercial influence of Peking.l9 The tarnished external image of China during the Cultural Revolution did not help alleviate the antagonistic climate either. The foundation for a new turning-point in Sino-Malaysian economic relations was laid in 1970 in the new foreign policy line of Tun Abdul Razak, who succeeded the Tunku after the bloody May riots in 1969. Tun Razak modified Malaysia's rigid pro-Western foreign policy in favour of the neutralization of Southeast Asia to be guaranteed by China, the Soviet Union and the United States. In keeping with the new stance of non-alignment, Malaysia also reversed her overtly anti-Chinese foreign policy and announced that she would support China's admission to the United Nations provided Taiwan would not be expelled. Tun Razak also declared that Malaysia was ready to establish a dialogue with China if China would in turn change her policy of hostility towards Malaysia. Thus Malaysia has taken the initiative in demolishing some of the Cold War barriers to her relations with China even before China started her "Ping Pong Diplomacy" and the United States announced Nixon's visit to Peking~20

19

In Noverrber, 1965, Dato T.H. Tan led a trade mission to Taiwan, and for the next few years he was a strong advocate for banning all trade with China and for establishing strcnger ece>ranic links with Taiwan. See South China Morning Post (Hong Kong), Novenber 29, 1965, and JW'le 11, 1967.

20 See Marvin Rogers, "Malaysia/Singapore: Prd:>lanc.; and Olallenges of the Seventies," Asian Survey, Vol. XI, No. 2, February 11, 1971, pp. 121-9.

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China's initial response to Malaysia's gesture of rapprochement was a donation of US$200,000 in February 1971 to the Malaysian flood victims G In May 1971, Tunku Razaleigh bin Mohamed Hamzah, Chairman of Pernas (National Trading Corporation, which among other things, handles trade with communist countries) led a nineteen-member trade mission including four government officials - to Peking for an "unofficial visit".21 In return, China's trade delegation came to Kuala Lumpur in August to sign an agreement to buy It also gave an 40,000 tons of rubber from Malaysia. i ndication of probable future annual purchases of 150,000200,000 tons, at a time when the Malaysian rubber price had fallen to its lowest level in twenty-two years . 22 Since then, contact between the two countries has been on the increase, as evidenced by the number of Malaysian trade, medical and sports delegations to China c The ban on private visits made by ethnic Chinese to China was also partially lifted . Above all, members of Pernas became regular visitors In 1973, the focus of Sino-Malays i an to the Canton Trade Fair. relations was no longer on commercial normalization b~L had shifted to full diplomat1c recognition. A rather protracted process of negotiation between Malaysian and Chinese officials is reported to be currently taking place in New York " 23 Since April 1972, Malaysia had imposed restr1ctions on the re-export of Ch1nese goods from Singapore in a move to by-pass the latter's role as a middleman. Ch1na had ind1cated her support for Malaysia's pol1cy of direct trade, which would eventually bring about a sharp climb in total trade between the two countries, since as much as 60-80% of Singapore's imports from China had been re-exported to Malaysia for many years. The growth of Sino- Malaysian trade between 1950-71 is summarized in Table 2, which shows that imports from China had grown sevenfold during this period while exports to More remarkable were China had been highly fluctuating. changes in the structure of Chinese exports to Malays1a. As shown in Table 3, the commodity composition in 1952 largely followed the traditional pattern, with foodstuff But that proportion was reduced to 45% 1n occupying 64%. It has been observed 1958, and cut further to 39% in 1971.

21

China Trade Report, May, 1971.

22

China Trade Report, September, 1971; and January, 1972 ,

23

FEER, Octc:Der 1, 1973, pp. 32-4 .

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that the structure of China's overall exports - particularl y to the west - had exhibited considerabl e stability over the last two decades, with foodstuffs, animal and vegetable products, minerals and metals still being the leading export items. The changes in the commodity structure of Chinese exports to Malaysia (and other Southeast Asian countries as well) - as seen in the swelling of manufacture d items clearly indicate that Southeast Asia is an important outlet for China's industrial goods. Politics and Economics of Trade Internation al trade has never been entirely free of political considerati ons even for countries with the best free trade tradition . When market economies deal with each other, polit1cal interventio ns in trade such as tariff, tax and subsidy policies, are considered legitimate because they are normally operated through "means tha~ preserve the However, appearance of free private competition . "2 to each acceptable less becomes e pol1tical interferenc other when a market economy is confronted with a socialist economy because of their inherent ideological differences . To the extent that foreign trade in the socialist countries is a state monopoly, the possibility of political influence on trade in these countries is an ever present possibility , and the market economies are sometimes rightly wary of various consequence s i n dealing with them. Thus East-West trade in the past had ~ een frequently characteriz ed by political acrimonatio ns, and slight issues could develop into "intolerant d1atribes leading to no solution."2 5 Such had actually been the case with Sino-Malay sian trade until the recent normalizati on. In this section, we shall show how politics have affected the course of Sino-Malay sian trade. China has always insisted that in theory, trade and politics cannot be separated; but more often than not, she actually approaches trade with hard-headed pragmatism. Malaysia is

24 Hariy G. Jdmson, "Notes on SCJte Theoretical Prcblems Posed by the Foreign Trade of Centrally Planned Eoorx:mi.es," in Alan A. BrCMn and Eqon Neuberger, Intemational Trade and CentraL PZanning (Berkeley: Uliversity of california Press, 1968), p. 395 . 25 J. Wilcz.nyski, The Eaonomios and Politics of East-West Trade (l.a'ldal: Maanillan, 1969) , P ~ 23.

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resentment was heightened by the depression in the rubber market. Hence many rubber merchants and plantation owners strongly disapproved of the China trade embargo827 True, the China trade embargo might have incurred little direct costs to the United States on account of the limited trade potential between the two countries at that time. 28 The same cannot be said of a small and open economy such as Malaya's e The Malayan predicament caused by the embargo i$ best reflected in Harry Johnson's misgivings about a trade embargo:29 ••• attempts to restrict trade for political reasons, on either side, do far more damage to the country imposing the restrictions than to the intended victims of the restrictions, and especially so - for well-known theoretical reasons - when the restriction imposing countries are small and would normally be heavily engaged in trade. With opposition to the embargo steadily building up over the years, it is not surprising that as soon as the ban was lifted in the middle of 1956, the Malayan Trade Delegation was ready to take off to Peking for trade neqotiations . The removal of the embargo coincided with China's Dumping plan to promote her exports to the non-socialist countries,

27 RdJert re rational evaluation of the gereral effects of trade errbarqoes, see Wilcznyski, op . ait o, chapter 12" 29

Harry

G. Johnson's Forward to Wilcznyski's book, ibid.

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and her rapid trade expansion was at first described as a "~ell-calculated bid" to captilre the Southeast As i a n market in order to fulfil her gigantic plan for the "flag to follow the trade." Hence wrote an eminent journalist in 1958:30 From Tokyo to New Delhi, communist China's offensive in Asia is causing the greatest concern. Chinese goods in astonishing array and of high quality have already penetrated every market. Given th e opportunity, they will capture the lot. Japan was certainly the first country to be worried by the intrusion of Chinese products into Southeast Asian markets,31 just as India, being economically less efficient, became the first casualty of the so-called Chinese "trade offensive" in so far as her textiles were virtually squeezed out from some of t~e Southeast Asian markets, for example, from Indonesia.32 Nevertheless, the Chinese export expansion, launched with such a great momentum as to have its value doubled within two years, apparently became too much for the Malayan Government to take. Thus China was accused of "dumping" cheap textiles which, as alleged by the Minister of Commerce and Industry, Mr. Tan Siew Sin, "were produced 33 at the expense of the cost of living of the Chinese people." The "anti-dumping" measures were ostensibly introduced on such familiar grounds as the protection of "infant industries". Specifically they were to protect only a single factory employing a few hundred workers.34 Besides, the official justification was also sought in some form of political self-righteousne ss. Irence Minister Tan stated: 35

D

Denis Waxner, "Cllina' s Bid to Capture Southeast Asian Trade," ST , Decarber 17, 19 58. See HKS, July 23, 1959; and FEER, Jtme 18,

31 The Jetro Survey of 1959. 1959. 32 Finanaial Times

(Lorrlon),

January 13, 1959.

33 "Malaya to Stop Dll'l1?ing of Red Olinese Textiles," 34

It was the Malayan Weaving

~ti.lls

35 "Cllina's OlJnl>ing in Malaya, ·'

HKS,

Noveltber 2, 1958.

Ltd. , opened in Jdlore in 1958.

FEER,

January 1, 1959, p. 8.

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It will therefore be asked why we ban the one, that is Chinese textiles, and not the other, that is Indian, Japanese and other text1les. The answer is simple. The one set of textiles comes in at commercial prices and the other comes in at prices which can reasonably be I say th1s regarded as unfair competition . known to been have textiles because Chinese be sold at prices which did not even cover the cost of the raw mater1als used 1n the1r In addition, of course, under manufacture . totalitaria n regime ~ labour is employed under conditions hardly distinguish able from those of slavery and must accept whatever p1ttance as decided by the State. In replying to criticisms for bl1ndly follow1ng the Malayan Government 1n imposing restr1ct1ve measures, t r. e Singapore Minister of Trade and Industry, Mr . J.M. Jurr db h o y, stated in a sim1lar tone:36 It is quite apparent that the trading pol1cy of China is strongly 1nfluenced by pol1t1cal considerati ons as is evidenced from the fact that China has been selling those goods below the comparative producing cost of countrles like Japan ••.• Jacob Viner has defined "dumping" as pr1ce d1scr1m1nat 1 o n between two markets.37 To speak of "dumping" by a soc1a11st economy is ironical, precisely because "dumping" has been traditiona lly used by the Marxist writers as ev1dence of the "anarchy of the market" under the cap1talist system or as an There inexorable consequence of "monopoly cap1tal1sm" . could have been plenty of concrete examples of "dump1ng" in the popular concept of the term by Sovlet-type econom1es

China Trikie . " FEER, January 8, 1958, p. 42.

1'".

"SiR3'apc>re

37

See Ja.oc:i> Viner, Dwrrping: A ProbLe, irt Intem ati onal r:·r·a..ie (~ York: ~tus Kelley, Reprinted in 1966), d1apt.er l. T~ fVPJ.lar definitioo of dutpin:J fran G. Haberler 1.s "the sale of a good abroad at a prioe ~ich is lcwer than the sellll'l9 pnoe of the ~ C}OOd ci t the saae t~ in the same circunstanoe at hate," T ~ Theol"lf of lnte:l""ta~ t.o~".a: T~ads (Icnkm: ~ & CO., 1936), p. 296.

&

- 15 38 on the markets of non-communist countries in the past. However, "dumping" by itself has no proper analytical meaning in economic theory. The fact that China exported low-priced textiles because they were produced by genuinely low-cost factors did not constitute "dumping". Chinese textiles had their own supply curves and cost structure which were necessarily different from those of Indian or Japanese The potentially harmful effects of a particular textiles ~ source of supply of goods should be judged not by the goods selling at lower prices but by the stability in their supply. It is "dumping" associated with unpredictability and uncertainty of supply and not "dumping" in the sense of price-cutting that should really worry the type of markets such as Malaya's.39 The Chinese complaint of their goods being specifically discriminated against by the Malayan ban could indeed be justified by the market shares argumente In 1958, the Chinese component in the pan-Malayan textile import constituted only 9 . 3% as against the 16.5% of the Indidn and 47.3% of the Japanese shares. Similarly, for cement, China's share was only 6.7% as opposed to Japan's 56 o6% and Britain's 31.9% for the same year (see Table 4). If the Malayan authorities were really concerned with possible Chinese domination of various markets, they should also ban the import of cheap Chinese foodstuffs which amounted to 45% of Malaya's total food imports in 1958- the shares of some of the Chinese food items being even larger: e.g. 50% for eggs and 50% for preserved vegetables.40 Therefore, it is more reasonable to see the Malayan ban as a political move, as Mr. Yap Pheng Geck, Vice-Chairman of the Singapore Chinese Chamber of commerce had stated candidly:41 I cannot understand how China can undersell the world suppliers in the Singapore market.

38 J. Wilcznyski has assenbled ani analyzed many cases of Soviet and Chinese "d~ing" in various markets, including that of Malaysiae See "nmping and Central Planning," Journal of Political Economy, June 1966, pp. 251-64; and Wilcznyski, op. ait o 1 Chapter 9o 39 This is the view taken by P.J.D. Wiles, Communist International Economics (Oxford: Basil Blackwell, 1968), pp. 217-8. 40 FEER, Sept.eJTber 28, 1961, p. 649. 41 ST, Oct.c:Der 21, 1958.

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It [the ban] must be a political measures Like other politicians in defending a trade restriction policy, Mr. Tan Siew Sin actually drew most of his strength from politics. 4 2 It may of course be argued that a rational distinction between economics and politics was neither clear nor considered necessary in the heyday of the Cold War~ There was also a lack of proper understandi ng of communist commercial practices. Such misundersta nding can be seen even in the well-establ ished regional trade journal, the Far Eastern Economic Review, whose editorial on January 14, 1960, ran thus:43 In a world where trade liberalizat ion is the order of the day China cannot expect to enjoy the advantages of other countrie~ liberalizat ion without on her side taking some steps in that direction; China restricts imports very rigidly indeed. It may be asked what had really prompted the Malayan Government to apply such drastic measures which were unprecedent ed in the country's commercial history, particularly since those measures were adopted in the teeth of strong opposition from Chinese merchants and importers and, understanda bly, from a large segment of the Chinese community. To begin with, the significanc e of the Malayan perception of the issue as "trade and subversion" cannot be dismissed. The Malayan Government was apprehensiv e about the political implication s of its trade with China such as the possibility of the Chinese Government making use of trade to exert political influence on the ethnic Chinese in Malaya. The decade of the 1950s presented a complicated scenario of fears, misconcepti ons and vague

42 Mr . Tan's statsrent in defence of the goverment' s stand smacked of the classical class of western t.ilrber nerdlants threatening to boyoott Soviet tint:ler exports on the ground that Soviet ~ was cut by forced la'x>ur. Both relied on political ercotionalism far Sup(Xll't to disrupt the trade. See Wiles, op , cit . , p. 217. 4 3 FEER, January 14, 1960, p. 39. But this is .imneasurably better than the clumsy editorial of the Straits Times of Noveltber 27 1 19 58 1 which siq>ly dismissed the Chinese ccrtplaint as a "threat" and that "the Chinese Goverranent is being very foolish! "

- 17 -

44 ideas about Peking's involvement with the Nanyang Chinese n Naturally the Malayan Government felt great anxiety over the fast-growing China trade, which was monopolized by Chinese traders to serve mainly the needs of the Chinese community - in the 1950s many Chinese in Malaya actually referred to Chinese products as "national products".

In the economic arena, the consistently unfavourable trade balance against Malaya would naturally add fuel to the argument for trade restriction. Besides, the vulnerability of the China trade was greatly due to the fact that a wide range of Chinese products such as consumer durables, household goods and textiles, were commonly considered non-essentials with low elasticities of demand. But these two factors alone did not constitute sufficient ground for the application of drastic measures. In retrospect, the most compelling reason for the trade curb seemed to be the frightening tempo and the somewhat threaten~ng posture of China's trade advance - the rapid rate of growth, the easy success in breaking into certain established markets, the rigorous price-cutting, and the unorthodox pract~ce of offering a variety of non-price benefits to the agents, etc.45 -which would inevitably cause great concern to the government of a small country. To this must be added the fact that nobody in 1958 could have foreseen that the Chinese trade advance would dissipate by itself in 1959 owing to domestic economic problems. In short, while the Malayan Government appeared to have over-reacted in its move to curb the China trade, the Chinese Government also appeared to have over-exploited the Malayan market o China maintained a double-faced policy throughConfrontation out Confrontation. She diverted her rubber purchases to the

44 Far a good asses~t of Pek~'s policies tONards Nanyang Chinese in this period, see SteP'len Fitzgerald, Cht-na and tht:. Ovef'seas Chinese: A Study of Peking's Changing Policy Ccarrbridge: canbrici3e University Press, 1972), dlapter 7 . 45 The Japanese have examined the causes for the success of the Cllinese trade advance in Southeast Asian markets . See .. Red O'lina Bid far Southeast Asia Mal:kets, Or ient-a l Economt- s r; , Sept:stber, 1958, pp. 471-2. 11

- 18 -

Indonesian market and offered liberal trad i ng facilities and inducements to the Indonesian importers of Chinese qoods, at the same time taking care to preserve her Malaysian market . On the political front, China also intensified an anti-Malaysian propaganda campaign while providing substantial economic and military a i d to the Sukarno regime.46 One would have expected that China ' s unfriendly towards Mal a ys1a would result in a total trade tude atti ban, as in the case of Tha1land (1959 ) and Indonesia 11 967 ) , But the Malays i an reaction was surprisingly mi l d. Apart from re-asserting the partial trade ban on certain Chinese qoods, the Malaysian Government only sought to harass the Bank of Ch i na i n Kuala Lumpur and Penang . In August 1965, Mr Tan Si ew Sin ac c used the Bank of China of "indulging in subversion" and ordered its closure.47 Why had Confrontation not killed the entire tradf.? The o fficial explanation as expressed by the Malaysian 48 leader, t he Tunku was couched in h1ghly moralistic terms: Malays i a trades with China and i n so doing it i s hoped that the mutual benefits would in some way alleviate the internal economic d i ff i culti es of China so that she might be less prone to foreign adventures and i nterfering in the affairs of other countries e Rhetori c of a similar nature was not lacking on the Chinese s1de, a s evidenced in the statement of the 49 Chinese Assistant Minister of Trade, Mr . Liu Hsi-wen:

46 Philippines, Malaysi a 1 s anti -ccmnunis t ally, had once ch1ded her for ccntinuing the "suicide trade" with China m the sense that "Malaysia was being fired in her ONn l ard because her trade with Red 01ina oontributes to Indonesia s anti -Malaysia campaign . " 'Ihe editorial of the Mani la Evening News , see HKS , August. 8, 1965. 1

22 I 1965 I p. 281.

47

FEER, Aujust

48

FEER 1

49

"Develop-cent of Trade Between China and the Asian-African Countries since the Band~ Conference," Ch1--na 's For>e?.-gri. T ade lPek..L!19) , No. 1, 1969, p . 17.

Sept:.E!Itt)er

29 1

1969 1 Po 633 .

- 19 -

In conducting our trade with the Asian-African countries, our country has consistently pursued the policy of equality, mutual benefit and exchange of products needed by each other on the basis of the Five Principles of Peaceful Co-existence. We strictly respect the sovereignty of other nations; we never attach to a trade agreement any unequal conditions detrimental to the interests of the other party; and we certainly do not take trade as a means to interfere in the internal affairs of other nations or to place any political pressure upon them. Apart from other economic factors (to be analyzed in the concluding section), China's policy of steering politics clear of trade had certainly been a key factor in keeping the trade alive, as can be seen from the observation of a veteran correspondent of the Far East ~ ~n Economic Review:50

China's relations with Singapore and Malaysia are marked by these same pragmatism and ambiguities which largely govern Peking's treatment of Hong Kong. Trade is a powerful bait with which to overcome ideological antipathies . And, if trade can be conducted at one level, while various forms of propaganda appear at another, so much the better .

•

•

0

Both China and Malaysia learned a lesson from Confrontation in that there was much in the trade that would benef1t both parties mutually - more than each had ever realized. This realization helped to build a foundation for eventual trade normalization, which came about pretty rapidly after 1971 once the international atmosphere became conducive. Trade Fluctuations Having experienced such a whimsical course of development, Sino-Malaysian trade was liable to display a pattern of wide fluctuations over the last ·two decades. The instability of

SO

Ant:hal¥ Polsky, Stakes 11

1969' p. 53.

in

Si.r¥Japare-Malays ia, 11 FEER, Octd::>er 2,

-

20 -

Malaysia's exports to China is sufficientl y clear from Table 2 . To the extent that Malaysian exports to China were almost exclusively composed of rubber, China's past erratic behaviour 1n the Malaysian rubber market - as marked by sudden entry and withdrawal - was the main cause for the instability ~ But the Chinese exports to Malaysia were much more diversified and behaved in a more regular w~y so that Table l cannot ~rovide any indication·~s to t~e actual extent 6f fluctuation s. The quest i on of trade fluctuation 1s sign1ficant for various reasons. First, a pattern of wide fluctuation and high irregularit y of Chinese exports to Malaysia would lend support to the Malaysian charge of "dumping" by China, that is, "dumping" associated with unpred1ctab il1ty of supply e Secondly, since Malaysia is one of the few non-social ist countries maintaining a significant un1nterrupt ed trade flow wi th Ch i na for over two decades, an analysis of the stability (or instability ) of Chinese exports to MalaysLa may y i e l d s ome generalizat ions regarding China's overalL trade behavio ur , particularl y its rel1ability as a source of supply . Th i rdly, Malaysia has often been cited as a typ ca economy with the greatest economic instability on account of its high commodity concentrat1 on in exports.Sl It may be of great interest then to know how far SinoMalays i an trade had contributed to further destab1lizi ng inf l uence to the Malaysian economy. Recent investigati on into Malays i a's export instability shows that her exports

51

generall y reexlgnized that pr.lll\ary cc:rtm:Xi1t1.es are swject to greater pr1ce floctuations oo that spec1al1zauo n 1.n their elCpOrts \toiOUld therefore brf.n3 about ext;x:>rt inStability , HCMever, ertpirical studl.es by Massell Midlaely and MacBean on spec1f1c groups of COlmtries, give a lCJN correlation bet"Wee¥1 the degree of oamodicy oonoentration and e>q:ert instab1li cy . Differences 1I1 the degree of export l.IlStabilicy arro~ countries may be due to differences m the oamodity ccnp:>sition rather than t o oamodity oonc:entrat1.on in thei r ext;x:>rts (e.g . s~ prlll\3.ry produc~s are mre susceptible to price fluctuatiCI'lS ) . See B,F. Massell, "Export C£ncentrauon and Fluctuat1ons in Export Ea.nu.ngs: A eross-Secticn Analysis," American Econormc R6View , March, 1964, pp. 47-63; M. Michaely, Concentra t ion in Internat~ ona l Trade It

l.S

North lb lland Pub. Co . , 19 6 2 ; ani A, I . MacBean, l.Dndon: Allen & E~ ort Instability and Economi c Deve w pmenr; U'J..Iin, 1966 ) . In the case of Malaysia, see David Ll.ffi, "Export Instability and Econanic Deve~t in West Malays1a, 1947-1968," MalAyan Economic Review, Vol. XVII, No . 2, Octd::>er l9 72f pp. 99-113. (Amsterdam:

- 21 -

to the socialist countries before 1965 were the most unstable owing to frequent influence from politics , 52 Economists are still debating if the centrally-p lanned economies, by virtue of the absence of cyclical fluctuation s in output and demand, are in fact more "ideal markets" for the primary products of developing countries o53 In order to bring out the pattern and extent of fluctuation s, we divided Sino-Malay sian trade into three periods, roughly in accordance with its overall cycl1.cal movements over the last twenty years, and work out their instability indices . As shown in Table 5, the middle period 1958-65 gives the highest indices of instability for both Malaysia's imports from and exports to China, reflecting the full impact of political influence on trade in this period such as the Malaysian "anti-dumpi ng" measures, and China's trade diversion policy during Confrontati on c A second obvious feature is that, whereas Malaysia's exports to China are subject to violent oscillation s (which sitnation

52 K. M. r.tilaned Ariff' s study sh01t1S that the Soviet Union is :irrpJrts fran Malaysia for 194 7-65 give an instability index of 578 as against 31 for the average of all countries ~ See Export Tr>ade

and West MaW.ys i a: An Enqui ry into the Economic Imp lications of Expor t Instab il& ty, .Morx:>qra:P'l Series on Malaysian Econ:mic Affairs,

(Kuala Lunpur: University of Malaya, 1972), P ~ 21 . S. J . Khoo's sttrly for the period 1947-64 also gives China and the Soviet Union the highest average annual percentage rate of change of lirports fran Malaysia, with the indices teing 61 and 55 respectively as cx:ltptted with the average of 16 for all countries - For the s~ period, China's share in Malaysia's total exports was 1. 1% but her relative oontribution to Malays1a's total exp::>rt receipts instability was 2. 3%. See "r1alayan Exforts: Instability and Prospects", Ph ,.D. thesis, Cornell University, 1967, pp . 59-64.

53 See W1.lcznyski, op . cit. , p. 206 and pp. 343-5 . One factor that helps to oontribute to more stability m trade with the socialist oountries 1.s the bilateral ~angsrent, providErl of course the parties abide by the tent5 o The study by E. Neuberger shCJNs that the Soviet inp:)rt.s for the period 1955-61 were not significantly nore stable than those of the western COWltries . "Is the USSR Superior to the West as a Market for Pri.rna.ry Products?" Review of Economic Statistics 1 Au:rust 1 1964 1 pp. 287-93 . It must be }:X)inted out that the period under discussion happened to be the rrost active .(ilase of the Cold War, and too ImlCh }:X)litical influence oould have biased the eoorani.c results.

- 23 -

Although the past Chinese purchases of Malaysian rubber were moderate compared with those of big buyers such as the United States of America, China often "appears to be a buyer prepared to step in at useful moments from Malaysia's point of view."54 In 1972, China's total demand for natural rubber was estimated to be 190,000 tons, of which 130,000 tons were imported from Malaysian sources . China has become Malaysia's fourth largest buyer with purchases surpassing those of Britain.SS The adverse balance of trade with Ch i na is unlikely to be a real source of irritation to Malaysia, partly because Malaysia has long been one of the few developing and partly countries with no balance of payments problem because the size of her deficits with China had often been small - thanks to counterbalance from China's rubber purchases ( see Tab 1 e 7 ) . On the other hand, Malaysia had found Chinese imports cheap and reliable as we have analyzed in the preceding section . The "Malaysian import bill would be considerably larger were the wide range of goods now bought from China purchased instead in Japan, Britain or other developed countries."56 Even though some manufactured items among the Chinese ~mports might have been a problem to small producers in Malaysia, other imports were simply considered essential by the low-income segments of the population . 57 Rice is the case in point. Malaysia is not self-sufficient i n rice and ever since 1956 China has been a substantial rice exporter to Mala~~ia, supplying in 1971, 33% of Malaysia's 'lhe rice supply crisis in early 19 7 3 in total rice inp:>rts.

54

FEER,

55 Rubber 56

October 3, 1970, p. 34. S ~at i st i ca[

Bu[le tin, Vol. 27, No. 10, July, 1973.

Harvey Stockwin, "Into the Red,"

FEER,

April 15, 1965, p . 111.

57 Anthony Polsky, "Stakes in Singapore-Malaysia, " FE"£'R , Octaber 2 , 19 69 , p. 53. Similarly for SingaJ;X>re, "a rnerrber of Singapore's influential O'linese Olarrber of Ccrmlerce est.iroated that the oost of living on the island republic would go up as much as 15%-20% if trade with China were to cease. 11

58 When China agreed to exp::>rt rice to SingaJ;X>re and Malaysia for the first tine, a considerable alarm was caused in Thailand which has been traditionally Malaysia's major rice supplier . See Malayan Mi rror October 10, 1956; Cheng Siok-Hwa, Th e Rice Trade of Malaya (Singapore: University Education Press, 1973).

-

24 -

many Southeast Asian countries brings home the importance of dependable rice imports from Chinar At the "macro" level, the growth of China's overall trade potential, as seen by China experts, is dependent on a few key econ.o mic variables such as a satisfactory level of China's agricultural performance.S9 As far as "micro" cases are concerned, however, China's trade development would not necessarily be constrained by the same set of "macro" conditions. In dealing with the economies of individual countries, particularly those smaller developing economies, China has a great deal more economic leeway and political flexibility in accommodating the latter's demand, as was exemplified by the course of Sino-Malaysian trade during the past two decades.

59

It is often hazard:>us to project China's trade p::>tentials in sudl a nanner and the futility of such an exercise can be illustrated by the study of Sioo-Anerican trade 'fOtential in 1969 by Rd:>ert Dernberger, in Eckstein, op. ait o Similarly the oonservative projection made by the JErK> of Japan in 1970 was not borne out by the sp.lrt in Sino-Japanese trade in 1973. See JEI'ID, How to Approaah the China Market (New York: Jdm Wiley, 1972).

Table 1 :

Chinese Foreign Trade, 1950-72 (_in US$

Year

Total

Index

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972

1,210 1,895 1,890 2,295 2,350 3,035 3,120 3,025 3,735 4,265 3,975 3,015 2,675 2, 755 3,245 3,855 4,205 3,860 3,710 3,885 4,224 4,681 5,716

28 . 0 44 . 4 44 .3 53.8 55 . 1 71.1 73.1 70.9 87 . 5 100. 0 93.2 70. 9 62.7 64.6 76.1 90. 4 98.6 90.5 87 . 0 91.1 99.0 108. 1 134.0

Note

:

Sources :

millio~)_

Exports

Imports

620 700 875 1,040 1,060 1,375 1,635 1,595 1,910 2,205 1,945 1,525 1,525 1,560 1,770 2,085 2,170 1,915 1,890 2,060 2,060 2,390 2,948

590 1,115 1,015 1,255 1,290 1 ,660 1,485 1,430 1, 820 2,060 2,030 1,495 1,150 1,200 1,457 1,770 2,035 1,945 1,820 1,825 2,165 2,291 2, 768

Pr oportions with: Non-Communi s t Communi s t ··countries (%) Countries (%)

71 49 30 32 26 26 34 36 37 31 35 44 47 55 65 70 74 80

78 79 79 77 77

2J

51 70 68 74 74 66 64 63 69 65 56 53 45 35 30 26 20 22 21 21 23 23

Trade with SEA Val ue % of Total

84 .5 86 . 4 42 . 1 38. 9 44.5 71. 8 102 . 4 137. 3 201.9 232.1 196.6 1:i).5 157.5 200. 0 244 . 9 206 . 0 246 .4 242 .6 283 .4 292 .4 225.1 303.1

7. 0 4. 6 2.2 L7 1. 9 2. 3 3c3 4.5 5.4 5.4 4. 9 5.0 5. 9 7.2 7. 5 5.3 5.8 6. 3 7. 6 7. 5 5.3 6. 6

t-V Ul

In 19 59, the Chinese Governrrent suspended the release of trade statistics, and the trade data have been carpiled fran the sources of the part.l'ler countries . For 1950-64 , ROOert L . Price, "International Trade of Conmunist China, 1960-65" , in Joint Econanic Committee, An Economic P~ofil e of Mainland China (Washington, D. C, : Government Printing Office, 1967) , p . 584; for 1965-70, Current Scene (Hong Kong ) , VoL IV , No. 3, February 1966 ; Vol. IX, No . 8 i August 7 , 1971; for 1971-72 , VoL XI 6 No . 10, October 1973 ; for Ch]na ' s trade with SEA, 1950-67, see Eckstein, op, cit. ; for 1968-71, see F~ Eastern Economic Review Yearb ooks.

Table 2:

Malaysia's Trade with China, 1950-71 (in M$ rru.::u.ion)

. ExportS ..

· · · ·rroports Year

$

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971

*

18.9 28.2 27 . 2 23.4 19.1 24.5 29.3 36 .0 45.2 25.1 35 . 0 42.4 45.5 75.9 106.0 101.2 173.3 192.7 175.3 174. 9 164 . 8 137.9

.

% of Total IrtlpJrts

2. 5 2.1 2.8 2. 6 2.4 2.6 2.8 3.3 4.5 2.5 2. 7 3. 2 3.0 5. 0 6.7 6.1 6.6 7. 4 6. 3 6.2 4. 9 4. 1

Index

$

% of Total

Trade Balance

Index

Exports

42 63 60 52 42 54 65 80

100 56 78 94 101 235 235 225 385 428 389 388 366 306

18.0 16.0

*

1.6 5.6 2.0 8. 5 28.5 51.6 5. 7

* *

0.2 0.2

*

0.1 2. 5 19.7 73 . 1 136.4 66.2 53.4

1.4 0.8

-

0.2 0. 6 0.2 0.6 1.2 4. 1 o. 3

* * * 0.8 o. 7

2. 3 3.3 1.6 1.4

100 89

9 31 11 47 158 286 32

-

1 1

14 109 406 755 366 296

+

-

-

-

0.9 12.2 27.2 21.8 13.5 22.5 20.8 7.5 6.4 19.4 35.0 42.4 45.3 75 .7 106.0 101.1 170.8 173.0 102.2 38. 5 98.6 84 . 5

statistically insignificant

Sources: Ma Zayan Stati stics: Externa Z Trade and Wes t; Ma lays i a Month l y St ati s tics of External Trade , various years .

N 0\

Table 3:

CUtttodity Cotp?t:jiti an of

S~ays ian

Trade (%)

(1) Food Meat Cereals

(Rice) Fruits &

Vegetables

1.4 12.7 (9. 8) 16.0

(2) Manufactu red Goods Paper

Textiles Iron & Steel

4.8 9.5 2.8

1958

1967

1971

camcdi.ty

-39.4 -27.2

43.7

1.4 12.0 (-) 46.0

-27.4

30.1

27.2

3.5 3.3

5.6 14.7 1.5

2.7 7.6 9.0

-64.2

45.3 1.1 6.3 (4. 3) 14.6

2.7 23.2 (20. 7) 14.6

1952

1\J

(3) Madli..necy

&

Trans_prt Equipnant

(4) Miscellane ous Manufactu res Cloth~

Scientific instnm:mt s (5) others Total

4.3

2.8

2.4

8.9

-7.8

7.4

2.3 0.3

2.3 0.4

8.6

1.9

20.2

14.9

14.8

100.0

100.0

100.0

100.0

*

1952 refers to Pan-Malayan trade, i.e. Malaya and Si.ngap:>re, under old classifica tions.

Sources:

Mal-ayan Statistics : External- Trade, and

Wes t Malaysia Monthl-y Statistics of External- Trade.

-..J

I

Table 4A:

China 1 s S'lares in Pan-Mala_yan Textile Inp?rts , 1953-59

{% of Value)

1953

1954

1955

1956

1957

1958

1959

Clli.na

1.8

2.5

4.3

5. 5

7.3

9.3

12.4

Japan

17.4

31.3

42.8

41.5

43.3

47.3

46.0

India

22 . 7

19.6

14.7

13.9

13 . 3

16.5

15.6

HOn:J lrts, 1955-59 {% of Value)

1955

1956

1957

1958

1959

1.3

7.0

13.9

6.7

9.0

U. K.

53.2

41.6

33.6

31.9

20.7

Japan

31.8

42.7

50.2

56 . 6

63.7

others

13. 7

8.7

2.3

4o8

6.6

Total

100

100

100

100

100

Countcy

Olina

Source:

Malayan Stat- i s tics: External Trade, va1:·ious years .

tv 0)

- 29 Fluctuations in Malaysia's Trade with China, 1950-71

Table 5:

II'rq;larts

I - I

Malaysia's Total !I'np:>rts

Exports** to China

frc:m . China

Period

I - I*

I - I

I - I

I - I*

Malaysia's 'lbtal Exports I - I

195~57

2L9

19.7

86.1

13.7

13.8

25 . 0

1958-65

37 el

27.6

194.7

16 . 4

5.6

13.7

1966-71

10.6

7. 6

00. 1

12.8

5.9

22 ol

I - I

.

Instability Index, or sorret:ilres referred to as cx::efficient of variation, is the standard deviation divided by the rrean:

=

y

0

y

n - 1

annual ooservations

where Yi

I - I* :

y

arit.hrretic rrean of Yi

N

nmber of observations

Instabi lity index oorrected for trend influence:

1

n-k-1

n

~

1 - 1

(Y . - Y)

2

l

y

where Y = a + b X is a linear trend. (Thi s index is used by Egon Neuberger in studying exp:>rts of primary products by developing cetmtries to the USSR) • **

Only one index is worked for Malaysia's expJrts to China because the violent fluctuations plus many "blanks" in the intennediate years defy rreaningful rneasurerrent by an instability index inoorporating a linear trend.

- 30 -

Table 6:

Trade Fluctuatia1s of West Malaysia: Trade Partners, 1965-71

Dtq:x>rts

Instcbility Index

By Selected Major

Exports

Rank

Instability Index

6 5

Rank

U.K.

15. 5

8

w.

18.1

6

20.2 29.2

lbnJ Kon:l

15.2

9

32.2

4

India

19.3

5

Australia

10

3 10

14.9 96.2

9 1

Si.nqap:>re

14.1 27.1 33.1 16.0

45.6 14.7

8

U.S.S.R.

29.2

3

15.8 16.3

Thailand

China

30.1 10.0

2 11

13.9 96.0

11 2

Average

20.7

35.9

W. Malaysian total

12.6

20.5

Geimany

U.S.A.

Japan

Note:

4 1 7

1965 was the year Singap:>re separated fran Malaysia.

7

- 31 -

Table 7:

West in

Ma~ ia' a Trade Balanoes vi th

19 71

in

MJ

Majer Trade Partners

miiliCi\)

Bal ance

Iqlort.s

w.

Malaysia

U.K. lbr¥] Kon:J

Australia Orlna

Japan

Sin:Japore

w.

Geimany

U.S.A. 'lbailaro

Source:

3,414.2

3,917 .o

+502 . 8

534.0 51.7 232.2 137.9 694.3 228.5

287.6 'B. 7 63.4 53.4 445.4 839.1

- 2 •4 - 12.0 -168.8 - 84. 5

189.3 209.0 107.0

117.6 595.7 24.1

- 71.7 +386 . 7 - 82. 9

West Malaysia Monthly Stat is t i es of Externa l Tro

- 248. -+610. 6

, 1971.

ISEAS PUBLICATIONS Occasion al Papers 1

Harry J. Benda, Researah in Southeas t Asian Studies lOpp. Gratis (Out-of- print) in Singapor e, 1970.

2

P. Lim Pui Huen, Newspape rs published in the Malaysian With a union list of loaal holdings , 1970. Area: 42pp. Gratis (Out-of-p rint) •

3

Chan Heng Chee, Nation-B uiZding in Southeas t Asia: 19pp. $2 . 00 (Out-of- print) The Singapore Case, 1971.

4

Eva Horakova , Problems of Filipino Settlers , 197le 24pp. $2.00 (Out-of- print)

5

Mochtar Nairn, Merantau :

Causes and Effeats of 19pp. n,1911. Migratio VoZuntary bau Minangka

$2.00

(Out-of- print)

6

Paul Pedersen , comp., Youth in Southeas t Asia: A Modified and Expanded by Joseph B. Bibliogra phy. Tamney and others, 1971. 69pp. $4.00

7

J.L.S. Gir1ing, Cambodia and the Sihanouk Myths, 1971. 26pp. $2.00 (Out-of- print)

8

R.P. Dore, Japanese Industri alization and the

9

Michael STenson,T he l948 Communis t RevoZt in Malaya: A Note of Historiaa Z Sources and Interpre tation and 30pp. $3.00 A Reply by Gerald de Cruz, 1971.

10

Riaz Hassan, Soaial Status and Bureaucr atic Contacts Among the PubZia Housing Tenants in Singapor e, 1971. 16pp. $2 .oo

11

Youth in Southeas t Asia: Edited Proceedin gs of the Edited by Joseph Seminar of 5th - 7th Marah l97l .

DeveZopi ng Countrie s: ModeZ, Warning or Source of 18pp. $3.00 Healthy Doubts? 1971.

B. Tamney, 1972. 12

13

75pp.

$4.00

A.W. Stargard t, Problems of Neutrali ty in South East Asia:

The ReZevana e of the European Experien ce,

19 7 2 •

2 9 pp.

$ 3 • 00

William R. Roff, Autobiog raphy & Biograph y in Malay 21pp. $2.00 Historic al Studies, 1972.

14

Lau Teik Soon, Indonesia and Regional Security: The Djakarta Conference on Cambodia, 1972. 20pp. $2.00

15

Syed Hussein Alatas, The Second Malaysia Plan Z97l - l975: A Critigue, 1972. 16pp. $2.00

16

Harold E. Wilson, Educational Policy and Performance in Singapore, l942 - l045, 1973. 28pp. $3.00

17

Richard L. Schwenk, The Potential for Rural Development in the New Seventh Division of Sarawak: A Preliminary Background Report, 1973. 39pp. $4.00

18

Kunio Yoshihara, Japanese Direct Investment in Southeast Asia, 1973. 18pp. $4.00

19

Richard Stubbs, Counter-Ins urgency and the Economic Factor: The Impact of the Korean War Prices Boom on the Malayan Emergancy, 1974. 54pp. $5.00

20

John Wong, The Political Economy of Malaysia's Trade Relations with China, 1974. 3lpp. $3.00

Trends in Southeast Asia 1

Trends in Indonesia: Proceedings and Background Paper, 1971. 58pp. $3.00 (Out-of-pri nt)

2

Trends in Malaysia: Proceedings and Background Paper. Edited by Patrick Low, 1971. 120pp. $5.00

3

Trends in the Philippines . Edited by Lim Yoon Lin. (Singapore University Press). 1972. 136pp. $7.00

4

Trends in Indonesia. Edited by Yong Mun Cheong. (Singapore University Press). 1972. 140pp. $7.00

5

Edited by M. Rajaretnam and Trends in Thailand. (Singapore University Press), 1973. Lim So Jean. 142pp. $10.00

6

Trends in Malaysia. Edited by Yong Mun Cheong. (Singapore University Press). 1974. $10.00

Library Bulletins 1

Rosalind Quah, Library Resources in Singapore on Contemporary Maintand China

2

Quah Swee Lan, comp., Oil Discovery and Technical Change in Southeast Asia: A Preliminary Bibliography, 1971. 23pp. $2.00

3 ·

P. Lim Pui Huen, comp., Directory of Microfilm Facilit ie s in Southeast Asia, 1972. 24pp. $2.00 (Out-of-print)

4

Checklist of Current Serials in the Library, 1972. 30pp. $3.00

5

Tan Sok Joo, Library Resources on Burma in Singapore, 1972. 42pp. $3.00

6

Quah Swee Lan, comp., Oil Discovery and Technical Chang e in Southeast Asia: A Bibliography, 1973. 32pp ~ $3 00

7

P. Lim Pui Huen, comp., Directory of Microfilm Faciliti e s in Southeast Asia~ 2d Edition, 1973. 32pp. $4 . 00

Southeast Asian Perpectives 1

U. Khin Mq. Kyi and Daw Tin Tin, Administrative Patterns

in Historical Burma, 1973. 2

67pp.

$3.00

Harsja W. Bachtiar, The Indonesian Nation: of Integration and Disintegration, 1974.

Some Prob Z£-ms 62pp. $5 . 00

Oral History Programme Series 1

Philip Hoalim, Senior, The Malayan Democratic Union: Singapore's First Democratic Political Party, 1973. 26pp. $3.00

2

Andrew Gilmour, My Role in the Rehabilitation of Singapore: l946 - l953, 1973. 100pp. $6.00

3

Mamoru Shinozaki, My Wartime Experiences in Singapore, 1973. 124pp. $6.00

Field Report Series 1

Yang Mun Cheong, Conflicts within the Prijaji World of the Parahyangan in West Java, l9l4 - l92?, 1973. 42pp. $3.00

2

Patrick Low and Yeung Yue-man, The Proposed Kra Canal: A Critical Evaluation and Its Impact on Singapore, 39pp. $3.00 1973.

3

Robert Fabrikant, Legal Aspects of Production Shar i ng Co n t racts i n the Indonesian Petroleum Industry, 2d Edition, 1973. 235pp. $25.00

4

The Indonesian Petroleum Industry: Miscellaneous Collected by Robert Fabrikant, Sourc e Materials. 1973. 516pp. $25.00

5

C.V. Das and V.P. Pradhan, Some International Law Pr oblems Regarding the Straits of Malacca, 1973 95pp. $10.00

6

M. Rajaretnam, Politics of Oil in the Philippines, 1973. 81pp. $5.00

Current Issues Seminar Series 1

Multinational Corporations and Their Implications for Edited by Eileen Lim Poh Tin, 1973. So utheast Asia. 140pp. $10.00

2

Econ omi c and Political Trends in Southeast 66pp. $6.00

3

Southeast Asia Today: 110pp. $10.00

Asi~,

Problems and Prospects,

1973. 1973.

International Conferences 1

New Directions in the International Relations of (Singapore University 2 vols. Southeas t Asia. Press). 1973; Economic Relations. 135pp. $8.50

Edited by Lee Soo Ann.

The Great Powers and Southeast Asia. Edited by Lau Teik Soon. 208pp. $10.00

of Southeast Asian Studies 1

Sartono Kartodirdjo, Protest Movements in Rural 229pp. $30.00 Java~ 1973.

2

Modernisation in Southeast Asia.

Evers.

1973.

249pp.

Edited by Hans-Dieter

$35.00

The above publications, except those published by Oxford University Press, are available for sale at the Institute of Southeast Asian Studies, Cluny Road, Singapore 10. Tel: 514211

TilE AUTHOR Dr. John Wong is a Lecturer in the Department of Econormcs of tM

Un1~rs•t y

of Smgap,>re