An academic warns Malaysia’s new trade pact with the US could unsettle Chinese investors and create operational hurdles for firms with China links
PETALING JAYA: Malaysia’s newly-inked Agreement on Reciprocal Trade (ART) with the United States has triggered geopolitical ripples, with China voicing concern, raising questions over how Putrajaya could continue to balance its two biggest economic partners.
While Prime Minister Datuk Seri Anwar Ibrahim has sought to downplay the unease, analysts say investor sentiment, particularly from China, could still take a hit.
UPM Putra Business School Associate Professor Dr Ida Md Yasin said the situation is “actually a concern,” highlighting the position of China as one of Malaysia’s largest trading partners.
She added that aligning with US export controls and sanctions could create operational hurdles for Malaysian companies with deep Chinese linkages.
“In my opinion, there would be an impact. Many people have mentioned that there could be future trade implications.
“However, the prime minister and Tengku Zafrul have said not to worry about it. So I do not know how far we could go until it actually happens. But if it does happen, it may be too late.”
She also said the agreement may unsettle long-term Chinese investors.
“If the US sets conditions that prevent us from continuing with China, then as a Chinese investor, I would feel that my investment in Malaysia is unstable, especially since we are talking about 10, 20, or 30 years down the road.”
Ida said Malaysia must preserve a neutral investment environment.
“The ART agreement was signed with the US, but we did not sign a similar agreement with China.
“So, in that sense, it does not appear neutral.”
Responding to Anwar’s remarks that concerns had been exaggerated and Malaysia had clarified to Beijing that bilateral cooperation could continue, she said uncertainty could linger.
“Time is ticking and we should not rush into signing. Or, if we do sign, it must be amended in a way that is fair to both parties.”
Economist Prof Geoffrey Williams however, took a more upbeat view, echoing the stance of the prime minister that the concerns may be overstated.
“The agreement between Malaysia and the US has a long list of commitments to change policies but no mandate or timetable to do so, so there is a lot of flexibility and autonomy built in.”
He added that Malaysia’s trade indicators remain healthy.
“Overall trade, exports and the trade balance have improved during 2025, and trade with China also remains very strong.
“So investors should not worry too much. For now, a wait-and-see approach is best.”
