New Perspectives on Malaysia and a Rising China: Essays Honouring Lee Poh Ping

ABSTRACT

This article introduces the feature collection titled Malaysia and China in a Changing Region: Essays in Honour of Professor Lee Poh Ping. As well as introducing the six articles in the collection, this article pays tribute to Professor Lee, who passed away in late 2016. The article links some of the key themes of Professor Lee’s research and publications to the themes of the six articles, each of which is concerned with the rise of China and the various impacts this has for Malaysia’s political economy.

KEYWORDS:

• Capitalism
• China
• Chinese overseas
• Malaysia
• political economy
• Southeast Asia

Professor Lee Poh Ping, a leading authority on East and Southeast Asia and mentor to numerous scholars in Malaysia, passed away in late November 2016. Six of the articles in this issue of the Journal of Contemporary Asia constitute a feature collection titled Malaysia and China in a Changing Region: Essays in Honour of Professor Lee Poh Ping. They are a tribute to Professor Lee and his work, authored by colleagues and friends. One of the articles, co-authored by Professor Lee and accepted for publication before his passing, was to be a part of a feature section in the journal, with two other articles by colleagues based at the Institute of China Studies (ICS) at the University of Malaya (UM). Bringing these three articles together with three articles by other of his colleagues makes for a collection that focuses on topics and issues that defined Professor Lee’s academic career.

Professor Lee Poh Ping

Born in 1942 and first trained as a teacher, Professor Lee went on to complete a First Class Honours degree at UM, reading History, in a university and department that was young and ambitious. The Department of History was staffed by scholars who would gain world renown, including Wang Gungwu, John Bastin, Anthony Reid, D.K. Bassett, C.M. Turnbull, Zainal Abidin Wahid, Chandran Jeshurun and former members of this journal’s founding editorial board, Jan Pluvier and Malcolm Caldwell. After completing his Honours degree, Lee became a tutor in the department.

With Professor Wang’s support and encouragement, Lee went on to complete a PhD at Cornell University, with his 1974 thesis, “Chinese Society in Nineteenth and Early Twentieth Century Singapore: A Socioeconomic Analysis,” being revised to become his first book (Lee 1974; 1978). This experience of doctoral training at an American university was to set an agenda that shaped Professor Lee’s future scholarship: an interest in trade, investment, China and the Chinese in Southeast Asia and regionalism (see Lee 1978, ix–x).

By the time Lee got to Cornell, the university had seen a series of revelations and protests over funding by the Central Intelligence Agency and its front organisations (see, for example, New York Times, March 12, 1967). This controversy would continue to influence student politics into the 1970s (see New York Times, March 20, 1977; Kahin 1997). Several of Cornell’s faculty and graduate students developed links to the US state’s clandestine operations, including several in its Southeast Asia Program (see Wakin 1992). Of course, Cornell was not the only university involved in Cold War research with government agencies in relationships that were extensive and, in many ways, deeply disturbing (see Cumings 1997).

One of the areas where Cornell was responsive to Cold War interests was in the study of the “overseas Chinese” (see Koizumi 2013). However, as a doctoral student, Lee worked with Benedict Anderson, a critical scholar of Indonesia, and developed a “socio-economic” perspective that ran counter to the Cold War concern for the “overseas Chinese” as a Fifth Column (CIA 1949; see also FitzGerald 1972, 1; Somers Heidhues 1974, 94–97).

Anderson steered Lee to a study of the instability in the Chinese community in the Straits the late nineteenth century (Lee 1978, ix). However, on examining the issue, Lee determined that the so-called instability required a critical perspective and a class analysis that had little in common with the Cold War characterisations of the “overseas Chinese.” He examined Chinese society in Singapore in the context of imperialism, giving attention to the socio-economic forces that underpinned conflict, rather than explanations of conflict that emphasised religion, dialect group and secret societies. He argued that the conflict of the time and these other factors could only be properly understood in their domestic and international socio-economic context (Lee 1978, 1–3). He argued:

Chinese society in Singapore was basically determined by the operation of the international economy and the changes in it. Under free trade a mercantile class was created which had little control over Chinese society, while the latter responded to free trade essentially by organizing itself into secret societies (Lee 1978, 113).

This arrangement had the potential for conflict, and it was the exploitive operation of free trade that unleashed violence. Ironically, the solution to the violence was a deepening of colonialism that linked Singapore with the Malay Peninsula (Lee 1978, 113).

Lee’s dissertation and his first book reflected a style of academic research that was to mark much of his work over the next four decades. For his approach, influenced by Barrington Moore’s (1966) comparative historical analysis in the social sciences, Lee employed colonial archives and other primary materials, with close attention to newspaper reporting and the various directories and reports produced by clan associations and the colonial authorities. These primary materials allowed Lee to “map” social and economic power. His “maps” usually appeared in his publications as a series of tables detailing the underpinnings of power and naming those who held power in Chinese society. These techniques are also displayed in his recent work published in the Journal of Contemporary Asia (see Cheong, Lee and Lee 2013; 2014; 2015a). It is again seen in the article Lee co-authored for this feature collection that assesses the change in the relationship between Malaysia’s ethnic Chinese and a rising China (Cheong, Lee and Lee 2017). Each of these co-authored articles, whether discussing the past or present configurations of power, acknowledges the importance of historical research for correctly locating power in society.

After completing his PhD, in 1974 Lee became a lecturer in the Faculty of Economics and Administration at UM. He was promoted to professor in the Department of Public Administration in 1992. Professor Lee continued to serve as an academic and administrator at UM until he officially retired in 1997.

From 1999 to 2009, Lee spent a period with the Institute of Malaysian and International Studies (IKMAS) at Universiti Kebangsaan Malaysia (UKM). Prior to leaving UM, Lee had developed an interest in Japan, and he continued this research at IKMAS. The study of Japan and Japan in the region had become particularly important by the 1980s as Japan became the second largest economy in the world and Malaysia’s main trading partner. In late 1981, then Prime Minister Mahathir launched Malaysia’s “Look East” policy, and this innovation further heightened Lee’s motivation for promoting Japanese studies and the study of regionalism (see Khalid and Lee 2003). Professor Lee did much to develop Japanese studies in Malaysia, having become the president of the Malaysian Association of Japanese Studies in 1998 and retaining that position until 2014. His contributions were recognised in 2010 when the Japanese government awarded him the Order of the Rising Sun (3rd class) in recognition of his contributions to Japanese studies, the promotion of intellectual exchange between Japan and Malaysia as well as the advancement of understanding of Japan in Malaysia (Embassy of Japan 2010).

Professor Lee carved out a research niche for himself by developing a perspective on the Southeast Asia side of Japan-Southeast Asia relations (see, for example, Lee 1990). He was particularly concerned to understand the nature of Japanese capitalist development and how this impacted Japanese foreign investment and its role in the regionalism that was knitting Japan, East Asia and Southeast Asia together for production and trade (see Lee 1988). Professor Lee’s contributions on Japan spanned academic work, policy arenas and the media, where he established a profile as a public intellectual. This profile was a good fit with IKMAS, which emphasised globalisation studies and working across disciplines, from a Malaysian perspective. IKMAS’s emphasis on the dimensions of globalisation led Lee to co-author papers with scholars from different disciplines. At the same time, he continued to work on issues related to China in the region and the Chinese in Malaysia, with particular attention given to the role of the Malaysian Chinese capitalist class and its relations with the state (see Lee 2005; Lee and Lee 2003).

In 2009, Professor Lee returned to UM and worked as a senior researcher with ICS until his passing in 2016. This position allowed him to engage more deeply in the study of the Malaysian Chinese capitalist class. In part, this engagement was driven by the ascent of China and the implications of this for the Chinese in the region and for Malaysian capitalism. Professor Lee’s approach continued to be interdisciplinary, working extensively with historian Lee Kam Hing and economist Cheong Kee Cheok, while also mentoring junior scholars such as Li Ran and Miao Zhang, both of whom have co-authored articles in this feature collection. Not only did this collaboration produce several publications on Chinese business in Malaysia, but prompted by the rise of China, allowed Professor Lee to reflect on alternative development paradigms (see Cheong, Lee and Lee 2015b; Lee 2016).

Professor Lee will be remembered by many as a fine colleague and a loyal friend. He gave his time generously and enjoyed sharing that time with colleagues both young and old. In later years, when at the ICS, this time was often shared over lunch at the Persatuan Alumni Universiti Malaya restaurant or the Universiti Malaya Academic Club savouring a curry served on a banana leaf or at dinner at the Royal Lake Club Kuala Lumpur. There were also long chats over coffee and tea, often in the corridors of the ICS. These wide-ranging discussions saw the birth of several research projects and papers. They were also informal mentoring sessions, fondly remembered by many of his younger colleagues. His humour and wit lightened many a bureaucratic meeting and he was renowned for one-line quips and literary quotations. He is sorely missed.

The Articles

As already mentioned, three of the articles in this feature collection were originally scheduled to appear together. In bringing this feature collection together we have added three articles by colleagues and friends, all of which were scheduled to appear in the journal.

The feature collection begins with Professor Lee’s own article, co-authored with his long-time colleagues and collaborators Kee Cheok Cheong and Kam Hing Lee (Cheong, Lee and Lee 2017). This article examines historical change in the economic position and motivations of Malaysian Chinese in the context of China’s changing economic location. Their argument is that the Malaysian Chinese no longer look towards China as a home they will ultimately return to. In the period before World War II, there was a flow of funds to China from the Malaysian Chinese who tended to maintain ties to their “home” localities in China, mostly in Fujian and Guangdong. As the authors explain it, the motivation for this flow of funds – as remittances – was “patrimonial.” So were the various transfers through “patriotic bonds” and various other collections that were meant to contribute to recoveries from natural and human disasters and to defend China against the Japanese invasion. The authors argue that this motivation has changed, and by the 1990s the flow of funds from Malaysian Chinese to China has mainly been in the form of investment meant to generate earnings. In this context, the motivation for funds flowing from Malaysian Chinese to China was like that of business investors from other nations investing in China; they are seeking a profit. The authors consider that demonstrating this profit motive is important in the context of the Malaysian political economy and the need to allay fears and suspicions among indigenous Malaysians that the Malaysian Chinese are diverting funds meant for Malaysia to China. China now looms large in the business calculations of big Malaysian Chinese businesses drawn by China’s growing economic power and its economic liberalisation.

The economic rise of China captured much of Professor Lee’s attention in recent years, as seen in a review article for this journal (Lee 2011). In his article for the feature collection, Andrew Kam (2017) looks at the evolution of regional production networks that led to the emergence of the “Factory Asia” model in East and Southeast Asia. Factory Asia is a model that involves factories in different Asian economies, linked through regional production networks, and producing parts and components that are then assembled and exported as finished products to the advanced economies in East Asia and the West. The regional trade in goods has China at its core. Kam investigates the distribution of value-added gains between countries in the changing production landscape of Factory Asia. He uses the trade in value-added approach to assess the changes in trade patterns to ascertain whether there is now a shift away from the Factory Asia model. His findings show that countries in East Asia are diversifying and upgrading their manufacturing activities seeking to capture more value-added from their exports, leading to changes in trade patterns. Kam finds that Southeast Asia, Northeast Asia and China have moved up the value chain in the production and export of different technology products to extra-regional markets. For China and Southeast Asia, industrial upgrading seems to focus more on final goods at different technological levels for export. China is diversifying its production into higher-quality goods for Western markets while Southeast Asian economies have also become final assemblers, producing mainly low- and medium-technology consumer goods for export. Southeast Asia remains dependent on imported inputs and is struggling to become a centre for research and development.

In a related article, Siew Yean Tham (2017) asks when it is that countries, having pursued industrialisation through manufacturing, shift to services? She compares Malaysia’s and China’s shift from manufacturing to services by examining why the change takes place, the role of policy in the shift, and the challenges and prospects of such a shift. Tham’s analysis shows that Malaysia’s move occurred earlier than China’s shift and it was prompted by the failure of its manufacturing sector to deepen, having failed to produce any world-class domestic technology firms. China’s shift is more recent with ongoing upgrading in its manufacturing sector. Both countries used similar policies to drive this transition in response to domestic and external changes. The services sector, however, is very heterogeneous, with labour and knowledge-intensive services operating side-by-side. Since both Malaysia’s and China’s services are more concentrated in labour-intensive services, a shift to knowledge-intensive services is required for both countries to be able to upgrade to a services-led economy. Malaysia’s early-mover advantage in using foreign investment for its manufacturing development has not translated into indigenous capabilities of the same stripe, scale and calibre of the earlier industrialisers such as South Korea and Taiwan. However, the shift to services in China, while using a similar foreign investment-led model of manufacturing development has also seen a deepening of indigenous capabilities and progressive upgrading especially in its electronics sector.

China and Malaysia continue to be the focus when Ran Li and Kee-Cheok Cheong (2017) shift attention from regional patterns to examine the localisation experience of two global and state-linked Chinese telecommunications enterprises – Huawei and ZTE. Their case study of the localisation strategies adopted by these companies is Malaysia. In considering how international firms localise, the authors find that ownership and state connections matter. These linkages confer benefits on Huawei and ZTE with easy access to finance, lucrative contracts and support for internationalisation from the Chinese state. Thus, state priorities figure prominently in the enterprises’ decision-making. When it comes to localisation, the ownership question also applies to the perceptions of foreign governments who consider Chinese firms as being linked to the Chinese government, regardless of how these transnational corporations are owned and controlled. In emerging economies, perceptions of Chinese government endorsement can be considered as a de facto guarantee of performance and investment. Huawei and ZTE view localisation as a competitive strategy to steal a march over their rivals. This strategy is built around their core competitiveness areas such as modern technology at low cost, product adaptability and customisation that allow the continued use of existing equipment, transfer of skills while creating employment. The authors also discern that state-to-state relations are important for Huawei and ZTE operations in Malaysia where the firms have adapted to Malaysia’s political preference for particular economic arrangements that promote Bumiputera employment and investment. At the same time, it is apparent that the Malaysian government is keen to maintain good relations with China, its largest trading partner.

Miao Zhang, Rajah Rasiah and John Lee Kean Yew (2017) also look at the experience of a Chinese firm in Malaysia. They examine the Chinese car maker Chery, its internationalisation strategy and its localisation efforts by delving into Chery’s interactions with the Malaysian government, local partners and suppliers. The car industry is one of the most protected of Malaysia’s domestic industries, meaning that careful political navigation is required from Chery and its local partner. The authors found that Chery’s experience in negotiating Malaysia’s complex state–society relations meant an adaptation of its business strategy to address protectionist and institutional constraints and requirements. It was found that while relations between Chery, the local partner and government agencies have developed reasonably strongly, few interactions have evolved between Chery and local suppliers or with Malaysia’s national research and development facilities. This latter failure limited collective learning processes and production collaboration. At the same time, the evidence is that Chery’s present conundrum is that it has been unable to rise above relatively low sales in the country. Efforts to resolve this through negotiations with the Malaysian government and to evolve mutually beneficial partnerships with national automotive makers also failed. Chery’s future seems to hang on the Malaysian government resolving to ease protectionist measures and allow more foreign participation into the auto sector to stimulate growth and competitiveness in the stagnant sector.

The final article in this feature collection is by Edmund Terence Gomez and Elsa Lafaye De Micheaux (2017). Taking up arguments about political economy and socio-economic analysis that long engaged Professor Lee, the authors argue for a Regulationist political economy approach for better understanding capitalism in regions where the state actively shapes the form of capitalism. Using Malaysia as a case study, where the state is both developmental and predatory, they find that the country’s electoral authoritarian regime has facilitated the development of complex state–business relations where politicians in power distribute government-generated rents on a selective basis, resulting in diverse business systems incorporating highly diversified conglomerates, state-owned firms and small- and medium-scale enterprises that co-exist with each other and function in tandem. The Malaysian case shows that firms, nationally specific and embedded, are attuned to domestic political developments, with some firms becoming deeply politically engaged, undermining regulatory agencies. In Malaysia, the result is that corporate equity wealth is concentrated in the hands of government-linked companies which are themselves majority-owned by government-linked investment companies that also control the country’s leading pension and savings funds, trust funds and sovereign wealth funds. What now prevails in Malaysia is an extreme concentration of political power and economic wealth in government-linked firms that allows the political executive to shape the political economy.

As a memorial to Professor Lee’s work and collaborations, this feature collection brings together some of Malaysia’s leading scholars. The research that underpins their articles highlights aspects of what Professor Lee called a socio-economic approach. Collectively, these articles consider important theoretical and empirical questions and issues associated with critical political economy. These issues are shaping Malaysia’s and the region’s political and economic futures, and their considerations of them are a fitting tribute to a fine scholar, a great colleague and a good friend.

Acknowledgements

The authors are grateful to the many friends of Lee Poh Ping who sent comments about his work and life.

Disclosure Statement

No potential conflict of interest was reported by the authors.