https://orcid.org/0000-0003-4082-8411
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Abstract
We examine Chinese President Xi Jinping’s close relations with Malaysian Prime Minister Najib Razak (2009-2018) and Philippine President Rodrigo Duterte (2016-), an outcome of China’s Belt & Road Initiative (BRI). We argue strongmen use their political power, shaped by their own political-economic systems, to tap into the BRI’s available capital to fuel their political agendas. We illustrate this argument in Malaysia, a country with a centralized party system, and in the Philippines, one with an oligarchy-driven economy with decentralized political parties. In Malaysia, Najib was able to directly use BRI to generate economic rents, reward business allies, and dispense patronage through company directorships and subcontracts to party members to strengthen his political position. In contrast, the Philippines’ inherently coalitional system highlights the messiness as well as compromises in states with decentralized political competition. While Duterte is perceived to be an all-powerful autocrat, in reality he needs the support of major political elites, oligarchs, and local politicians for most major decisions. Duterte still used BRI to reward his cronies, weaken the opposition, and tame the oligarchs.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 An economic plan to create a massive infrastructure network linking 65 countries in Asia, Europe, and Africa, the BRI route had a combined population of 4.4 billion and a gross domestic product of US$21 trillion in 2013.
2 In the 1990s, foreign investments entering China with the opening of its economy had reputedly been by Southeast Asia’s leading ethnic Chinese entrepreneurs.
3 Despotic power here refers also to the personalization of political power.
4 Khan (Citation2012) sees elites as actors endowed with near monopoly political and economic power. Political elites are those in national-level positions, such as senators, parliamentarians, or ministers. Local elites, i.e. governors, regents, or mayors, rely on their local embeddedness to reproduce their power. Oligarchs are those with disproportionate material wealth (Winters Citation2011). The term oligarch tends to be used inter-changeably with business elite. Here, oligarchs are the wealthier, more established, subset of business elites.
5 In 2019, the BSRP was renamed PNR South Long Haul.
6 Following the 1969 riots, the twenty-year affirmative action New Economic Policy (NEP) was introduced to redress wealth and income inequalities between the Malays and other ethnic groups. This goal was to be achieved through the redistribution of corporate equity along ethnic lines, as well as the development of Malay entrepreneurs (Gomez and Saravanamuttu Citation2013).
7 Incorporating SMEs in development plans was crucial as they comprise 98.5 percent of Malaysia’s 1.2 million firms. Business groups control about 40 percent of all quoted firms, while the top ten families own a quarter of market capitalization of these enterprises. GLCs constitute about 42 percent of total quoted market capitalization (Gomez and de Micheaux Citation2017).
8 FDI includes wholly-owned and joint-venture enterprises as well as substantial non-equity arrangements such as long-term subcontracting.
9 Case (Citation2017) reviews these debates on the nature of authoritarian rule in Malaysia.
10 Gomez (Citation2017) provides an account of concentration of economic and political power in the Prime Minister’s office during Najib’s administration.
11 A core factor contributing to this decline in domestic investments was the outcome of the general election in 2013, when UMNO registered a serious fall in popular support. In response, Najib introduced an ethnically-based discriminatory policy to muster Malay political support. This policy, another affirmative action plan targeting Malays in business, undermined domestic investor confidence (Gomez and de Micheaux Citation2017).
12 For an account of the 1MDB scandal, see Wright and Hope (Citation2018).
13 XUMC had, undoubtedly, been received well by Malaysian Chinese, but by then the MCA had loss significant electoral support. In the 12th General Election in 2008, BN fared badly in the multi-ethnic highly-industrialized states of Selangor and Penang, areas where the MCA normally contested parliamentary seats. The MCA was seen to be too subservient to Najib. Moreover, the MCA needed UMNO’s help to draw electoral support, one reason why it had failed repeatedly to act on grievances voiced by Malaysian Chinese. The MCA was also strongly critiqued for being silent about allegations of corruption involving UMNO leaders, including the 1MDB scandal that had deeply undermined Najib’s credibility domestically and abroad (Case Citation2017).
15 Interview with former Albay Mayor, Bicol, July 26, 2018.
16 These discussions focused on China’s “debt trap” and limited spillovers on the host economy. Authors’ observation of the negotiations in July and August 2018.
17 Interview with former Albay Mayor, Bicol, July 26, 2018. Corroborated by interviews with Naga, Surigao, and Gumaca local elites in July 2018.
18 Interview with NTC Committee member, Manila, November 7, 2018.
19 Interview with political broker in the Duterte regime, Manila, October 30, 2018.
20 Interview with a Philippine senator, Manila, November 8, 2018.
21 Duterte dangled the influx of Chinese online gambling companies which became customers to the Ayalas. For MVP, the potential to invest in the South China Sea’s energy sector was an important consideration.
Additional information
Notes on contributors
Alvin Camba
Alvin Camba is an assistant professor at the Josef Korbel School of International Studies at the University of Denver and a research fellow at the Climate Policy Lab at Tufts University. Alvin has been awarded multiple best graduate research paper awards by sections of the American Sociological Association (ASA), funded by foundations or research institutions (e.g. The Chiang Ching-kuo Foundation, The Smith Richardson Foundation, Southeast Asia Research Group), and contributed to policy reports (Carnegie Endowment for International Peace, Center for Integrated and Private Enterprises). His research on Chinese capital in Southeast Asia has been published in top development journals, such as Review of International Political Economy, Development and Change, Resources Policy, and Extractive Industries and Society. He has presented his work at the World Bank, AidData, and the US State Department.
Terence Gomez
Edmund Terence Gomez is Professor of Political Economy at the Faculty of Economics & Administration, University of Malaya. He specializes in government-market relations and the linkages between politics, policies and business development. His publications include Malaysia’s Political Economy: Politics, Patronage and Profits (Cambridge University Press, 1997), Political Business in East Asia (Routledge, 2002), Government-Linked Companies and Sustainable, Equitable Development (Routledge, 2014) and Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia (Palgrave-Macmillan, 2017).
Richard Khaw
Richard Khaw, currently pursuing a PhD programme at the Faculty of Economics and Administration, University of Malaya, Kuala Lumpur. Previously worked as a professional in the engineering and construction industry, both locally and internationally.
Kee-Cheok Cheong
Dr. Cheong Kee-Cheok is currently a Associate Fellow at the Institute of China Studies, University of Malaya (FEA, UM). As a graduate of the University of Malaya, he obtained his PhD at the London School of Economics. Upon returning to Malaysia, he joined the FEA, UM, and was appointed first as Deputy Dean, then the Dean of Faculty. After a decade at UM, he spent 16 years overseas at the World Bank as an Economist and subsequently Senior Economist. He was Acting Coordinator for China and Vietnam in the Economic Development Institute (now known as the World Bank Institute). After returning to Malaysia in 1997, he continued to work as consultant for the Bank and UN agencies. His work has taken him to China, Vietnam, Cambodia, Laos, Mongolia and North Korea and other Asian countries. His research interests include economic development, transition economies, employment and poverty and international economic relations.