KUALA LUMPUR: Malaysia must build up its economic strength through reforms and stand with Asean as a bloc to withstand an impending trade war between the US and China, prominent economist Woo Wing Thye said today.
Woo said Malaysia’s choices lay in either choosing one side at the expense of angering the other (the “fist of fury” model), or withstand this trade war without being proxy to either (the “bro fist”).
He believed Prime Minister Dr Mahathir Mohamad will have an important role in galvanising Asean to respond to trade threats from either of the big powers.
Woo said economic and government reforms were necessary for Malaysia to withstand the impact of the US-China trade war.
If tensions between US and China were low, Malaysia would be left alone.
“But when tensions between the US and China are building, they try winning us over by bearing gifts — the US through exempting us from rules in the Trans-Pacific Partnership Agreement, and China through building infrastructure like railways.”
When tensions were high, as they are now, the attitudes of the two powers would be more like “If you’re not with me, you’re against me”, Woo said.
If Malaysia became more wealthy, by carrying out economic reforms, the country could avoid being a proxy of either big power by not being economically reliant upon them.
If the five major Asean countries could stand together as a bloc, the big powers would find it harder to use Asean members as proxies.
“Mahathir has credibility, is well-respected in Asean and is able to galvanise the region, enabling us to respond appropriately to threats and ultimatums from the US and China,” Woo said.
However, he noted that the world had changed since Mahathir was last in power and what made him successful then would not make him successful now.
Woo spoke to reporters while at a forum here today where he delivered a lecture on the implications of the US-China trade war. The forum was organised by Refsa (Research For Social Advancement) research institute.
The US and China began a tariff war this month, with the US slapping a 25% tax on imports of US$34 billion of goods from China, including machinery and components like semiconductors.
China has retaliated with 25% tariff on imports of soy beans, other agricultural products and cars, on top of tariffs already imposed on steel, aluminium, washing machines and solar panels.