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China & Malaysia to Increase Trade By 60%

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Oct. 5 – Chinese President Xi Jinping has signed a five year trade deal with his Malaysian counterpart Prime Minister Najib Razak that will boost bilateral trade between the two countries by 60 percent to US$160 billion in the next five years. The two countries also upgraded their relationship to a “Comprehensive Strategic Partnership.” Malaysia was the first ASEAN country to formally acknowledge diplomatic ties with China back in 1974.

The two countries will jointly develop two industrial parks, one in Kuantan, in Pahang State, and the other in Qinzhou in Guangxi Province. The two governments will channel efforts to direct their national companies to invest in these. Malaysia’s Sovereign Wealth Fund and China’s ExIm Bank also signed an agreement to jointly finance a tower project in the Financial District of Kuala Lumpur, to be called the Tun Razak Exchange, while China’s Xiamen University will also open its first branch campus outside of China at Salak Tinggi on the edge of Kuala Lumpur. The campus will open in 2015 and house 10,000 students from the ASEAN and China regions.

“As can be seen from this trip, China’s outbound investment is concentrating very much on developing ties and developing infrastructure with its Asian neighbors. ASEAN especially is a fruit ripe for picking and is in need of huge amounts of development work in upgrading road, rail and ports,” comment Chris Devonshire-Ellis of Dezan Shira & Associates. “China’s Sovereign Wealth Fund is concentrating on developing these links and foreign investors looking at taking part in what will be an on-going development bonanza will need to set their sights firmly on Asia.”

President Xi flies to Bali today for the APEC annual CEO Summit. Readers may follow news on this at our Asia Briefing website.

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Chris Devonshire-Ellis
Founding Partner
Singapore Office
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Alberto Vettoretti
Managing Partner, China, Vietnam & Italy
Shenzhen Office
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