The economies of Malaysia and China: then and now

  • Nation
  • Monday, 26 May 2014

THE economic landscape of Malaysia and China has vastly changed from 40 years ago, when both countries established diplomatic relations with each other.

For the better part of the 1970s, Malaysia’s economy was mainly reliant on mining and agriculture, with a transition in the latter part of the decade to manufacturing.

The change was largely due to policies focused on getting foreign direct investment in the form of companies setting up factories in zones set aside for the purpose.

The main exports then were natural rubber and tin but today, it is the vast services sector that is the mainstay of the Malaysian economy, while electrical and electronic as well as palm oil products have replaced natural rubber and tin as the main exports.

This sector contributed 55.2% to gross domestic product (GDP) last year while under the 10th Malaysia Plan (2011 to 2015), the sector is expected to grow at 7.2% annually until 2015 and contribute 61% to GDP.

On the other hand, China’s economy moved from a closed centrally planned system to a more market-oriented one following the reforms of 1978 under then first vice-premier Deng Xiaoping.

According to an International Monetary Fund study from 1997, China’s growth averaged 6% pre-1978, but this was not without some volatility.

However, following the 1978 reforms, the country saw an average real growth of more than 9% a year with fewer and less painful ups and downs.

In several peak years, the economy grew more than 13%.