IMAGINE the world economy as a massive seesaw, with the US on one end, contributing 25 per cent of global output, and China on the other, adding 15 per cent.
Together, these two giants balance nearly 40 per cent of the global economy. Now picture Malaysia - a small but strategic player - sitting closer to the fulcrum, contributing just 0.4 per cent or one hundredth of their combined heft. The gap isn't just economic; it's also about living standards.
The US and China are operating on vastly different playing fields when it comes to quality of life and economic systems.
The backdrop to this global dance is the architecture of the modern world order. Born in the ashes of World War II, the Bretton Woods Institutions set the rules for a US-led global system.
For decades, especially after the Berlin Wall crumbled and the Cold War ended, the world seemed to orbit a unipolar star - the United States.
But this system is no longer firing on all cylinders. Economic stagnation, rising populism, whiplash-inducing technological change, and geopolitical missteps have led to a chorus of voices declaring that the unipolar moment is over.
We're transitioning from a world dominated by one power to something far more unpredictable - a multipolar reality. Here, the US is a troubled hegemon grappling with internal divisions and external challenges, while China emerges as a confident contender.
Richard Haass of the Council on Foreign Relations captures this moment of flux well: the old order cannot be revived, and the US must embrace multilateralism as the new normal.
But not everyone sees China as vying for America's throne.
Some argue that Beijing isn't aiming to replace Washington but to carve out its own sphere of influence in the Indo-Pacific, expelling US dominance while playing the role of global counterweight.
For Malaysia, caught in this evolving power dynamic, the stakes couldn't be higher. How this great-power rivalry unfolds will ripple through trade, security, and the very fabric of globalisation, leaving no corner of the world untouched.
Why this matters to Malaysia?
Why does this matter to Malaysia? Because when the elephants of global trade - the US and China - lock tusks, the grass doesn't just tremble; it risks getting trampled.
As a trade-dependent nation strategically positioned at the crossroads of global supply chains, Malaysia has no choice but to pay close attention. The US-China trade war isn't just another geopolitical spat; it's a tectonic shift in how the global economy functions.
Under President-elect Trump, the geopolitical chessboard was ripe for disruption. Trade deals with Vietnam, Mexico, Canada and even the European Union faced scrutiny, renegotiation, or outright rejection.
His "America First" doctrine lit the spark for the US-China trade war, triggering ripple effects across markets, currencies, and supply chains around the world.
Fast-forward to the post-Covid-19 era, and four buzzwords now dominate the global economic conversation: de-globalisation, de-risking, friend-shoring, and near-shoring. These concepts signal a profound rewriting of the rules governing global commerce.
De-globalisation and de-risking reflect a retreat from the hyper connected world of yesteryear, with nations and corporations recalibrating priorities to emphasise resilience over efficiency. Supply chains are no longer built purely for cost savings; instead, they're being diversified to reduce dependency on any single country, mitigating vulnerabilities to geopolitical tensions or pandemic-induced disruptions.
Friend-shoring and near-shoring take this a step further, encouraging supply chains to move closer - either geographically or within circles of political trust. It's about trading with neighbors and allies, not distant and unpredictable partners.
The stakes are especially high given Malaysia's export profile. Electronics are the backbone, but palm oil also plays a significant role. This is why Malaysia cannot afford to be a passive bystander in the evolving US-China dynamic.
The shifts in global supply chains and economic power require nations like Malaysia to adapt, innovate, and find their footing in this new multipolar world. To hesitate is to risk being left behind.
Contribution of International Trade to GDP
International trade is to Malaysia what oxygen is to life - indispensable. As for international trade as a share of gross domestic product, Malaysia's trade has been consistently more than 100 per cent since 1988 and is currently more than double of the world average.
In other words, Malaysia doesn't just participate in international trade; it thrives on it. Imports and exports generate significant income, but beneath these impressive numbers lies a sobering reality: Malaysia's exports have a high import content.
This dynamic, documented in Bank Negara Malaysia's annual reports, reveals a crucial vulnerability - Malaysia adds relatively little value to what it exports.
Despite being deeply embedded in globalisation, particularly through global value chains (GVCs), the country remains stuck in low-value-added activities like assembly work rather than climbing the ladder to high-end manufacturing and innovation.
The question isn't whether Malaysia trades but how it trades - and whether it's extracting maximum benefit from its active role in the global economy.
As for trade partners, Malaysia has seen a dramatic shift over the past 15 years. Where the US once topped the list, China now occupies the throne, followed closely by Singapore, the European Union, Japan, and the US.
Trade with Japan and the US often comes with a critical bonus: the transfer of technology. This is where Malaysia's trade relationships offer a glimmer of hope for moving up the value chain.
Yet, this is also where the shadow of geopolitics looms large. The rising dragon, China, continues to challenge the American eagle for dominance, creating a dangerous global dynamic.
Misunderstandings between these superpowers could lead to what political theorists call the "Thucydides Trap," a concept revived by Harvard's Graham Allison.
The premise is simple but terrifying: when a rising power threatens an established one, conflict often becomes unavoidable, much like the ancient rivalry between Athens and Sparta.
In today's context, the stakes are higher, the players more powerful, and the consequences more far-reaching.
Thankfully, Japan has emerged as a strategic counterbalance in this fraught environment. But Malaysia, as a small open economy, must tread carefully in this geopolitical minefield.
Like the fabled Malay Sang Kancil - the clever mouse deer that uses wit and agility to outmaneuver larger foes - Malaysia must find its way between these Goliaths.
Strategy, timing, and adherence to the rules of the game are critical if the country is to avoid getting trampled while reaping the maximum benefits from its economic relationships.
At the heart of it all lies a deeper imperative: preserving Malaysia's economic sovereignty. The country's high interconnectivity with the global economy is both a strength and a vulnerability.
Participation in GVCs links Malaysia to global markets, but it also leaves the economy exposed to external shocks - be it fluctuating commodity prices or the ripple effects of a trade war between China and the US.
In the end, Malaysia's survival and success depend on its ability to navigate these shifting tides. Globalisation is not just an opportunity; it's a battlefield.
To thrive, Malaysia must not only adapt but innovate, ensuring that it isn't just a player in the global economy but a resilient and sovereign one. The challenge is to dance with the giants without losing its footing - and to emerge stronger, smarter, and more self-reliant in the process.
* The writer is an adjunct lecturer at Universiti Teknologi Petronas, international relations analyst and a senior consultant with Global Asia Consulting. He did his graduate studies at Macquarie University in Sydney, Australia.