Consider China as a Strategic Pillar of Malaysia’s Defence Industry

KUALA LUMPUR: NEARLY two decades ago, many international military observers underestimated the capabilities of China’s defence industry. The weapons and equipment displayed at the time were regarded as basic copies of Western technology.

However, within a relatively short period, that narrative changed completely.

President Xi Jinping’s directive in 2019 for the People’s Liberation Army (PLA) to accelerate drone-based research and training set in motion a transformation that has now made Beijing one of the world’s most dynamic centres of military innovation.

In the Defence Ministry’s New Year Address on Jan 12, 2026, Defence Minister Datuk Seri Mohamed Khaled Nordin stressed that Malaysia would launch the National Defence Industry Policy (DIPN) to develop a strong, competitive and sustainable domestic defence industry while strengthening the country’s technological sovereignty in defence.

At a broad level, such a statement could be seen as signalling a much-needed strategic shift in the country’s defence approach.

It must be understood that building a resilient defence industry requires access to innovation ecosystems, technology supply chains and rapidly evolving expertise.

One of the most important aspects of this cycle also involves diversifying partnerships to maximise technology exchange.

All of this can only take place clearly and effectively if the country has a well-defined national defence industry policy or direction.

Apart from the longstanding dominance of the West in the military industry, China’s seriousness in developing its defence sector gives it significant potential to become an important industrial partner.

China’s military technology has advanced rapidly and is emerging as one of the challengers in the global defence industry.

For example, during the military parade on Sept 3, 2025, marking the anniversary of victory in the Second World War, China prominently showcased advanced assets such as rows of GJ-11 stealth drones, giant unmanned underwater vehicles, armed ground robots and Dongfeng missiles.

These displays highlighted the country’s remarkable technological leap.

It can be argued that China is no longer positioning itself as a passive follower, but is increasingly establishing itself as a power shaping new forms of warfare based on algorithms, automation and quantitative superiority.

These developments demonstrate a significant leap in technological capability. However, questions remain over whether these innovations can be effectively integrated into actual warfare.

Nevertheless, whether widely recognised or not, one of the key factors behind this rapid progress is China’s willingness to invest heavily in research and development.

According to the OECD, China’s R&D expenditure increased by about 8.7 per cent in 2023, compared with 1.7 per cent in the United States and 1.6 per cent in the European Union.

Measured in purchasing power parity, China’s R&D spending reached approximately 96 per cent of the US level in the same year, indicating a rapidly narrowing gap.

For perspective, independent estimates placed China’s absolute R&D spending at between US$720 billion and US$750 billion in 2023, depending on the PPP methodology used.

For 2024, China’s National Bureau of Statistics reported total R&D expenditure of 3.613 trillion yuan, an annual increase of 8.3 per cent.

Investment in basic research amounted to 249.7 billion yuan, equivalent to 6.91 per cent of the total. These investments have ultimately positioned China as one of the major powers prepared to deploy technologies across multiple domains.

What is even more thought-provoking for the international community is China’s readiness to integrate artificial intelligence directly into the “kill chain.”

This includes the development of long-range and hypersonic missiles, reflecting Beijing’s determination to counter US dominance. The Dongfeng-26D variant has been dubbed the “Guam Killer” because of its ability to threaten key US bases in the Pacific.

The YJ-17 and YJ-19 hypersonic missiles, meanwhile, are capable of travelling at high speeds along difficult-to-predict trajectories, making traditional air defence systems less effective. Combined with stealth drones, unmanned submarines and satellite systems developed by the China Aerospace Science and Industry Corporation (CASIC), it is clear that China is building an integrated multi-domain warfare ecosystem.

Malaysia-China Strategic Dimension

Given China’s determination and rapid progress in developing its domestic defence industry, Malaysia’s efforts through the Ministry of Defence (MINDEF) to cooperate with the country deserve serious attention.

This approach should be viewed as a realistic strategy that not only addresses current needs but also responds to the increasingly dynamic regional environment.

Several initiatives supporting this strategic dimension should be further strengthened. Malaysia made a positive start through Mohamed Khaled’s high-impact visit to Beijing in September 2025.

However, it cannot end there. The Defence Minister’s visit must be viewed as a catalyst for further strategic assessments, particularly in determining the extent to which China’s defence industry offerings align with Malaysia’s requirements and capabilities.

In this regard, the DIPN must be translated into action in a systematic and effective manner. The Defence Minister’s meeting with CASIC Chairman Chen Ximing must be fully leveraged.

Besides opening avenues for cooperation in rockets, air defence, satellites and space technology, the engagement reflects Malaysia’s seriousness in advancing innovation within its defence industry.

CASIC is a major player in China’s missile and aerospace technology ecosystem, and access to this sector provides Malaysia with additional options in an area that has long been dominated by the Western bloc.

The MINDEF delegation’s meeting with China North Industries Group Corporation (NORINCO), a company synonymous with Chinese armoured vehicles and artillery, appears to have produced tangible outcomes.

It should serve as a reference point in addressing more substantive questions, including the extent to which Malaysia can assess the feasibility of technology transfer and joint production to ensure that the benefits are not limited to asset procurement alone.

Similarly, Mohamed Khaled’s visit to the China Precision Machinery Import-Export Corporation (CPMIEC) represents a strategic move that could open opportunities for cooperation in missile technology, which is now regarded as a critical element in the regional balance of power.

The initiatives currently being pursued can be viewed from three main perspectives.

First, Malaysia needs to balance its dependencies to avoid being tied to a single bloc. Diversifying strategic partners is a fundamental requirement in an increasingly multipolar world.

Second, the technology offered by China is more suited to the country’s requirements, particularly in maritime domain surveillance, border patrols and short-range aerial missions.

Lower costs and ease of operation make such technology a practical alternative to more expensive Western assets.

Third, technology transfer could generate spillover benefits for domestic industries. Universities, technology companies and research centres could develop their own capabilities, turning defence cooperation into a long-term investment that strengthens industrial resilience.

This direction is consistent with the mid-term review of the Defence White Paper, which emphasises self-reliance through the National Defence Industry Policy (DIPN), as well as the role of STRIDE as a driver of research and development to ensure that acquired technologies are effectively absorbed into the national ecosystem.

However, it must be acknowledged that ultimately, success will depend on disciplined implementation.

Every partnership should be tied to measurable strategic-return benchmarks, including technology-transfer modules, specialist training, local supplier development and guarantees for lifecycle support.

Without these prerequisites, the benefits risk being reduced to mere asset transactions without delivering the necessary leap forward for Malaysia’s domestic defence industry.

Astro Awani