Malaysia S Strategic Compass Amid Rising Eastern Bloc

---

The 2025 Shanghai Cooperation Organisation (SCO) Summit, held in Tianjin, China, may be remembered as a pivotal moment in the slow dismantling of US-centric global supremacy.
Originally conceived as a regional security forum, the SCO is now rapidly transforming into a geopolitical and economic bloc with ambitions far beyond Central Asia.
The presence and active engagement of China, Russia, and India - three nations that collectively account for over a third of the world’s GDP (in purchasing power parity terms) and more than 3.5 billion people - signal a coordinated challenge to the prevailing Western-led international order.
These powers, bound by mutual distrust of Western economic coercion and frustrated by what they see as the moral hypocrisy of Western diplomacy, are consolidating around a new vision of global multipolarity.
For Malaysia, this evolving landscape presents both opportunities and significant challenges. Situated at the crossroads of global trade routes and diplomatic currents, Malaysia cannot afford to adopt a simplistic binary posture between East and West.
Instead, the country must exercise strategic autonomy by preserving its sovereignty while deftly navigating between competing power centres.
This balancing act demands not just neutrality in name but proactive diplomacy, economic diversification, and regional leadership that reinforces Asean as a resilient bloc amid geopolitical turbulence.
India, China, Russia forge new synergy
The 2025 SCO Summit revealed a striking new synergy between India, China, and Russia.
Historically, India and China have been rivals with longstanding border disputes and divergent strategic interests. However, their leaders, Prime Minister Narendra Modi and President Xi Jinping, issued a joint statement emphasising cooperation over rivalry, calling for reform of global institutions to reflect a more balanced world order.
This rhetorical shift, following years of tension, underscores a growing pragmatism in India’s foreign policy, shaped partly by disillusionment with Washington’s protectionist turn, including legacy tariffs from the Trump era and uneven treatment in trade and technology access.
At the same time, Russian President Vladimir Putin used the SCO platform to denounce Western sanctions and champion a “de-dollarised” financial system.
Prime Minister Anwar Ibrahim (left) and Russian President Vladimir PutinCentral to this initiative is the proposed “R-Block”, a currency settlement mechanism based on the rupee, ruble, and renminbi that is designed to bypass the dollar-dominated system and the institutions that enforce it.
Challenging the dollar
These developments reflect not merely a shift in trade preferences but an ideological pivot toward constructing parallel institutions.
Alongside China’s Global Development Initiative (GDI) and Russia’s Eurasian Economic Union (EAEU), the SCO bloc is now discussing digital currency platforms, regional infrastructure banks, and AI cooperation forums.
This movement challenges not only the primacy of the US dollar but also the legitimacy of institutions like the IMF and World Bank, which many countries in the Global South view as instruments of Western influence.
Indeed, Xi’s summit remarks emphasised the need to resist “bullying behaviour” and warned against Cold War mentalities.
The summit’s optics: featuring a military parade attended by Xi, Putin, North Korea’s Kim Jong-un, and Iran’s president, projected a potent image of unity against Western coercion.
In this context, Malaysia’s participation at the SCO+ Summit, though as a guest and not a formal member, is telling.
Prime Minister Anwar Ibrahim used the platform to deliver a powerful message of moderation and sovereignty. He endorsed elements of China’s GDI while cautioning that global institutions have failed the test of justice, citing the ongoing crisis in Gaza as an indictment of the current multilateral system.
Anwar called for a new global architecture grounded in equity and inclusion, invoking the Confucian ideal of Chung Yung (the Doctrine of the Mean), which emphasises a balanced path between justice and humanity as the philosophical foundation for future diplomacy.
His address stood out not only for its substantive critique of the current global order but also for its measured tone, positioning Malaysia not as a partisan actor but as a credible voice of moderation and moral clarity within the Global South.
Seeking balance and diversification
Malaysia must now translate this diplomatic positioning into a long-term strategy. First, the country should reinforce its commitment to strategic autonomy. This means resisting pressure from any power, be it the United States, China, or Russia, to adopt rigid alignments that compromise Malaysia’s sovereignty.
While maintaining military and security partnerships with the US and other Indo-Pacific allies, Malaysia must also deepen trade and investment ties with China, India, and emerging SCO-linked markets in Central Asia and Eastern Europe.
A key pillar of this autonomy must be economic diversification. While China is Malaysia’s largest trading partner, accounting for over 16 percent of total trade in 2024, overdependence on any single market poses risks.
As global supply chains fragment, Malaysia can position itself as a hub for Eastern and Western capital, offering stable logistics, political neutrality, and manufacturing capacity in key sectors like semiconductors, renewable energy, and digital services.
Asean leadership and M’sian sovereignty
Second, Malaysia must reinvest in Asean as a strategic buffer and voice of moderation. A more unified and assertive Asean can shield the region from great-power rivalry and offer Southeast Asia a platform to speak with one voice.
Malaysia, with its historical diplomatic credibility and balanced worldview, can lead Asean efforts on infrastructure integration, digital trade corridors, and green transition areas where shared regional interests align regardless of global political divisions.
Third, Malaysia should engage selectively with emerging SCO and Brics mechanisms, particularly in fintech, digital payments, and energy cooperation. These platforms offer new avenues for technological transfer and access to capital, especially for middle powers seeking alternatives to Western-dominated financing.
However, engagement must be governed by one principle: sovereignty must remain non-negotiable. Malaysia should participate in initiatives that offer economic or technological benefits but avoid entanglements that require political allegiance or ideological alignment.
Small country, big role
Finally, Malaysia has a unique opportunity to serve as a diplomatic bridge in this emerging multipolar world.
As a moderate Muslim-majority country with a record of constructive international engagement, Malaysia is well-placed to mediate between competing blocs, promote reform of outdated global institutions, and champion inclusive governance.
By advocating for fairer trade rules, equitable access to technology, and rules-based multilateralism that respects diversity, Malaysia can help shape a more just and representative world order.
In conclusion, the rise of a China-India-Russia alignment under the SCO umbrella signals not just a regional realignment but a fundamental reconfiguration of global power.
For Malaysia, neutrality remains the guiding instinct, but neutrality today requires a proactive strategy, institutional resilience, and diplomatic creativity.
In a world moving from dominance to balance, Malaysia must prove that small states, when agile and principled, can lead in complexity rather than merely survive it. - Mkini
R PANEIR SELVAM is the principal consultant of Arunachala Research & Consultancy Sdn Bhd, a think tank specialising in strategic national and geopolitical matters.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

---