Digital Dilemmas: How Malaysia Navigates the United States - China Tech Rivalry

The world’s two biggest powers are in a race, not just for military or economic dominance, but for control over the digital future. Right in the middle of this quiet but powerful contest sits Malaysia. As the United States (U.S.) and China clash over technology and influence, countries across Southeast Asia are under growing pressure to pick a side. But for Malaysia, the answer is not so simple.

China is investing heavily across the region through its Digital Silk Road, a key component of the larger Belt and Road Initiative. This program aims to build networks, infrastructure, and smart cities that integrate cutting-edge technology such as 5G networks, cloud computing, and artificial intelligence. These investments not only bring economic opportunities but also extend China’s geopolitical influence.

At the same time, the U.S. and its allies warn about the risks of relying too heavily on Chinese technology, especially in sensitive areas like 5G and cybersecurity. The U.S. government, along with countries like Australia and Japan, has pushed back against Huawei and other Chinese tech firms, citing concerns over national security and potential espionage. Washington is also promoting its own technological standards and encouraging allies to develop trusted supply chains free from perceived Chinese influence.

Malaysia has worked with both sides. Tech giants like Huawei from China and Amazon Web Services from the U.S. have made big investments in Malaysia’s digital infrastructure. Huawei has played a significant role in expanding Malaysia’s 5G capabilities, while Amazon Web Services supports cloud services critical for Malaysia’s growing digital economy. Rather than choosing one over the other, Malaysia is trying to get the best of both worlds. But as tensions rise, staying neutral is becoming harder.

In 2021, the Malaysian government launched the MyDIGITAL plan, a bold roadmap to turn Malaysia into a digital economy leader by 2030. The plan includes ambitious goals such as expanding 5G coverage nationwide, promoting digital skills among the workforce, encouraging digital entrepreneurship, and making it easier for businesses and services to move online.

Alongside this, Malaysia has introduced comprehensive strategies to strengthen cybersecurity, improve the protection of personal data, and foster innovation ecosystems. The government is also investing in digital infrastructure and smart city projects, partnering with both local and international players.

But the question remains: who controls the technology behind this transformation? And how much influence are foreign powers gaining in the process? This is particularly critical when core components of the digital infrastructure come from foreign suppliers, potentially exposing the country to vulnerabilities.

One of the biggest challenges Malaysia faces is trust. The U.S. has voiced concerns that Chinese tech firms may have close ties to their government and that using their equipment could open the door to spying or digital attacks. These fears are amplified by global geopolitical rivalries and incidents involving cybersecurity breaches. China, in turn, accuses the U.S. of politicising technology to limit competition and maintain its dominance in the digital economy.

Malaysia isn’t alone in this. Across ASEAN, countries are dealing with the same pressures. But Malaysia has taken a more diplomatic and balanced approach. Through regional cooperation on cybersecurity, data sharing, and digital policy frameworks, Malaysia is helping ASEAN shape its own digital rules, not just follow those set by bigger powers.

This approach involves collaborating on capacity building, harmonising regulations, and promoting cross-border digital trade while maintaining national security. Malaysia’s leadership in ASEAN’s digital agenda seeks to create a more unified regional front that can better negotiate with the U.S., China, and other global players.

Choosing sides may not be necessary but being clear-eyed, strategic, and united with regional partners will be key. After all, in today’s world, the digital space is not just about convenience. It’s about sovereignty, security, and the future of diplomacy itself.