PUTRAJAYA: In 1974, Malaysia’s second premier Tun Abdul Razak took a bold step in the nation’s history by establishing diplomatic relations with a country that was shunned by many.

Thirty-five years later amidst a global financial system that is still suffering from the collapse of well-known banking institutions in the US, that step is paying off.

For while the rest of the world wrestles with recession, China and India shine like a beacon with gross domestic product (GDP) growth of up to 10% in the last few quarters.

From minor exchanges in foodstuff, Malaysia has now become China’s largest trading partner among Asean countries at US$53 billion (RM179.67 billion) last year.

And for the nation, China is now its largest trading partner. The country is second on the exports list and top on the import rankings, according to data from the Department of Statistics. That position is now poised for further improvement.

Prime Minister Datuk Seri Najib Razak and China’s President Hu Jintao marked the 35th anniversary of the two country’s diplomatic ties by inking five more memorandums of understanding (MoUs) yesterday.

To enhance their bilateral relations, the two nations signed MoUs in areas ranging from finance and education to sewerage services.

“Our relationship has continued to prosper and is poised to enter a more exciting phase,” said Najib at a joint press conference with Hu yesterday.

“Hu’s visit is not only important to symbolically mark the 35th anniversary of our diplomatic relations but is substantial as well,” he noted. “This was evidenced in today’s discussions which covered a wide range of topics.”

According to Najib, China wants more trade in palm oil and Malaysian timber to fuel its growth.

Explaining the MoUs, Najib said that Bank Negara Malaysia’s memorandum with the China Banking Regulatory Commission on banking supervision cooperation will chart new terrain in financial regulatory initiatives between the two nations.

“This is very meaningful in view of the current global challenges,” said Najib.

The two nations also signed a Preferential Buyer’s Credit loan agreement on the second bridge project in Penang and agreed that the job should “be implemented shortly”.

“Other possibilities include our commitment to grant to a Chinese company the construction of the Mengkuang Dam. The current negotiations include a pulp and paper project in Sarawak and an aluminum smelter plant.”

China Harbour Engineering Co (CHEC) and UEM Builders Bhd are the main contractors for the Penang Bridge project. The Chinese government is providing a US$800 million loan for the job.

Malaysia has also agreed in principle to grant to the Chinese the construction of the double-tracking rail project from Gemas to Johor Bahru.

Apart from that, China and Malaysia have also agreed to cooperate through the exchange of knowledge in the fields of green technology, agriculture and science and technology.

For his part, Hu said that he was satisfied with the momentum of the countries’ relationship.

“We’ve agreed to maintain high-level exchanges and take effective measures to implement our joint action plan on strategic cooperation.

“We will also work together to explore new areas of cooperation and foster new growth points,” he added.

This is Hu’s first state visit to Malaysia. The Chinese president, who will attend the Asia-Pacific Economic Cooperation (Apec) summit in Singapore this weekend, stopped over at Melaka after his talks with Najib.

The last Chinese president to visit Malaysia was Jiang Zemin, who made a state visit in 1997 and attended the first informal meeting between leaders of Asean countries and their dialogue partners in Kuala Lumpur in 1998.