Malaysia Walks Tightrope on China and the South China Sea

For almost two years, Malaysia and China have been making elaborate preparations to commemorate the historic 40th anniversary of their diplomatic relationship in 2014 (The Star, August 29, 2012). Yet the first few months of “Malaysia-China Friendship Year” have been anything but celebratory, with greater anxiety about Chinese encroachments into Malaysian waters and the mystery surrounding a missing Malaysian plane initially headed for Beijing threatening to strain ties. Malaysia appears to be refining its conventional hedging strategy by intensifying a buildup of own capabilities and solidifying ties with regional actors and other external powers like the United States. Yet, the importance the government attaches to the relationship as well as political and budgetary realities suggests that there may be limits to both how the Southeast Asian state can respond, as well as the extent to which the South China Sea issue affects overall ties. Hence, despite skepticism of Chinese intentions, Malaysia is unlikely to either abandon its balanced approach or sign on to any overtly anti-Chinese initiatives anytime soon, despite the entreaties of other regional actors.

Malaysia’s perception of China during the early Cold War was characterized by deep suspicion, owing to the specter of the Communist threat emanating from Beijing’s ties to both the Communist Party of Malaysia (CPM) and the Soviet Union. But in a changing geopolitical environment, Malaysia became the first Southeast Asian country to normalize relations with China in 1974, a milestone both sides continue to emphasize publicly. Particularly with the end of the Cold War and the uncertainty surrounding China’s rise, Malaysia has quietly pursued a hedging strategy designed both to maximize the benefits of the Sino-Malaysian relationship and to minimize risks by strengthening economic and security links with other powers such as the United States (see China Brief, September 21, 2012). Under Malaysia’s current Prime Minister Najib Razak, bilateral ties have reached new heights, with the two sides agreeing to upgrade bilateral ties to a comprehensive strategic partnership during Chinese President Xi Jinping’s visit to Malaysia last October (Xinhua, October 4, 2013).

Recent Developments on the South China Sea Issue

Yet for all the positive developments in other dimensions of the Sino-Malaysia relationship, the South China Sea continues to remain a thorn in its side. Tensions between Malaysia and China are chiefly about overlapping claims in the Spratly Islands, which are located at the central part of the South China Sea. The Spratlys are north of Borneo, which includes the east Malaysian states of Sabah and Sarawak. Encroachments by China into what Malaysia considers its exclusive economic zone (EEZ) are not new or rare—from 2008 to 2012 alone, as many as 35 assets belonging either to the People’s Liberation Army Navy (PLAN) or Chinese law enforcement agencies were observed in Malaysia’s EEZ (Maritime Institute of Malaysia, April 15, 2013). Yet Malaysia has traditionally preferred to respond to Chinese provocations quietly by registering private protests and slightly adjusting its relationships with other states, a sharp contrast to the more outspoken approaches adopted by the Philippines and Vietnam in recent years.

But several incidents over the past year have raised eyebrows because of their boldness and growing threat to Malaysia’s security amid a broader pattern of increasing Chinese assertiveness in the South China Sea. On March 26, 2013, a flotilla of four PLAN ships visited James Shoal (which China calls Zengmu Reef and Malaysia calls Beting Serupai), 80 kilometers from Malaysia and 1800 kilometers from the mainland coast close to the outer limits of Beijing’s nine-dashed line claim. The crew reportedly conducted an oath-taking ceremony on the deck of one of the ships, the Jinggangshan, pledging to “defend the South China Sea, maintain national sovereignty and strive towards the dream of a strong China” (South China Morning Post, March 27, 2013).

Malaysian officials initially announced there were no reports of an encounter with the flotilla, but then later said that Malaysia had in fact lodged a protest with Chinese authorities. Others also suggested that a Malaysian naval offshore patrol vessel, the KD Perak, monitored the exercise and issued orders for the PLAN to leave the area (The Strategist, April 2013). Then, in April, a Chinese maritime surveillance vessel returned to James Shoal and left behind steel markers to assert China’s claim, an incident that was only fully publicly revealed a few months later (The Diplomat, February 28).

In January 2014, when a three-ship PLAN flotilla visited James Shoal again and a similar oath-taking ceremony was conducted, the chief of the Royal Malaysian Navy (RMN), Admiral Abdul Aziz Jaafar, initially denied that the exercises took place. Wt was not until February 20 that the chief of the Malaysian armed forces, Zulkefeli Mohamad Zin, finally publicly confirmed that the incident did occur. In fact, just after the incident China’s ambassador to Malaysia paid a quiet visit to Malaysian defense minister Hishammuddin Hussein, who was also joined by service chiefs (Xinhua, January 29; The Star, January 30). By now, some politicians in Malaysia were calling for a more assertive government response because Beijing’s recent actions were affecting not only the security and sovereignty of Sabah and Sarawak, but the rights that Malaysia enjoyed within its EEZ, including the right to exploit marine resources and strategic oil and gas reserves (Borneo Post, February 5).

The disappearance of Malaysian flight MH 370, initially bound for Beijing and carrying more than 150 Chinese nationals, has also thrown yet another spanner in the works. Chinese media and officials have sharply criticized Malaysia’s handling of the investigation, noting the frustration at the lack of timely authoritative information disclosed by the government and its reluctance to share insights (China Daily, March 13; Global Times, March 13; Xinhua, March 15). Chinese Foreign Ministry spokesman Qin Gang also noted that China had the responsibility to “demand and urge” Malaysia to step up its efforts, and Beijing has deployed what Chinese media have called the largest Chinese rescue fleet ever assembled, including warships, coastguard vessels, aircraft and satellites in its search area (Reuters, March 13).

Malaysia’s Refined Hedging Strategy

Despite Malaysia’s seemingly quiet public response, the additional measures the government has taken during the past year or so suggest that the it is in fact recalibrating its hedging strategy to account for these increasingly bold Chinese encroachments. Diplomatically, Malaysia has accelerated efforts over the past few months to work with its fellow claimants in the South China Sea, namely Brunei, the Philippines and Vietnam to coordinate a joint approach on the dispute. Less than a week after the incident in January, Malaysian Foreign Minister Anifah Aman made an unannounced private visit for discussions with his Philippine counterpart, during which the South China Sea issue was raised according to the Philippine foreign ministry (Reuters, February 26). Malaysia was also actively engaged in organizing and participating in the first ASEAN Claimants Working Group Meeting held in Manila on February 18, and Kuala Lumpur is reportedly hosting the second round later this month following ASEAN-wide consultations with Beijing on March 18 (Philippine Star, March 3).

Malaysia has also announced efforts to boost its own capabilities. In addition to stepping up patrols around the area, Hishammuddin issued a statement in October last year that the country would set up a marine corps and establish a naval base 60 miles away from James Shoal in Bintulu, Sarawak. While the statement itself did not refer to the South China Sea explicitly and cited security in the East Malaysian state of Sabah as the rationale, the proximity of the base, the timing of the move and the prioritization of the initiative was not lost on defense analysts (Jane’s Defense Weekly, October 15, 2013).

Kuala Lumpur has also intensified its military engagement with the United States. During Hishammuddin’s inaugural visit to Washington, D.C. in January since assuming the defense portfolio, he discussed strengthening military exercises and training with his counterpart Chuck Hagel (New Straits Times, January 19). And when U.S. admiral Jonathan W. Greenert met with the RMN chief Aziz in February, the two discussed the recent incident with the Chinese navy, talked about submarine operations and agreed to more U.S. ship visits to Malaysian ports in the future, in addition to the average of over twenty per year registered over the past six years (The Malay Mail, February 11). Greenert also reportedly assured Aziz of America’s commitment to Malaysia’s national security.

The Limits to Malaysia’s Response

But even if these developments suggest a more energetic Malaysian response to China’s growing assertiveness in the South China Sea, there are a few key factors that limit the extent to which the Southeast Asian state can react, as well as the degree to which this dimension will affect the overall relationship, both now and in the near future.

First, Malaysia’s historical relationship with China is something which both sides continue to take very seriously. Beijing never forgets that Malaysia was the first ASEAN state to normalize ties with China at a time where some of its peers were still concerned about the threat it posed. Furthermore, it matters to both sides that this historic normalization was done when Najib’s father, Tun Abdul Razak, was prime minister. For example, when Najib visited China for the first time as Prime Minister in 2009, Chinese Prime Minister Wen Jiabao gifted him a photo picturing Najib’s father signing the joint communique to establish diplomatic ties with Chinaese Premier Zhou Enlai (China Daily, December 17, 2013).

Second, and on a related note, Malaysia’s civilian leadership has placed a high priority on maintaining good overall ties with Beijing and is determined to ensure that irritants in one area do not get in the way of an otherwise successful relationship. As Najib clearly stated in his keynote address to the Shangri-La Dialogue in 2011, while Malaysia remains fully committed to a “common ASEAN position” in terms of engaging China on the South China Sea, it is “equally determined” to ensure that the bilateral relationship “remains unaffected” (Shangri-La Dialogue, 2011). This is especially important this year, as Najib continues to try to make advances in his chief goal of making Malaysia a developed country by 2020 by boosting investment and tourism, cutting subsidies and reining in the deficit amidst intensified domestic opposition (New Straits Times, March 8). As Malaysia’s largest trade partner, export destination, import source and tourist-generating market outside of ASEAN, China will be at the forefront of any successful economic strategy, and it will take a lot for Najib to risk straining the overall relationship. However, it is important to note that Malaysia is a top economic priority for China as well, being its third largest trade partner in Asia after Japan and Korea and accounting for about a quarter of Beijing’s overall trade with Southeast Asia (Xinhua, January 21).

Even as Malaysia continues to be cautious about Beijing’s assertiveness in the South China Sea and intensifies its hedging efforts, it still seeks better ties with Beijing in the security realm, albeit in a gradual and calibrated manner. For example, a year after the two sides had held their first ever defense and security consultation and following President Xi’s visit to Kuala Lumpur in October 2013, Hishammuddin paid a visit to Beijing and announced that China and Malaysia were expected to launch their first-ever joint exercise in 2014 and that he had invited his counterpart Chang Wanquan to visit the Malaysian naval base of Mawilla 2 in the South China Sea in pursuit of launching a “direct-contact” relationship with China’s South China Sea fleet (Xinhua, September 11, 2012). While this security cooperation is relatively modest considering that both sides signed a memorandum of understanding nearly a decade ago, and even if the push on some initiatives is largely coming from Beijing, these efforts nonetheless deserve mention.

Third and finally, in spite of any rising threat perception vis-à-vis China, budgetary constraints may also restrict what Malaysia can realistically do to enhance its own capabilities to counter Beijing. The current political environment is characterized by a combination of widespread public discontent over price hikes, broader dissatisfaction with the government—which actually lost the popular vote in its election victory last year—and a deep suspicion about corruption in military purchases. This makes spending increases on military procurement a tough sell. For instance, RMN chief Aziz said in a January address this year that the Malaysian navy does not expect to undertake significant development programs in 2014 beyond existing commitments due to budgetary constraints. While he also added that the navy may ask the government to fund new purchases, such as surveillance radars and underwater security systems that could enhance Malaysian capacity to act in the Spratlys, as well as additional ships to relieve the stress of maintaining the navy’s current operational tempo, it remains to be seen whether the government will be able to approve, acquire and deploy them in a timely fashion (Jane’s Defense Weekly, January 9).

So while some countries may continue to hope that Malaysia will speak louder and carry a bigger stick when it comes to countering Chinese aggression in the South China Sea, it is far more likely that the government will insist on both adjusting its quiet hedging strategy against Beijing while also working equally hard to prevent that issue from undermining the overall bilateral relationship. Until and unless this balanced approach becomes unviable, Malaysia looks set to continue to walk the tightrope on China and the South China Sea.