The island of Borneo sits more than 1,000 miles due south from mainland China across a vast expanse of the sea. That distance, however, hasn’t stopped the People’s Republic from treating Borneo as its own backyard. The three countries that share the island—Indonesia, Malaysia, and Brunei—now find themselves on the receiving end of the same trademarked Beijing resource grab that has, to greater publicity, threatened the Philippines and Vietnam.
China’s ever-growing appetite for oil and gas under Xi Jinping has sparked new resource appropriation. China consumes 50% more oil and 100% more natural gas than it did just 10 years ago, and it is surging south to lay claim to offshore fields that promise to satisfy its demand.
The most recent provocations at the edge of China’s so-called nine-dash line include the deployment of large Chinese maritime survey ships scoping the Malaysian and Indonesian Exclusive Economic Zones off the coast of Borneo, as well as the harassment of Malaysian oil and gas development by China Coast Guard nautical vessels and aircraft.
China’s behavioral pattern puts the maritime countries of Southeast Asia on a sticky wicket. China is very big, very close, and very connected to the region. The ISEAS-Yusof Ishak Institute’s State of Southeast Asia survey finds that more than three-quarters of respondents consider China to be Southeast Asia's central economic force. The figures match that perception. Since 2001, trade between China and the Association of Southeast Asian Nations, or ASEAN, has grown 900% and is now worth half a trillion dollars annually. Taken as one economic bloc, ASEAN, to which Indonesia and Malaysia belong, became China’s largest trading partner in 2020, while China has been ASEAN’s largest trading partner for more than a decade.
China is also a major investor in the region. Indonesia is in line for more than $90 billion of new development thanks to China’s Belt and Road Initiative, or BRI. Malaysia is an even larger BRI recipient, by some measures registering the world’s second-highest project-value sum.
To remain in Beijing’s good graces, Indonesia and Malaysia have adopted a habit of self-censorship regarding China’s infringements. This is described in David Shambaugh’s 2020 book, Where Great Powers Meet: America & China in Southeast Asia, and Indonesia’s response to Beijing’s recent crossings into its EEZ demonstrates the tendency. Despite maritime analysts reporting that the Chinese survey vessel Haiyang Dizhi 10 plied a tell-tale grid pattern in Indonesian waters in September and October, Adm. Dato Rusman, commander of Indonesia's Marine Combat group, told President Joko Widodo in a video conference that the survey ship was "conducting innocent passage" and that "everything is safe and under control."
Malaysia has tended to act similarly. “Kuala Lumpur has consistently played down China’s activities in our territories,” Malaysian politician and the chief executive of the Institute for Democracy and Economic Affairs Wan Saiful Wan Jan explains in Sebastian Strangio’s 2020 book, In the Dragon’s Shadow: Southeast Asia in the Chinese Century.
But Malaysia now says it has had enough of China’s maritime bullying.
On Oct. 4, the Malaysian Ministry of Foreign Affairs summoned the PRC’s ambassador in Kuala Lumpur to convey its opposition to the presence of PRC survey vessels off its coasts. Collin Koh, research fellow at the S. Rajaratnam School of International Studies in Singapore, says Malaysia is now emphasizing a "no compromise" position toward threats in the South China Sea, a sharp turn for its China orientation.
The turn speaks to larger regional dynamics. “The more China’s presence and influence grows,” Shambaugh writes, “the less it, seemingly, is trusted.” According to the State of Southeast Asia survey, Southeast Asian opinions about China are souring. Just 17% now express confidence that China will "do the right thing" to contribute to global peace, security, prosperity, and governance, down from 20% in 2019.
Amid this cleavage rests a diplomatic opportunity for the United States. While few in the region support outright alignment with either power to the exclusion of the other, favor now tips in the U.S. direction. According to the 2021 survey, if “forced to align oneself in the ongoing US-China rivalry,” 62% of respondents would choose the U.S., while the choice of China has dropped from 47% in 2020 to 39% in 2021.
The Biden administration savvily endorsed ASEAN’s Outlook on the Indo-Pacific this summer, but opportunities to distinguish the U.S. approach from China’s mercantilism remain. One point of emphasis could be renewing U.S. leadership on Asia-Pacific trade. The U.S. exit from the Trans-Pacific Partnership agreement was costly to both Malaysia and Vietnam, each a key South China Sea claimant.
The five ASEAN members that have ongoing resource rows with China over its maritime behavior have a direct and distinct interest in the maintenance of a rules-based order that respects their sovereignty. The free-and-open principles that animate U.S. policy towards the Indo-Pacific align with that interest, creating an opportunity for enhanced economic and strategic cooperation in the region.
Jordan McGillis is Deputy Director of Policy at the Institute for Energy Research. Anthony Kim is a Research Fellow in The Heritage Foundation’s Margaret Thatcher Center for Freedom and editor of the think tank’s annual Index of Economic Freedom. The views expressed are the authors' own.
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