Whatever its strategy to manage the South China Sea dispute this year, Malaysian officials will need to devote attention to rebuilding trust among the ASEAN claimants, says Malaysian academic Thomas Daniel.

 This handout photo taken on 11 January 2025 and released on 12 January by the Philippine Coast Guard (PCG) shows a Chinese Coast Guard ship sailing some 60 nautical miles (111 kilometres, 69 miles) west of the main Philippine island of Luzon while being monitored by Philipine Coast Guard ship BRP Teresa Magbanua (not pictured). (Handout/Philippine Coast Guard (PCG)/AFP)

As Malaysia chairs ASEAN this year, there are several difficult strategic-security issues that it is expected to address and mitigate. Almost all of them are legacy issues, stretching back years or even decades, with the South China Sea (SCS) dispute being of the most complicated and prominent. In fact, this dispute takes on added importance for Malaysia as one of the four ASEAN claimant states.

However, it is not the disputes between the four members of ASEAN that generates headlines but that of China’s claims and actions in the dispute. As a regional superpower that holds undisputed escalation dominance in the SCS, and has not been afraid to employ it, China has been strident on its expansive yet undefined claims. In recent years, China has worked to normalise the presence of its ships and aircraft in almost all areas of the SCS, including as far as the Natunas where it postulates overlapping claims with Indonesia.

The fear that the SCS dispute will be subsumed by major power rivalry is one that resonates with most ASEAN member states, including Malaysia.

The impact of great power rivalry

Simmering tensions are manifested most acutely in the dispute over the Philippines’ attempt over the past year to resupply and reinforce its troops stationed at Second Thomas Shoal, a move opposed by China. The resulting highly publicised actions by both countries have seen aggressive maritime manoeuvres, water cannon skirmishes, a severed finger and a “provisional arrangement” cobbled together after urgent diplomacy. It has increased worries among all stakeholders of a conflict, accidental or otherwise, that could draw in external powers like the US, a treaty ally of the Philippines.

The nine-dash line shows China’s historical territorial claim in the South China Sea. (SPH Media)

The fear that the SCS dispute will be subsumed by major power rivalry is one that resonates with most ASEAN member states, including Malaysia. Actions like freedom of navigation and overflight exercises by the US and others, have a mixed reception in Southeast Asia due partly to the belief that China has used these to justify the militarisation of the reclaimed features it occupies. For much of 2024, the Biden administration repeatedly issued statements in support of the Philippines, while forward deploying naval units to support their treaty ally. The new Trump administration, which appears to be dominated by China hawks, has reassured the Philippines of its “ironclad” support, while criticising China.

Trust among ASEAN countries a factor

The possibility of the US choosing to increase pressure on China in the SCS as part of a wider strategy to renegotiate a new modus vivendi with China should not be ruled out. ASEAN member states would certainly feel the repercussions from that, which is another consideration for Malaysia in how it approaches the dispute.

That said, a fundamental intra-ASEAN dynamic that the regional association and its Chair will have to navigate is the issue of trust, or the lack thereof. ASEAN member states, and claimant states in particular, simply do not trust each other due their own history of disputes, which predate China’s involvement. There are also more contemporary issues at play.

While Anwar might have more friendly rhetoric when it comes to the bilateral relationship, there is no real evidence of a shift in the country’s SCS policy.

Over the past year, for example, several analytical pieces on Malaysian foreign policy under Prime Minister Anwar Ibrahim have speculated about a growing alignment with China, one that he has repeatedly denied. While PM Anwar has repeatedly stressed that Malaysia has no major problems with China in the SCS, he has equally stressed that Malaysia will continue to uphold its interests in the SCS, especially in hydrocarbon exploration, and that the dispute needs to be solved peacefully in line with established international laws, especially UNCLOS.

This has been a longstanding position of Malaysia, which has always sought to compartmentalise the dispute, so it would not affect the wider relationship. Beijing reciprocates this. While Anwar might have more friendly rhetoric when it comes to the bilateral relationship, there is no real evidence of a shift in the country’s SCS policy.

Chinese President Xi Jinping meets Malaysian Prime Minister Anwar Ibrahim at the Great Hall of the People in Beijing, China, on 7 November 2024. (China Daily via Reuters)
Chinese President Xi Jinping meets Malaysian Prime Minister Anwar Ibrahim at the Great Hall of the People in Beijing, China, on 7 November 2024. (China Daily via Reuters)

Meanwhile, the perception by some in ASEAN that the Philippines under President Ferdinand Marcos Jr is too close to the US, hence drawing a particularly aggressive response from China on Second Thomas Shoal is an issue that stakeholders from Manila have had to respond to. While some dismiss this as a narrative propagated by China to diminish the agency of the Philippines, the nature of the security partnership between the latter and the US certainly feeds into the speculation which many officials do not openly discuss, with some exceptions. All ASEAN member states have been constant in their desire that both the Philippines and China find a more constructive way to manage the dispute.

One thing is clear, whatever its strategy to manage the SCS dispute this year, Malaysian officials will need to devote attention to rebuilding trust among the ASEAN claimants. This might entail closer and more honest discussions among ASEAN claimants, and more empathy, leading to thoughtful language and framing from all ASEAN parties.

Black swan risks in South China Sea dispute

Some might argue whether Malaysia is well placed to do this, but Malaysia has little choice. A fractious SCS does not benefit any of its littoral or claimant states, especially a state like Malaysia that is dependent on maritime trade, hydrocarbon resources from the SCS. Don’t forget, Malaysia is also a non-contiguous state, physically separated by the SCS.

Additionally, Malaysia also has the role of ASEAN’s country coordinator for China until 2027, and thus, the onus on managing the Code of Conduct negotiations between ASEAN and China. Negotiations are now in the third reading of the single draft negotiating text, yet it remains to be seen if the targeted conclusion in 2026 would be achieved. A key consideration would be the final provisions and redress mechanisms in the code meant to govern behaviour in the SCS and minimise tensions. Fear among some observers in ASEAN member states that the Code might ultimately limit their leverage.

An ASEAN member’s stint as chair will be judged on how it manages the difficult, high-profile challenges, sometimes more than its other achievements. It is manifestly unfair, but perceptions do matter. 

Chinese Coast Guard vessels fire water cannons towards a Philippine resupply vessel Unaizah May 4 on its way to a resupply mission at Second Thomas Shoal in the South China Sea, on 5 March 2024. (Adrian Portugal/Reuters)
Chinese Coast Guard vessels fire water cannons towards a Philippine resupply vessel Unaizah May 4 on its way to a resupply mission at Second Thomas Shoal in the South China Sea, on 5 March 2024. (Adrian Portugal/Reuters)

As with all country coordinators before it, Malaysia will strike an optimistic tone and seek to push the negotiations along. But it is cognisant that it would require an agreement of all member states. While the recent chair’s statement from the ASEAN Foreign Ministers’ Retreat held in Langkawi did not defer much from ASEAN’s usual language on the SCS, there were repeated mentions of UNCLOS as a universally recognised legal framework in which any and all maritime activities, disputes and outcomes, including the Code of Conduct, must be based on.

All signs are that Malaysian officials are reasonably confident when it comes to managing the dispute as they commence the rotational role of ASEAN chair for 2025. While it is not business as usual, Malaysia’s consistent position on its national and regional interests are not expected to create many waves.

It will be in elements of the dispute that Malaysia has no control over — the dynamics between Philippines and China, whether Beijing suddenly decides to dial up pressure on all claimants, or perhaps even in how the US and other external stakeholders chooses to approach the SCS — which is where possible black swan development will come from.

An ASEAN member’s stint as chair will be judged on how it manages the difficult, high-profile challenges, sometimes more than its other achievements. It is manifestly unfair, but perceptions do matter. Malaysian officials know this and know that no small amount of deft diplomacy is needed as chair of ASEAN in 2025.

This article was first published in Think China on 5 February 2025.

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