By Dr. James M. Minnich

October 11, 2024

As the geopolitical landscape in the Indo-Pacific continues to evolve, Malaysia finds itself navigating a delicate balance between two global superpowers: the United States and China. This intricate maneuvering was the focus of Episode 29 of Dialogue, “Malaysia Between Giants,” where DKI APCSS professor Dr. James Minnich discussed these dynamics with Elina Noor of the Carnegie Endowment for International Peace. Positioned in Southeast Asia, Malaysia’s strategic location and economic potential make it a significant player in the region. Malaysia has adopted a “pulling sideways” policy to protect its national interests, engaging both powers without aligning exclusively with either. This approach reflects a broader trend in Southeast Asia, where nations increasingly seek to assert their agency amidst intensifying great power competition.

Pulling Sideways

Malaysia’s strategy of pulling sideways involves maintaining close economic ties with China while engaging in robust security cooperation with the United States. China is Malaysia’s largest trading partner, and the economic relationship between the two has grown significantly in recent years, particularly in areas like technology and infrastructure investment. At the same time, Malaysia’s long-standing defense and strategic ties with the U.S. continue to play a critical role in its national security policy. This balancing act allows Malaysia to leverage its economic opportunities with China without compromising its security alliances with Western powers.

However, this delicate balance is not without its challenges. Malaysia’s pragmatic approach requires continuously weighing the benefits and risks of each partnership. As China’s assertiveness in the South China Sea grows, Malaysia faces increasing pressure to protect its maritime interests while avoiding direct confrontation with Beijing. Meanwhile, aligning too closely with U.S. strategic goals could jeopardize Malaysia’s economic gains with China.

The South China Sea Conundrum

The South China Sea remains a flashpoint in Malaysia’s geopolitical calculations. Malaysia has overlapping claims with China in these waters, which are rich in resources and vital for international shipping lanes. While Malaysia has taken a cautious approach, preferring diplomatic engagement over open confrontation, tensions in the region persist. Incidents involving Chinese coast guard and naval vessels in disputed areas present ongoing challenges to Malaysia’s sovereignty.

To manage these tensions, Malaysia advocates for a rules-based order and a peaceful resolution of disputes through ASEAN and other multilateral platforms. Its approach seeks to uphold regional stability while maintaining flexibility in its foreign policy decisions. While this cautious stance has led some to criticize Malaysia as being “spineless” in its dealings with China, Elina Noor argues that it actually reflects Malaysia’s realistic assessment of the power dynamics in motion and its awareness of “its own limitations, capacity, and capabilities.” Beyond maritime challenges, Malaysia’s ambitions in the technology sector reveal another dimension of its strategic balancing act.

Technology and Economic Ambitions

In addition to security concerns, Malaysia’s economic ambitions are closely tied to its role in the global technology supply chain. The country aims to become a significant player in semiconductor manufacturing and other tech industries, attracting investments from both U.S. and Chinese firms. While this ambition aligns with Malaysia’s goal of advancing its digital economy, it also introduces risks of tech dependency and geopolitical entanglements. Recognizing these challenges, Elina Noor emphasizes, “Business as usual doesn’t apply anymore. What I hope for the Malaysian government is to be a little more proactive and farsighted in its vision of capitalizing on the digital economy.”

ASEAN Leadership and Regional Integration

As Malaysia prepares to assume the ASEAN chairmanship in 2025, it has a unique opportunity to shape its agenda and strengthen regional unity. Malaysia’s leadership in ASEAN will likely focus on economic integration, maritime security, and enhancing intra-regional trade. In this role, Malaysia aims to champion a more cohesive ASEAN that can act as a stabilizing force in the Indo-Pacific, resisting external pressures from both China and the U.S.

Conclusion

Malaysia’s journey between these geopolitical giants is a testament to its diplomatic finesse, strategic pragmatism, and determination to carve out its own path in an increasingly polarized world. Its policy of pulling sideways not only protects its national interests but also positions Malaysia as a key influencer in shaping Southeast Asia’s future. By carefully balancing economic aspirations with security priorities, leveraging its ASEAN leadership, and embracing technological innovation, Malaysia seeks to set the terms of engagement in a region defined by great power rivalry. As the U.S.-China competition intensifies, Malaysia’s ability to navigate these turbulent waters will be crucial, not just for its prosperity but also for the broader stability of the Indo-Pacific region.

Book Recommendation

For deeper insights into the complexities of Southeast Asia’s strategic thinking, Elina Noor recommends Syed Hussein Alatas’ The Myth of the Lazy Native (Routledge, 2010). This influential work challenges colonial stereotypes and provides valuable context for understanding the region’s socio-political landscape, reminding us that a critical examination of history is essential in shaping a resilient future.