Sea dispute endangers friendly China-Malaysia ties

Subject

The maritime dispute between China and Malaysia in the South China Sea.

Significance

The inaugural 'One Belt and One Road China-Malaysia Business Dialogue' took place on July 15. 'One Belt and One Road' is the cooperative infrastructure investment initiative that the Xi Jinping administration presents as its signature foreign policy initiative. Yet for many in the region it has been overshadowed by Beijing's maritime assertiveness. Even China's normally cordial relations with Malaysia are now under threat from tensions at sea, where China Coast Guard ships at a disputed reef have prompted a low-key but serious standoff.

Impacts

• Relations between Beijing and Kuala Lumpur will face their first serious test since the early 1990s.
• China is likely to claim Luconia Breakers as its southernmost territory under international law.
• Opposition politicians in Malaysia will put pressure on the Najib administration to resist China's actions.
• ASEAN will be more proactive in the South China Sea disputes under Malaysia's chairmanship.