China and Malaysia’s historical interactions stretch back to the ancient maritime Silk Road, with the Malacca Sultanate establishing early diplomatic and trade relations with the Ming Dynasty in the 15th century. The formal diplomatic relationship between the two nations was established in 1974, marking a significant step in their modern partnership. This relationship has evolved into a Comprehensive Strategic Partnership, emphasizing economic, political, and cultural cooperation. However, tensions remain, particularly over territorial disputes in the South China Sea. China’s expansive claims, represented by the controversial nine-dash line, include areas such as the Luconia Shoals, which fall within Malaysia’s exclusive economic zone. Despite these disputes, both countries strive to manage their differences through diplomacy while safeguarding their respective national interests.

China Malaysia Ties: An Overview

The relationship between China and Malaysia has deep historical roots, extending back centuries through early trade and cultural exchanges. Chinese records from the 5th and 6th centuries AD mention the presence of Malay sailors in China, signifying the long-standing interactions between the two regions. During the Ming Dynasty, the Sultanate of Malacca established close political and economic ties with China, benefiting from the Ming dynasty’s protection. These early interactions laid the foundation for the modern diplomatic relations that were formally established in May 1974. After the Cold War, ties between China and Malaysia strengthened significantly, especially after the Communist Party of Malaya ended its insurgency in 1989.

Economically, China and Malaysia share a robust partnership. Since 2009, China has been Malaysia’s largest trading partner, with bilateral trade reaching US$98.90 billion in 2023. Malaysia is also a key participant in China’s Belt and Road Initiative (BRI), with notable projects like the East Coast Rail Link (ECRL) and the Malaysia-China Kuantan Industrial Park reflecting their strong economic ties. Malaysia, exports a variety of goods to China, including palm oil, electronics, and natural gas, highlighting the interconnected nature of their economies. In 2024, the two countries renewed a five-year economic cooperation agreement, focusing on trade, investment, agriculture, manufacturing, infrastructure, and financial services, further solidifying their partnership.

Politically, China and Malaysia maintain a Comprehensive Strategic Partnership, established in 2013, which emphasizes mutual respect and understanding. Frequent high-level visits have reinforced diplomatic ties, such as Chinese Premier Li Qiang’s visit to Malaysia in 2024, which resulted in a joint statement and several memoranda of understanding (MOUs). However, despite their close cooperation, tensions occasionally arise due to overlapping territorial claims in the South China Sea. While these disputes have caused friction, both countries remain committed to resolving issues through bilateral discussions.

Culturally, Malaysia’s significant Chinese diaspora, the second-largest in the world, has played a key role in shaping the nation’s social and cultural fabric. Educational and cultural exchanges between the two nations are also robust, with programs fostering greater understanding and collaboration. Malaysia’s large Chinese community significantly contributes to the country’s cultural landscape, while educational programs encourage mutual understanding. Many Malaysian students pursue higher education in China, and numerous Chinese students study in Malaysia, creating valuable people-to-people ties.

Diplomatically, China and Malaysia have maintained a stable and cooperative relationship, working together on regional and international issues. Both countries are actively involved in trade agreements and infrastructure projects, particularly under the Belt and Road Initiative (BRI). Malaysia has benefited from increased connectivity and infrastructure development through its involvement in the BRI, demonstrating the strategic nature of its relationship with China.

Despite the strong ties, tensions over the South China Sea continue to pose challenges. China’s claims, based on the “nine-dash line,” overlap with Malaysia’s exclusive economic zone (EEZ), leading to disputes over maritime boundaries and resource exploration. These disagreements have occasionally strained relations but have not derailed overall cooperation.

Recent developments in the South China Sea have brought the issue to the forefront. Malaysia continues its oil and gas exploration activities in the region despite objections from China. Prime Minister Anwar Ibrahim has reaffirmed Malaysia’s stance, emphasizing that these activities are within its waters and are crucial for the country’s economic interests. China has protested these activities through diplomatic notes, but Malaysia remains firm, citing its sovereign rights and adherence to international law, including the United Nations Convention on the Law of the Sea (UNCLOS).

A recent leak of a classified diplomatic note from China, which warned Malaysia to halt its oil drilling activities, has further strained relations. Despite this, both countries have committed to resolving the dispute peacefully, emphasizing the importance of maintaining their broader relationship.

Does China Claim Luconia Shoal?

The Luconia Shoals, also known as the Luconia Reefs, are situated approximately 100 kilometers off the coast of Sarawak, Malaysia, within Malaysia’s exclusive economic zone (EEZ). The shoals are part of a larger reef complex in the South China Sea and are sometimes considered the southernmost part of the Spratly Islands.

These shoals hold significant strategic importance due to their rich marine biodiversity and potential underwater resources, such as oil and natural gas. This makes the area valuable for both economic and strategic reasons.

China claims the Luconia Shoals as part of its broader claim over the South China Sea, delineated by the “nine-dash line.” This line encompasses nearly the entire South China Sea, including regions that fall within the EEZs of other countries, such as Malaysia.

Recent developments have intensified tensions in the region. China has repeatedly protested Malaysia’s oil and gas exploration activities in the Luconia Shoals. A recent incident involved a leaked Chinese diplomatic note urging Malaysia to cease its exploration activities, asserting that they infringe on Chinese sovereignty. Additionally, China has increased its military presence in the area, exemplified by the deployment of 16 military aircraft near the Luconia Shoals in 2021, prompting Malaysia to scramble fighter jets in response. The Chinese Coast Guard has also maintained a near-constant patrol around the shoals, signaling China’s intent to assert control over the region without establishing a physical occupation.

In response, Malaysia has consistently asserted that its activities in the Luconia Shoals are within its sovereign rights and comply with international law, particularly the United Nations Convention on the Law of the Sea (UNCLOS). Malaysian Prime Minister Anwar Ibrahim has emphasized that Malaysia will persist with its exploration activities and will not yield to China’s demands.

What is China’s nine dash line claim?

China’s “nine-dash line” claim asserts sovereignty over a substantial portion of the South China Sea, represented by a U-shaped line that encompasses approximately 90% of the region. This claim stretches as far as 2,000 kilometers from the Chinese mainland, extending close to the shores of several Southeast Asian countries, including Vietnam, the Philippines, Malaysia, and Brunei.

The origins of the nine-dash line date back to 1947 when the Republic of China published maps featuring eleven dashes. After the establishment of the People’s Republic of China in 1949, the number of dashes was revised to nine. China bases its claim on historical usage, asserting that Chinese fishermen and traders have utilized these waters for centuries.

The nine-dash line is highly controversial and has been the subject of significant international disputes. A key point of contention is the United Nations Convention on the Law of the Sea (UNCLOS), which defines territorial waters, exclusive economic zones (EEZs), and continental shelves. Many countries argue that China’s claim violates UNCLOS by overlapping with their EEZs and territorial waters. In 2016, the Permanent Court of Arbitration in The Hague ruled in favor of the Philippines, declaring that China’s claims have no legal basis under international law. China rejected this ruling, straightaway.

The claim has led to heightened tensions and confrontations in the South China Sea, involving not only the claimant states but also external powers like the United States. The U.S. conducts freedom of navigation operations in the region to challenge China’s claims.

China’s Classified diplomatic note to Malaysia over oil and gas exploration in the South China Sea

A recently leaked classified diplomatic note from China to Malaysia has revealed Beijing’s strong opposition to Malaysia’s oil and gas exploration activities in the South China Sea. In the note, China accused Malaysia of encroaching on areas covered by its controversial 10-dash line map, which claims nearly the entire South China Sea. The document specifically referenced Malaysia’s activities near the Luconia Shoals, located close to the Malaysian state of Sarawak.

In response, Malaysia has firmly stated that it will not yield to China’s demands and will continue its exploration efforts, maintaining that these activities are taking place within its own waters. The Malaysian government has also called for an investigation into the leak of the classified document. This signifies the complex territorial disputes in the South China Sea, where multiple countries, including Malaysia, have overlapping claims with China.

Will Malaysia continue South China Sea exploration?

On September 5, Malaysian Prime Minister Anwar Ibrahim affirmed that Malaysia will continue its oil and gas exploration activities in the South China Sea, despite a recently leaked diplomatic document revealing opposition from Beijing. Anwar emphasized that Malaysia’s exploration efforts are well within its own waters and that both countries would address the issue through amicable discussions.

Malaysia’s state-run oil company, Petronas, operates oil and gas fields within the country’s exclusive economic zone in the South China Sea. Despite an international court ruling that dismissed China’s claim as having no legal basis, Beijing continues to assert ownership over almost the entire South China Sea, a vital region for global trade and economic resources.

In a press conference broadcast live on Malaysian television, Anwar reiterated that Malaysia’s actions were neither provocative nor hostile. He described China as a “great friend” but made it clear that Malaysia must continue to secure its economic interests, which include oil drilling within its territorial waters. He stressed that halting exploration activities would not be an option, as they are crucial to Malaysia’s economic survival.

The controversy stems from a leaked diplomatic note, reportedly published by the Philippine news outlet Inquirer.net, in which China demanded that Malaysia stop its oil and gas activities near the state of Sarawak on Borneo island. While Malaysia’s foreign ministry has launched an investigation into the leak, it has not denied the authenticity of the document.

Anwar expressed openness to dialogue with China to resolve the matter, highlighting that any disputes should not undermine the strong bilateral relationship between the two nations. He also pointed out that continued engagement is necessary, but this does not mean Malaysia will stop its exploration activities.

The South China Sea has become a regional flashpoint, with frequent confrontations between China and other claimant countries like the Philippines. Analysts fear that rising tensions in the area could potentially involve larger powers, such as the United States, due to mutual defense treaties with regional allies like the Philippines.

What are challenges, roadblocks, and the Way ahead?

The relationship between China and Malaysia has deep historical roots, dating back centuries through trade and cultural exchanges. Chinese records from the 5th and 6th centuries mention Malay sailors in China, highlighting the long-standing connections between the two regions. During the Ming Dynasty, the Sultanate of Malacca established close ties with China, benefiting from the protection of the Ming court. These early interactions laid the groundwork for modern diplomatic relations, formally established in May 1974. In the post-Cold War period, ties between the two nations strengthened significantly, especially after the end of the Communist Party of Malaya’s insurgency in 1989.

Economically, China and Malaysia have developed a robust partnership. Since 2009, China has been Malaysia’s largest trading partner, with bilateral trade reaching RM450.84 billion (US$98.90 billion) in 2023. Malaysia plays a key role in China’s Belt and Road Initiative (BRI), with major projects like the East Coast Rail Link (ECRL) and the Malaysia-China Kuantan Industrial Park reflecting their strong economic cooperation. In 2024, the two countries renewed a five-year economic cooperation agreement that focuses on trade, investment, agriculture, manufacturing, infrastructure, and financial services, further solidifying their economic ties.

Politically, China and Malaysia maintain a Comprehensive Strategic Partnership, established in 2013, based on mutual respect and understanding. Frequent high-level visits, such as Chinese Premier Li Qiang’s visit to Malaysia in 2024, have strengthened diplomatic ties. However, despite close cooperation, tensions arise due to overlapping territorial claims in the South China Sea. While these disputes have caused friction, both countries remain committed to resolving issues through bilateral discussions.

Culturally, Malaysia’s significant Chinese diaspora has played an essential role in shaping the nation’s social and cultural fabric. Educational and cultural exchanges between the two nations are strong, with programs that foster greater understanding and collaboration. Many Malaysian students study in China, and vice versa, enhancing people-to-people connections and mutual understanding. However, while economic ties between China and Malaysia are strong, challenges persist. Malaysia seeks to balance its economic dependence on China with its national interests and sovereignty, especially regarding the South China Sea dispute. The evolving geopolitical landscape in Southeast Asia, influenced by other major powers, presents additional challenges and opportunities for both countries.

China’s “nine-dash line” claim asserts sovereignty over a substantial portion of the South China Sea, a region rich in natural resources and strategic shipping lanes. The claim, represented by a U-shaped line, encompasses about 90% of the sea, extending close to the shores of Southeast Asian nations like Vietnam, the Philippines, Malaysia, and Brunei. The origins of this claim date back to 1947 when the Republic of China published maps with eleven dashes. After the establishment of the People’s Republic of China in 1949, the number of dashes was reduced to nine. China bases its claim on historical usage, asserting that Chinese fishermen and traders have used these waters for centuries.

The nine-dash line is highly controversial and has led to significant international disputes. A major point of contention is the United Nations Convention on the Law of the Sea (UNCLOS), which defines territorial waters and exclusive economic zones (EEZs). Many countries argue that China’s claim violates UNCLOS by overlapping with their EEZs. In 2016, the Permanent Court of Arbitration in The Hague ruled in favor of the Philippines, stating that China’s claims had no legal basis under international law. Despite the ruling, China has continued to assert its claims.

China has protested Malaysia’s oil and gas exploration activities in the Luconia Shoals, leading to diplomatic tensions. In one recent incident, a leaked Chinese diplomatic note urged Malaysia to halt its exploration activities, claiming they infringed on Chinese sovereignty. China has also increased its military presence in the area, including sending 16 military aircraft near the shoals in 2021, which led Malaysia to scramble its fighter jets. Despite these protests, Malaysia has consistently maintained that its activities in the area are within its sovereign rights under international law, specifically UNCLOS. Malaysian Prime Minister Anwar Ibrahim has affirmed that Malaysia will continue its exploration activities, refusing to yield to China’s demands.

End Note

In essence, while China and Malaysia share deep-rooted historical, economic, and cultural ties, their relationship faces ongoing challenges, particularly concerning territorial disputes in the South China Sea. The contested claims, especially over areas like the Luconia Shoals, highlight the tension between China’s expansive nine-dash line and Malaysia’s sovereign rights under international law. Despite these disputes, both nations continue to engage in diplomatic efforts, emphasizing dialogue and cooperation, even as Malaysia remains resolute in pursuing its oil and gas exploration activities critical to its economic interests. The evolving geopolitical dynamics in the region will continue to shape the future of this relationship.