China continues its drive to dominate the Pacific region

The Chinese economy may be encountering serious difficulties, but that has not stopped Beijing from continuing its efforts to dominate southeast Asia, both politically and economically. In the past two weeks alone, Malaysia agreed to double its palm oil exports to China and also signed an infrastructure investment deal worth over $4 billion. At roughly the same time, Timor-Leste upgraded its relations with China to what the two nations called a “comprehensive strategic partnership.”

Chinese-Malaysian relations have hardly been entirely smooth, as Beijing’s so-called nine-dash line, encompassing virtually the entire South China Sea, overlaps with Malaysia’s claims relating to its states of Sabah and Sarawak. Indeed, in no small part because of friction over its competing territorial claims with China, Malaysia has developed an important military relationship with the United States. That relationship has been ongoing for some time, but it has been more discreet and less extensive than that between Washington and Singapore, Malaysia’s neighbor to its immediate south.

Nevertheless, despite their territorial dispute, China has been Malaysia’s leading trading partner for 14 consecutive years, with trade between the two countries nearly doubling from $16 billion in 2013 to over $23 billion in 2022. It is noteworthy that the palm oil deal enables Malaysia to avoid European Union restrictions that prohibit companies from selling or exporting commodities, such as palm oil, inside the EU that were grown on land deforested after 2020.

The palm oil deal promises to maintain China’s role as Kuala Lumpur’s biggest export market, thereby setting limits on just how far Malaysia can cooperate with the United States on defense-related matters. Indeed, in order to finalize its latest trade and investment agreement with Kuala Lumpur, Beijing assured Malaysian Prime Minister Anwar Ibrahim that it would continue to negotiate with Southeast Asian countries over disputed territorial claims in the South China Sea, and avoid actions that risked escalation.

The new “Comprehensive Strategic Partnership” that Beijing has established with Timor-Leste goes even further than China’s trade agreements with Kuala Lumpur. The joint statement that the countries issued in September states that “the two nations agreed to enhance high-level military exchanges, strengthen cooperation in areas such as personnel training, equipment technology, the conduct of joint exercises and training.”

Timor-Leste, or at least its current government, appears to have fully bought into China’s view of Taiwan as a breakaway province that should not declare its independence. Indeed, the two countries also announced that “Timor-Leste believes that the Communist Party of China will lead the Chinese people of all ethnic groups in a concerted effort to realize the Second Centenary Goal of building a great modern socialist country in all aspects.” This is surely a message not only to Taiwan but to all ethnic Chinese outside China’s borders.

Dili’s stance is nothing if not ironic, given that, during the late 1990s, Washington had been a leading supporter of the then-Indonesian province of East Timor’s efforts to break away from Jakarta’s rule and achieve independence. Indeed, not only did the U.S. establish diplomatic relations with the new state of Timor-Leste immediately upon independence on May 20, 2002, it has since provided more than $500 million in bilateral assistance to the relatively poor country. Equally ironic was the joint statement’s pronouncement that “China congratulated Timor-Leste on successfully holding the Parliamentary election,” a practice more often associated with Taiwan than Beijing.

Timor-Leste’s prime minister, Xanana Gusmao, insisted that he would continue to foster a relationship with the United States, but did not want to be caught between Washington and Beijing. Fair enough, but his readiness to enhance military cooperation with China at a time when Beijing has been demonstrating increasingly aggressive behavior in the region is a cause for concern.

In recent months, and especially with President Joe Biden and Secretary of State Tony Blinken’s recent visits to the region, Washington has increased its efforts to upgrade its relationships with both the larger and smaller Pacific states. The events of the past few weeks demonstrate that China has no intention of sitting back as the U.S. does so. The lesson for Washington is unequivocal: It cannot slacken its efforts both to expand and deepen its ties throughout the wider Pacific region. And it must do so even as it continues to devote high-level attention, military equipment and billions of dollars to help Ukraine drive back Russia’s invading forces.

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was undersecretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy undersecretary of Defense from 1985 to 1987.