View / China has resolved its ‘Malacca Dilemma’

For at least a quarter of a century, US military strategists have calculated that if China moved aggressively against Washington’s allies in Asia — by imposing a naval blockade on Taiwan, or threatening Japan’s vital sea lanes — the US Navy could, as a last resort, weaponize oil against Beijing.

Most of China’s seaborne oil imports flow through the Strait of Malacca, a narrow waterway that links the Indian Ocean and the South China Sea. Block that passage, the thinking went, and China’s economy would be crippled.

The war in Iran has shattered those assumptions. Not only has China’s economy survived the oil supply disruption largely unscathed, but its enormous oil stockpiles, overland pipelines, new technologies to convert coal to chemicals, and embrace of green technologies have given Beijing strategic leverage. By contrast, the island economies around China, including Japan, Taiwan, and the Philippines — all overwhelmingly reliant on imported energy — are struggling.

The Trump administration, meanwhile, is facing the increasingly fraught economic and political fallout of rising inflation as a result of the energy shock.

As long ago as 2003, former Chinese leader Hu Jintao raised concerns about what he called the “Malacca Dilemma,” revealing a deep insecurity that has been a key driver of Beijing’s industrial, military, and diplomatic strategy ever since. Indeed, the trillion-dollar Belt & Road Initiative is in large part a defensive maneuver, born of a desire to reduce China’s susceptibility to maritime threats from the US by looking inland to the vast Eurasia continent.

Today, Beijing has transformed what was once a chronic vulnerability into a source of strength and begun to redraw the geopolitical map of its region.

Eyck Freymann, a Hoover fellow at Stanford University and the author of Defending Taiwan, believes that now, a US blockade would have the opposite effect. “You’d starve out your allies before you starve out China,” he told me.

It’s no coincidence, Freymann said, that China has intensified its “grey zone” intimidation of smaller neighbors over the past several months as war in Iran drags on, prolonging the energy crisis.

Chinese coast guard vessels have increased patrols off Taiwan’s east coast, part of a wider campaign to assert law enforcement control over shipping routes around the island. Those moves have alarmed Japan, whose economy is dependent for its survival on open sea lines and which recently has been embroiled in a spat with China over remarks that Prime Minister Sanae Takaichi made about Taiwan. Beijing has also been stepping up its territorial claims within Philippine waters.

The blunt message that Beijing is sending, said Freymann, is that now, “China’s boss.”

What’s more, noted James Crabtree, the author of the forthcoming The Perimeter — on the “First Island Chain” in the western Pacific that he describes as the world’s most important geopolitical fault line — the Iran war has further exposed the vulnerability of US bases in the Asia Pacific, all within easy reach of Chinese missiles, while putting pressure on the US aircraft carrier force. For the first time in decades, the US 7th Fleet has no carriers operating in the Indo-Pacific.

With China emerging from the Iran conflict “looking relatively good,” said Crabtree, “the US now has decisions to make” on its military deployments in the region.

Some analysts argued that in striking Iran the US was actually delivering a devastating blow to China, its main geopolitical adversary and the primary customer of Iranian oil. Zineb Riboua, a researcher at the Hudson Institute, wrote that “the road to the Pacific runs through Tehran.”

In reality, China has demonstrated it has built multiple routes to escape an energy blockade; in effect, it has resolved its “Malacca Dilemma” — and turned the tables on Washington. US allies now face their own existential predicament, just as war in Iran depletes American power in the region.