Malacca: The Strait That Could Strangle China's Future

New Straits Times

02-06-2025

If you want to understand one of China's deepest strategic nightmares, look no further than a thin, congested strip of water between Malaysia, Singapore, and Indonesia called the Strait of Malacca.
Every day, about 60 to 80 percent of China's imported oil and gas — the lifeblood of its factories, cities, and army — squeezes through this one narrow bottleneck. If anything goes wrong there — a war, a terrorist attack, a US naval blockade — China's energy lifeline gets cut, fast. It's what former President Hu Jintao famously called the "Malacca Dilemma" back in 2003, and it's been haunting Chinese strategists ever since.
Geography as China's Achilles' Heel
In Great Power politics, geography is destiny, and Malacca is China's Achilles' heel. Unlike a factory, you can't pick it up and move it. It's a chokepoint locked between neighbors who are friendly — but not friendly enough to bet their own futures on China's rise. Worse for Beijing, the US Navy, along with allies like Singapore, Australia, and Malaysia, still rules these waters.
Even though China has built pipelines through Myanmar and dreamed up new overland routes, most of its vital oil still floats precariously through Malacca. Which means, in a real showdown, America could strangle China's economy without even firing a shot — just by parking a few ships in the right place.
The Malacca Dilemma at the Heart of Global Rivalry
That's why the Malacca Dilemma is at the very heart of today's Great Power Rivalry. Washington's strategy is simple: keep dominating the world's maritime chokepoints — Malacca, Hormuz, Suez, Panama — so that, if tensions spike, it can squeeze China's jugular.
Beijing's counter-move is equally ambitious: build a "String of Pearls" — a network of ports, naval bases, and diplomatic friendships stretching from Pakistan's Gwadar to Djibouti in East Africa — to open up alternative routes and soften the Malacca trap. Belt and Road isn't just about trade; it's a hedge against naval strangulation.
The US Flexes Its Muscle at Sea
Meanwhile, out at sea, the US is busy flexing its muscles through something called Freedom of Navigation Operations — FONOPS for short — sending warships through the South China Sea to challenge Beijing's island-building and maritime claims.
Malacca itself is technically an international waterway, open to everyone under the UN Convention on the Law of the Sea (UNCLOS). But the message behind FONOPS is
clear: "We're here. We're watching. And if push comes to shove, you're not as free as you think."
A Narrow Strait Could Decide the Fate of Nations
Bottom line: China's Malacca Strait Dilemma is no abstract theory. It's the chokehold that connects geography to grand strategy, economics to energy, and every US Navy patrol to the pulse of China's future growth. In a flat, fast, and sometimes brutal world, even a narrow strip of water can decide the fate of nations.
Malaysia's Energy Gamble in a Flat, Volatile World
From Trump's Shale Flood and Malacca Choke to Malaysia's Green-Energy Rebirth, — in today's "flat" energy world, Malaysia finds itself on the same oil-price roller coaster as everyone else — one moment plunged by the COVID-19 collapse, the next jolted by recovery and geopolitical flare-ups.
In Q1 2020, Brent crude tumbled over 65 percent from its year-start levels as global demand evaporated under lockdowns; by 2023, however, it had averaged US$83 per barrel, down from $101 in 2022 and roughly $81 in 2024. President Trump's "America First" energy agenda — unleashing a US shale surge, imposing tariffs on Chinese goods, and withdrawing from the Paris pact — amplified these supply–demand swings and regulatory uncertainty, forcing Malaysia to weather thinner trade surpluses, ringgit gyrations, and a bruised fiscal cushion.
Rethinking Fuel Subsidies: A Fiscal Revolution
By June 2024, Putrajaya ripped up blanket diesel subsidies in Peninsular Malaysia, sending pump prices from RM2.15 to RM3.35 per litre — yet instead of leaving smallholders and truckers stranded, the government funneled RM200 a month under the Budi Madani programme to vulnerable diesel-dependent groups.
Simultaneously, it retooled RON95 petrol aid to protect the bottom 85 percent of earners while phasing out support for the top 15 percent. In doing so, Malaysia transformed subsidy reform from a political liability into a fiscal advantage.
Malaysia's Green Energy Sprint: No Turning Back
Recognizing that volatility won't abate, Malaysia has accelerated its pivot to renewables. The Green Technology Master Plan targets 40 percent renewable energy in the power mix by 2035 through solar, hydroelectric, and waste-to-energy projects.
April 2024 saw the launch of Energy Exchange Malaysia (Enegem), a 100 MW pilot auction exporting green power to Singapore and laying the foundation for an integrated
ASEAN grid. The 2023 National Energy Transition Roadmap commits to 70 percent renewable capacity by 2050, while the 2024 Aviation Decarbonization Blueprint and the 2023–2040 Circular Economy Roadmap set ambitious net-zero and resource-efficiency milestones across transport and industry.
Oil and Gas: Still Malaysia's Financial Backbone
Despite the green rush, oil and gas remain pillars of the economy — making up roughly 7 percent of GDP (about RM124 billion in 2022), 15 percent of exports, and 20–30 percent of federal revenue, buoyed by Petronas's RM375 billion haul that year.
Natural gas alone contributed RM52 billion in 2024, powering factories and turbines nationwide. Paradoxically, Malaysia still imports more refined products than it exports — an inefficiency the government plans to remedy through expanded downstream capacity at Pengerang.
China's Energy Juggernaut and the Looming Malacca Trap
To our north and east, China's energy juggernaut looms larger by the day. In 2023, it consumed 16.4 million barrels per day of liquid fuels — more than triple India's demand — and imported 11.3 million barrels per day of crude for its refineries and petrochemical complexes.
Yet nearly 80 percent of those imports must pass through the narrow Strait of Malacca — a vulnerability Admiral Hu Jintao dubbed the "Malacca Dilemma" in 2003. While Beijing has built pipelines through Myanmar and Central Asia to bypass the choke point, most of its oil still flows past our shores, intertwining Malaysia's economic fortunes with every Sino-American flare-up and Indian Ocean security calculus.
Malaysia's Urgent Imperative: Diversify or Be Dragged Under
That interdependence can be a vulnerability — or an opportunity. Malaysia's best hedge is diversification:
• Ramp up renewable capacity and green hydrogen,
• Deepen petrochemical value chains at Pengerang,
• Modernize refining and logistics under the new Oil, Gas and Energy Services (OGSE) Blueprint.
Pair that with tax reforms to ease fiscal reliance on hydrocarbons, deeper financial markets to absorb external shocks, and targeted subsidies that protect the most vulnerable — and Malaysia will not just weather the storm, but set its sails to harness every gust in Asia's unfolding energy century.
Economist Samirul Ariff Othman is an adjunct lecturer at Universiti Teknologi Petronas, international relations analyst and a senior consultant with Global Asia Consulting. The views in this OpEd piece are entirely his own.