Southeast Asia Navigates Energy Crisis, China Positions Itself as a Reliable Partner
Weeks of escalating conflict involving the United States, Israel, and Iran have significantly disrupted the vital flow of oil and natural gas through the Strait of Hormuz. This disruption has sent fuel prices soaring across Southeast Asia, forcing governments in the region to urgently seek solutions to ensure adequate energy supplies for their industries, airlines, and citizens. Amidst this palpable anxiety, Beijing is actively leveraging the crisis to present itself as a more stable and dependable partner than Washington.
Fuel Shockwaves Ripple Through Asia
Southeast Asian nations have responded with a combination of fuel-saving measures and substantial subsidies. This mirrors a broader global effort to identify alternative energy suppliers and navigate new trade routes. The vulnerability extends even to established oil and gas producers and exporters like Malaysia and Brunei, which are not immune to the widespread inflationary pressures and supply chain shocks affecting the entire region.
In a stark demonstration of the crisis’s severity, the Philippines declared a state of national energy emergency on March 24th, a measure set to remain in effect for a full year. The government cited an “imminent danger” to the nation’s energy supply. Prior to this declaration, Manila had already implemented a four-day workweek for government offices and mandated energy conservation measures across all agencies.
The Philippines has also introduced financial assistance for transport workers and issued a stern warning that a potential jet fuel shortage could lead to the grounding of some commercial aircraft. Vietnam, meanwhile, has dipped into its fuel price stabilization fund and advised airlines to prepare for potential service reductions. Importers have indicated that jet fuel supplies might only be guaranteed through the end of March.
Indonesia has pledged to mitigate the impact through its state budget and increased subsidies. Thailand is actively considering further relief measures as escalating diesel prices severely affect key sectors, including the fishing industry, where many boat operators report being compelled to remain docked due to prohibitive fuel costs. Malaysia, in response, has boosted its subsidy expenditures to maintain stable pump prices for consumers.
Governments are also looking beyond traditional suppliers in the Gulf for immediate relief. Reports indicate that Asia is on track to import a record volume of Russian fuel in March, with Southeast Asia anticipated to be the primary recipient.
China Aligns with Southeast Asia on Iran Conflict Response
China has strategically utilized the current energy crisis to “project itself as a responsible and stabilizing actor, calling for de-escalation in the Middle East and vowing to work with Southeast Asian countries to ease energy shortages,” according to insights from Li Mingjiang, an associate professor at Singapore’s S. Rajaratnam School of International Studies.
Beijing has largely echoed the prevailing sentiment in Southeast Asia regarding the Iran conflict, emphasizing the importance of diplomatic solutions. Similar to regional governments, the Chinese administration desires a swift reopening of the Strait of Hormuz. However, it also remains cautious about direct involvement in the conflict. Chin-Hao Huang, co-director of the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy, observes that China’s public statements have consistently urged restraint, a ceasefire, and dialogue – positions that resonate with the common denominators of most Southeast Asian governments.
Perceived US Actions Fuel Negative Sentiment
The ongoing crisis further bolsters Beijing’s narrative that China is the sole superpower championing peace, free trade, and multilateralism, thereby casting the United States in a negative light as aggressive and self-serving.
Enze Han, an associate professor at the University of Hong Kong, notes that “The US-Israel military intervention in Iran is very unpopular in several Southeast Asian countries. China does not need to do anything for the opinion towards the US to sour further in the region.” He adds, “Similarly, the rising gas price in many countries in the region is also worsening the image of the United States. Again, Beijing does not need to do anything for the blame to be on the United States.”
However, aligning more closely with China does not automatically guarantee energy security for Asian nations. Beijing has already implemented bans on fuel exports to safeguard its domestic supply. On March 18th, Cambodia reported that export restrictions imposed by both China and Vietnam had compelled it to seek alternative suppliers and prepare for potential domestic shortages.
Shifting Towards Renewable Energy: A Long-Term Opportunity for China?
In the longer term, the current energy shock could significantly strengthen China’s influence in Southeast Asia. The crisis underscores the region’s deep-seated concerns about over-reliance on Middle Eastern oil, thereby amplifying the appeal of renewable energy sources – an area where Chinese companies demonstrate considerable competitiveness.
China is already deeply integrated into Southeast Asia’s transition towards green energy. Its corporations are among the leading investors in the region’s nascent electric vehicle and battery manufacturing sectors. Furthermore, Beijing has been a primary financier for numerous hydropower dams and extensive solar farms across mainland Southeast Asia, transforming the region into both a market for Chinese clean-tech exports and a crucial production hub for solar panels, batteries, and electric vehicles.
Speaking at the Boao Forum in China, Singaporean Prime Minister Lawrence Wong highlighted China’s potential to “play a critical role” in shaping global outcomes and “an even bigger role in supporting regional prosperity and stability.” He also urged Beijing to remain a steadfast advocate for open, rules-based trade. Wong further suggested that ASEAN should collaborate with China on renewable energy initiatives to advance the regional power grid. If the conflict in Iran ultimately hardens Southeast Asia’s resolve to diversify its energy sources away from oil, Beijing stands to benefit not only from the immediate crisis but also from the region’s strategic response to it.
