Navigating the ‘Malacca Dilemma’ in 2025

How China’s efforts to address its key strategic vulnerability continue to encounter obstacles despite billions of dollars of investment

It has been over two decades since the then Chinese President, President Hu Jintao articulated his concern regarding the “Malacca dilemma” at a Chinese Communist Party Economic Work Conference in November 2003. In the nearly twenty-two years since, Beijing has sought to reduce its dependence on the key Sea Lines of Communication (SLOC). This is due to the possibility that the Malacca Strait, through which around 80% of China’s oil imports pass, could be blockaded by “certain powers” (i.e. the U.S.) in a conflict scenario, which could strangle the Chinese economy (Krishnan, 2020). To mitigate this strategic vulnerability, China has explored several alternative supply routes including the Power of Siberia 2 pipeline between China and Russia via Mongolia, the proposed Kra Canal in Thailand, and expanding Arctic Sea routes. Whilst many of these proposals are still under debate, Beijing has powered ahead with two large-scale ventures under the umbrella of their Belt and Road Initiative (BRI): pumping billions of dollars into infrastructure and connectivity projects along the China-Pakistan Economic Corridor (CPEC) and the China-Myanmar Economic Corridor (CMEC). Despite considerable sustained investment and construction efforts over the last decade, these initiatives have encountered an array of logistical, security, and diplomatic hurdles in recent years. This article examines these two initiatives in greater depth and uncovers their role in hampering Beijing’s efforts to address its “Malacca dilemma”.

The ‘Dilemma’

The Malacca Strait is a key strategic maritime choke point located between the Sumatra Islands and the Malay Peninsula with a yearly average of around US$3.5 trillion in global trade (just over a quarter of all international maritime trade) passing through the waterway connecting the Indian and Pacific oceans (Myers, 2023). Critically for Beijing, close to two-thirds of all Chinese maritime trade passes through the Strait, including around 80% of its oil imports, with the People’s Republic of China (PRC) importing approximately 60% of the crude oil consumed by its economy (Oliveria, 2024). Due to this economic and strategic dependence on trade and energy supplies moving through the Strait, which is only 2.8km wide at its narrowest point, the prospect of a blockade of the waterway by a foreign adversary has long troubled the Chinese Communist Party (CCP) officials in Beijing (Parrot, 2024).

In light of this threat, in recent years China has pursued a naval buildup with the People’s Liberation Army Navy (PLAN) overtaking the U.S. Navy in the number of active warships and introducing its ‘Far Seas Protection’ (远海防卫) doctrine which outlines Beijing’s ambition to field a blue water navy capable of protecting China’s SLOCs beyond the First Island Chain in the Western Pacific (Shugart, 2021). Although the development of greater maritime military assets would allow Beijing to further project its influence over the Malacca Strait, this strategy alone does not reduce China’s dependence on the waterway, with the PRC investing heavily in the CPEC and CMEC over recent years to combat this vulnerability (Choudhary, 2023).

The CPEC

The China-Pakistan Economic Corridor has been central to Beijing’s extensive BRI strategy across the globe, with US$62 billion invested in infrastructure projects across Pakistan since 2013, with the aim of developing economic links between China’s Xinjiang province and the deep-water port of Gwadar on the Arabian Sea. This 3000 km long network of transport, connectivity, and energy infrastructure would provide Beijing with a strategic alternative to the Malacca Strait in addition to potentially cutting the time and cost of trade between China, the Middle East, and Europe (Graceffo, 2024).

Despite some significant progress on CPEC projects with numerous new coal, wind, and hydropower plants, as well as railways and highways already operational, political instability in Pakistan, arduous mountainous terrain and cost overruns, in addition to the threat of militant violence, have significantly impacted the development of CPEC initiatives. The most acute obstacle in recent years has come from attacks on infrastructure projects and Chinese nationals in Pakistan by Balochistan Liberation Army militants, with the separatists killing two Chinese engineers in a suicide bomb attack last October, prompting bilateral talks about increasing security for projects along the CPEC (Olander, 2024).

The CMEC

Similar to the CPEC, the CMEC is another alternative land supply route that seeks to reduce Beijing’s dependence on the Malacca Strait with substantial Chinese investment in infrastructure and energy projects in Myanmar, such as the US$2.5 billion Mee Lin Gyaing power plant. Central to the CMEC are the US$1.5 billion oil and US$1.04 billion liquified natural gas (LNG) pipelines connecting the western Chinese province of Yunnan to the port of Kyaukphya on the Indian Ocean, which have been operational since 2017 and 2013, respectively (Lane, 2024).

Despite the successful construction of the pipelines, capable of delivering 22 million tonnes of crude oil and 13 billion cubic metres of LNG per year over 770 km to western China, the ongoing civil war in Myanmar following the Burmese military’s coup in 2021 has significantly disrupted operations (Hamzah, 2017). With Chinese-financed initiatives stretching across the territory controlled by the junta, various Ethnic Armed Organisations (EAOs), and locally organised People’s Defence Forces (PDFs), the instability has drastically hampered Beijing’s efforts to develop the CMEC into a reliable alternative to the route through the Malacca Strait. It is worth noting that even at maximum capacity, the 420,000 barrels of oil a day transported by the Myanmar-Yunnan pipeline, is substantially dwarfed by the 6.5 million barrels a day Beijing imports via the Malacca Strait (Krishnan, 2020).

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