Weeks of fighting between the US, Israel and Iran have severely disrupted the flow of oil and gas through the Strait of Hormuz, leaving Southeast Asian governments struggling to provide enough fuel for their industries, airlines and domestic consumption.
At the same time, Beijing is trying to turn that concern into its advantage.
“China is willing to strengthen coordination and cooperation with Southeast Asian countries to jointly address energy security issues,” China’s Foreign Ministry spokesman Lin Jian said at a news conference last week.
Fuel shock spreading across Asia
Southeast Asian countries have already implemented a mix of fuel-saving measures and subsidies, joining a frantic global effort to find alternative suppliers and trade routes. Even countries like Malaysia and Brunei – oil and gas producers and exporters – remain vulnerable to the broader inflation and supply-chain shocks spreading across the region.
On March 24, the Philippines declared a national energy emergency, warning of an “immediate threat” to the country’s energy supply, which would remain in place for one year. Manila had already shifted government offices to a four-day work week and ordered agencies to curb energy use.
The Philippines has also launched cash aid for transport workers, while warning that a shortage of jet fuel could eventually ground some of its planes. Vietnam has already used up its fuel price stabilization fund and told airlines to prepare for cuts, with importers warning that jet fuel supplies may only be guaranteed until March.
Indonesia has vowed to absorb part of the shock through the state budget and large subsidies. Thailand is considering new relief as rising diesel prices hit sectors such as fishing, where crews say many boats could be forced to remain in port. Malaysia, for its part, has increased subsidy spending to keep pump prices stable.
Governments are also looking beyond the Gulf for stopgap supplies. Reuters reported last week that Asia was on track to import record amounts of Russian fuel in March, with Southeast Asia expected to be the biggest recipient.
China is reconciling with Southeast Asia on Iran
Meanwhile, Singapore’s S. China has used the crisis to “present itself as a responsible and stabilizing actor, reducing tensions in the Middle East and vowing to work with Southeast Asian countries to ease energy shortages,” Li Mingxiang, associate professor at the Rajaratnam School of International Studies, told DW.
Beijing has been close to the Southeast Asian consensus on Iran, urging diplomacy. Chin-Hao Huang, co-director of the Center for Asia and Globalization at the Lee Kuan Yew School of Public Policy, told DW that like countries in the region, the Chinese government wants to reopen the Strait of Hormuz as soon as possible, while also being wary of getting directly involved in the conflict.
Huang said, “To the extent that it has provoked any public response, it has been to issue calls for restraint, ceasefire and dialogue; all of these are points of common denominator for most governments in Southeast Asia.”
US action ‘very unpopular’
The crisis also boosts Beijing’s narrative that China is now the only superpower safeguarding peace, free trade and multilateralism, portraying itself as a hero confronting an aggressive and selfish United States.
“The US-Israeli military intervention in Iran is very unpopular in many Southeast Asian countries. China does not need to do anything to further deteriorate opinion of the US in the region,” NJ Han, an associate professor at the University of Hong Kong, told DW.
Han said, “Similarly, rising gas prices in many countries in the region are also tarnishing the image of the United States. Again, Beijing does not need to do anything to put the blame on the United States.”
However, moving closer to China is not a guarantee of energy stability for Asian countries. Beijing has already banned fuel exports to protect its domestic supplies.
On March 18, Cambodia said Chinese and Vietnamese export restrictions had already forced it to seek alternative suppliers and prepare for shortages at home.
Can Southeast Asia move away from Gulf fossil fuels?
However, in the long term, this crisis may still strengthen China’s hand in Southeast Asia. Li told DW that the energy shock reinforces regional concerns about overdependence on Middle Eastern oil, which in turn strengthens the appeal of renewable energy, an area where Chinese companies are highly competitive.
China is deeply embedded in Southeast Asia’s green transformation. Its companies are among the largest investors in the region’s emerging electric-vehicle and battery sectors. Beijing has also been a major financier of hydropower dams and giant solar farms in mainland Southeast Asia, turning the region into both a market for Chinese clean tech exports and a production base for panels, batteries and electric vehicles.
Speaking at the Boao Forum in China on Thursday, Singapore Prime Minister Lawrence Wong said China “can play an important role” in shaping global outcomes and “can play an even greater role in supporting regional prosperity and stability” while urging Beijing to remain a strong advocate for open, rules-based trade.
Wong also said ASEAN should work with China on renewable energy to advance the regional power grid. If Iran toughens Southeast Asia’s resolve to diversify away from oil, Beijing could benefit not only from the current crisis, but also from a strategic response to the region.
Edited by: Darko Janjevic