Editor’s Note: The following article is part of a new USIP essay series, “Southeast Asia in a World of Strategic Competition.” The opinions expressed in these essays are solely those of the authors and do not represent USIP, or any organization or government.

The U.S.-China rivalry is fundamentally transforming the conventional pillars of Asia's economic and political landscape as it plays out across many domains — including diplomacy, commerce, security, intelligence, ideology, values, science and technology. The United States' posture toward China has seen a seismic shift in recent years, driven by American perceptions of China’s rise and the threat it poses. Indeed, China’s economic ascendance and its growing importance in the international system — demonstrated by its economic success, military strength and soft power influence — pose a geopolitical challenge to the United States’ preeminent position in international politics. While this rivalry is shaping the global order, there’s nowhere it’s felt more than in Southeast Asia.

Secretary of State Antony J. Blinken meets with Bruneian Foreign Minister II Dato Erywan Yusof, in London, United Kingdom, on May 3, 2021. Ron Przysucha/ U.S. Department of State
Secretary of State Antony J. Blinken meets with Bruneian Foreign Minister II Dato Erywan Yusof, in London, United Kingdom, on May 3, 2021. Ron Przysucha/ U.S. Department of State

As U.S.-China competition has intensified, studies have suggested that this rivalry has had profound effects on Malaysia, Singapore and Indonesia. However, not much is known about its impact on the small Southeast Asian state of Brunei and its effect on the country’s diplomatic and economic relations with the two powers.

Brunei’s Ties with the United States

The United States and Brunei have a longstanding relationship. Due to its strategic location on the routes connecting American bases in the Philippines, Thailand, Singapore and Australia, Brunei was beneficial to the United States during the Cold War. Additionally, Brunei permitted the United States to use the country's pristine tropical jungle for anti-guerrilla warfare training during the Vietnam war.

Brunei has prioritized relations with the United States since 1984, as the sultanate views that relationship as an implicit security guarantee against external aggression. For decades, both the United States and the United Kingdom were the ultimate protectors of Brunei's independence and sovereignty against its larger, more powerful neighbors. Despite longstanding ties with Washington, Brunei has largely followed a hedging strategy with the United States and China, maintaining strong relations and working to obtain the best possible economic, political and defense deals from both sides.  

Brunei and the United States inked a military and defense cooperation memorandum of understanding in 1994. This agreement resulted in the continuation of joint exercises, training programs and other forms of military cooperation between the two countries. In August 2022, the two nations conducted the Pahlawan Warrior Exercise, a bilateral exercise that focuses on enhancing partner land force capacity.  

Brunei-U.S. relations entered a new era following the Obama administration’s “Asia Pivot.” Brunei was a key U.S. partner in the Trans-Pacific Partnership (TPP) negotiations, a proposed trade agreement with 12 nations that Washington saw as a potent economic tool to advance its interests, but ultimately pulled out of in 2017. Brunei is also a member of the China-dominated Regional Comprehensive Economic Partnership (RCEP) and its participation in both the TPP and RCEP suggest that it has judiciously employed a hedging strategy.

Currently, the Brunei-U.S. English Language Enrichment Program for Association of Southeast Asian Nations (ASEAN) and the U.S.-Asia Pacific Comprehensive Energy Partnership serve as platforms for both countries to further strengthen their bilateral relations. The former, which is funded by Brunei, seeks to improve the English proficiency of government officials and teachers from ASEAN member states through training programs involving American and Bruneian English experts. Brunei, the United States, and Indonesia initiated the latter initiative to address energy scarcity and access in the Asia-Pacific region. The significance the United States has attached to these two non-military projects reflected how the Obama administration’s Asia strategy appeared to give small states in the region greater maneuverability than the traditional U.S. alliance approach.

Brunei’s Ties with the People’s Republic of China

Brunei-China bilateral relations date back to the Han dynasty, some 2,000 years ago. The tomb of Sultan Abdul Majid Hassan of Brunei, which was erected in Nanjing, China during the Ming dynasty in the early 15th century, represents the countries' enduring affinity. Later, such ties were eclipsed by the British protectorate of Brunei, which was then threatened for decades by Communist China. Bilateral relations considerably improved after the end of the Cold War, culminating in the establishment of official relations in September 1991.

Since establishing diplomatic relations, the two nations have routinely exchanged high-level visits, which have frequently coincided with ASEAN or Asia-Pacific Economic Cooperation summits. Since 1993, when he was the first Bruneian head of state to visit China, the sultan of Brunei has made 10 voyages to China, including state visits in 2013 and 2017. Jiang Zemin was the first Chinese head of state to visit Brunei in 2000, followed by Hu Jintao in 2005.

As China expands its economic activities in Southeast Asia, economic interdependence between China and ASEAN nations has deepened. In contrast to other ASEAN nations, however, Brunei's economic exchanges with China remained stagnant until recently. In 2011, bilateral trade reached $1.3 billion, quadrupling the amount since 2008. But 2013 proved to be a turning point in Brunei-China relations. In April 2013, the sultan paid a diplomatic visit to China to confer with President Xi Jinping. In response, Chinese Prime Minister Li Keqiang attended the eighth East Asia Summit in Brunei’s capital, Bandar Seri Begawan. Brunei-China cooperation, which was primarily limited to hydrocarbon resource development prior to the signing of these agreements, has expanded to include energy, trade, infrastructure, agriculture, culture and defense.

In 2018, during Xi’s first visit to Brunei, both countries agreed to enhance their relationship to a strategic cooperation partnership and used the occasion to highlight the development of bilateral relations. The two nations vowed to be excellent partners, characterized by mutual trust in politics, mutual benefit in the economy, mutual comprehension in interpersonal and cultural exchanges and mutual assistance in multilateral affairs.

China has become Brunei's largest trading partner, foreign investor and source of travelers despite the conflicts in the South China Sea. Brunei remains an enthusiastic supporter of Xi's signature Belt and Road Initiative (BRI), despite opposition from some Southeast Asian nations. Beijing is the primary investor in Brunei's port and petrochemical refinery, the country's two major infrastructure initiatives. Brunei and the Guangxi Zhuang Autonomous Region in south-central China signed an agreement in 2014 to establish the Brunei-Guangxi Economic Corridor. The initiative involves a joint venture between the Brunei government and the Guangxi Beibu Gulf Group to assume administration of the Muara Container Terminal, to increase the port's handling capacity from 220,000 to one million containers by 2021 and to construct an industrial park adjacent to the port.

In 2017, Zhejiang Hengyi Group committed to invest $4 billion in phase one of Brunei’s Pulau Muara Besar (PMB) petrochemical complex project. The Hengyi Group pledged to invest an additional $12 billion in the PMB and the bridge connecting the refinery to Brunei's mainland was constructed by a Chinese company.

China has become Brunei's largest source of foreign investment due to these initiatives. China's BRI has absorbed Chinese-funded initiatives, and Brunei has become a fervent supporter. During the sultan's 2017 state visit and Xi's 2018 visit to Brunei, the two countries signed an MOU to advance BRI cooperation. In an article published prior to his visit, Xi highlighted Brunei's strong support for BRI and the synergies between BRI and Brunei Vision 2035 that would give the bilateral relationship "new impetus." Shortly after Xi's visit to Brunei, the Brunei-China One Belt One Road Association was formed to facilitate commercial relations between the two nations. In contrast to other Southeast Asian nations such as Thailand, Myanmar and Malaysia, where BRI projects have been criticized, renegotiated or even canceled due to concerns over high costs and debt liability, BRI-related projects in Brunei have not, at least thus far, sparked similar controversy.

At first glance, China-Brunei relations appear to be strong. Nonetheless, disputes over South China Sea claims have emerged. Brunei has been the quietest claimant nation, bordering on complete silence and the territorial and maritime boundary dispute has scarcely been an issue. China has pressed Brunei delicately for a joint development agreement, but Brunei has thus far resisted.

The China-Brunei dispute in the South China Sea has two facets. Disputed maritime boundary lines are the first concern. If the fifth and sixth dashes of China’s “9-dash line” are joined, that line would come within 35 nautical miles of Brunei's coast, where the majority of the country's vital offshore energy industry is located. Brunei has not publicly rejected the 9-dash line (or the new 10-dash line China recently released) as incompatible with the 1982 United Nations Convention on the Law of the Sea (UNCLOS), in contrast to the Philippines, Vietnam, Malaysia and Indonesia. Given that Brunei has always adhered strictly to UNCLOS, it is extremely unlikely that its government’s legal experts will recognize the basis for China’s maritime jurisdictional claims, which a U.N.-backed arbitral tribunal rejected in July 2016.

The second concern is maritime characteristics. Two geographical features are located within Brunei's exclusive economic zone (EEZ), the Louisa Reef (a low-tide elevation) and the Riflemen Bank (a submerged feature). Under international law, neither is entitled to a maritime zone (such as a territorial sea of 12 nautical miles or an EEZ of 200 nautical miles). Louisa Reef and Rifleman Bank have never been formally claimed by Brunei, although it appears to claim Rifleman Bank as part of its extended continental shelf. China and Vietnam both assert sovereignty over the Spratly Islands, which these two features are considered to be a part of. Malaysia relinquished its claim to Louisa Reef in 2019 in exchange for Brunei abandoning its territorial claim to Limbang in Sarawak. In addition, both countries agreed to jointly develop maritime resources in certain Malaysian-claimed areas of Brunei's EEZ.

Conclusion

When it comes to U.S.-China competition in Southeast Asia, China has the advantage in terms of infrastructure investments through the BRI, its geographic proximity and enormous financial resources. This is evident by Beijing’s substantial trade surplus, especially with Brunei. For its part, Brunei is not “band wagoning” with either China or the United States. Ultimately, Brunei wants to maintain equal distance from and neutrality with these two competing powers. Indeed, Brunei seeks to advance its interests through its relationships with both powers while avoiding the dangers of rigidly tilting toward or away from Beijing or Washington. Still, Brunei remains concerned that geopolitical competition will interfere with its national interest, which prioritizes economic development.

Sufrizul Husseini is an associate researcher at the Centre for Strategic and Policy Studies, Brunei Darussalam.

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