How new US-Indonesia defence pact sharpens China’s ‘Malacca dilemma’

The most important line in this new defence partnership is not the reassuring one about “peace and stability”. It is the one about “maritime, subsurface and autonomous systems”. Add the promise of maintenance, repair and overhaul support, as well as the commitment to expand joint special forces training, and the document reads less like ceremony than capability.

This is not just another diplomatic upgrade. It is the quiet architecture of military usefulness. As argued previously, strategic competition is no longer defined only by territory, but by control over the routes through which energy, trade and force must pass.

Indonesia has not suddenly become an American ally. Jakarta has stressed sovereignty and its long-standing “free and active” foreign policy, while a separate US proposal on military overflight access remains under review and, according to Indonesian officials, sits outside the published partnership. That caveat matters. But it does not reduce the significance of what has been agreed. In Asia, the most consequential shifts often arrive without treaty drama. They are built through habit, hardware and interoperability.

China has understood this logic for a long time. More than two decades ago, president Hu Jintao warned of what became known as the “Malacca dilemma”: the vulnerability created when a rising industrial power depends on fuel it must import by sea through a narrow passage it does not control. The numbers still speak loudly. China imported 11.6 million barrels of crude oil a day last year, over 90 per cent of which arrived by sea rather than pipeline. The Middle East accounted for roughly half of China’s crude and condensate import mix. The dilemma is not rhetorical. It is structural.

That is why Indonesia matters so much. The Strait of Malacca remains the world’s largest oil transit chokepoint. The US Energy Information Administration (EIA) estimates that 23.2 million barrels a day flowed through in the first half of 2025, roughly 29 per cent of the maritime oil trade. It is also the shortest sea route between Gulf suppliers and Asian buyers. Even when ships avoid it, they do not escape Indonesia’s relevance: the main alternatives are the Sunda and Lombok straits, both detours. This is not simply a question of geography. It is a question of leverage over dependence.