By Phoebe De Padua

A Royal Malaysian Navy Super Lynx helicopter operating over the South China Sea, June 18, 2013. Source: CARAT’s flickr photostream, U.S. Government Work.

Malaysia has had few serious run-ins with China in its dispute in the South China Sea compared to its fellow ASEAN claimants, the Philippines and Vietnam. Malaysia has not seen the dispute as a major national security concern in recent years, and its reactions to tensions between China and its Southeast Asian neighbors has been largely muted.

But an evolving security landscape seems to be propelling Kuala Lumpur to adopt a more nuanced strategy, courting China while also preparing for the worst.

China’s first ever naval exercise near James Shoal earlier this year did not go unnoticed in Malaysia. The small bank off the Malaysian coast is the southernmost feature in the South China Sea claimed by Beijing. Malaysian defense minister Hishamuddin Hussein announced in October that his country would create a marine corps and establish a new naval base in Bintulu, which lies off the coast of Sarawak State about 60 miles from James Shoal.

According to Hishamuddin, the new marine corps and base are designed to protect neighboring Sabah State from incursions by militants from the Philippines, as occurred earlier this year, and not a response to the Chinese Navy’s exercise. Plans for their creation certainly predate the Chinese exercise, but it is difficult to believe that Malaysian military planners did not have both the Sulu and South China seas in mind. The base will be well located to respond to incidents in the Spratly Islands.

Malaysia also continues to follow its traditional belief that a closer relationship with Beijing can deter tensions and avoid crises in the South China Sea. The two countries have embarked on efforts to build closer military ties and government-to-government contacts. In late October, Hishamuddin and his Chinese counterpart General Chang Wanquan announced that Malaysia and China will hold their first joint military exercises in 2014.

Hishamuddin also extended an invitation for Chang to visit a Malaysian naval base on Borneo in an effort to launch direct contact between Malaysia’s Naval Sea Region 2, which is responsible for the area around the Spratly Islands, and China’s South Sea Fleet. The Malaysian government has also on occasion floated the idea of joint development of oil and gas resources in the area.

But alongside closer ties with China, Malaysia is also pursuing greater defense cooperation with fellow claimant Vietnam. The two governments in October agreed to establish a maritime cable link between Malaysia’s Naval Sea Region 1, based on mainland Malaysia’s South China Sea coast, and Vietnam’s Southern Command. This will enable the two countries to directly contact each other during potential incidents in the South China Sea, though it does not involve their units responsible for the most disputed waters near the Spratlys.

Vietnam, which has more at stake in its disputes with China than does Malaysia, has in the past year moderated its rhetoric while it works to repair relations with Beijing. This has facilitated Kuala Lumpur’s decision to boost maritime cooperation with Hanoi. In contrast, Malaysian officials have not taken steps to boost cooperation with the Philippines, nor have they offered overt support for Manila’s arbitration case against Chinese claims. At this year’s ASEAN Defense Ministers’ Meeting Plus, Hishamuddin reportedly told his ASEAN counterparts that, “just because you have enemies doesn’t mean your enemies are my enemies,” in an apparent reference to the Philippines.

Malaysia is highly dependent on trade and is China’s largest trading partner in ASEAN. It is also farther from the Chinese mainland and enjoys a strategic buffer in the Philippines and Vietnam. This makes Kuala Lumpur’s cost-benefit analysis regarding confrontation with China different than those of its neighbors’. But as Beijing pursues a more aggressive course of action, by having its ambassador to the Philippines declare that China reserves the right to decide “when and where to set up the new air-defense identification zone” in the South China Sea, for instance, Malaysia might further reconsider its approach to the disputes.

Malaysia is entering a new phase of engagement on South China Sea issues with its neighbors. China’s actions at James Shoal and its aggressiveness in the East China Sea will keep South China Sea worries on Kuala Lumpur’s radar. It will also ensure that Malaysia continues engaging with its ASEAN counterparts on the South China Sea, though at its own pace.

Ms. Phoebe De Padua is a researcher with the Sumitro Chair for Southeast Asia Studies at CSIS.