As the United States and Japan tussled with China over the wording of a concluding statement at an Asian security meeting in Kuala Lumpur this week, caught in the middle was host Malaysia.

Plans for a joint statement were eventually dropped by the Malaysian government because of disagreements over the disputed South China Sea. U.S. and Japanese officials wanted to address Beijing’s island-building. Chinese officials resisted.

The episode illustrates the thin line Malaysia and other smaller Southeast Asian states must walk in balancing ties with China and the United States, especially since a U.S. warship challenged the territorial limits around one of China’s man-made islands in the Spratly archipelago last week.

China is Malaysia’s biggest trading partner, according to Malaysian government statistics, and in contrast to other countries with competing claims to the South China Sea such as the Philippines and Vietnam, has typically played down concerns over China’s expanding military reach.

… Traditionally, Malaysia cooperated more with the United States on military matters while ties with China were focused on economic links, said Oh Ei Sun, a senior fellow at the S. Rajaratnam School of International Studies in Singapore.

But the September military exercise with China and the conclusion of a Pacific trade deal with the United States underscored how Malaysia’s ties with both countries were deepening, Sun said.