When Chinese President Hu Jintao met Brunei's Sultan Hassanal Bolkiah on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting this September in Russia, both leaders said they were pleased with the development of bilateral ties in recent years.
Though relations between Beijing and Bandar Seri Begawan have strengthened considerably over the past few years, the future could pose challenges that both sides will have to navigate in order to preserve these close ties.
Sino-Brunei relations are deeply rooted in history and date back over 2,000 years. The two sides traded as early as China's Western Han Dynasty, and some accounts suggest Chinese settlers from Fujian province arrived in Borneo and settled in the area now called Brunei in the 13th and 14th centuries.
Brunei's Sultan Abdul Majid Hassan, who died during his travels in China in the early 15th century despite the Chinese emperor's best efforts to help treat his illness, was buried with royal tribute in Nanjing and continues to serve as a symbol of the relationship today.
In more recent times, however, relations were somewhat distant as Brunei was a British protectorate for most of the last century until it gained independence in 1983. Even then, due to various concerns including communism and sensitivities related to its ethnic Chinese population, Brunei on September 30, 1991, was then the last member of the Association of Southeast Asian Nations (ASEAN) to establish official ties with Beijing.
Since then, China increasingly has seen Brunei as a useful source of oil and gas to fuel its economic growth and a voice for better ties between it and ASEAN. Meanwhile, Brunei, an Islamic sultanate with a population of 400,000 and the fifth-richest country in the world per capita, has considered Beijing to be a crucial partner to engage to both diversify and strengthen its fossil-fuel-based economy and preserve peace and stability in the Asia-Pacific region.
While relations between the two countries have tightened over the last decade or so, the last year has seen a particular increase in the momentum of the relationship ahead of Brunei's chairmanship of ASEAN in 2013.
Last November, Wen Jiabao became the first Chinese premier to visit Brunei in the history of the bilateral relationship, and both sides celebrated the 20th anniversary of the establishment of diplomatic relations with great fanfare. Wen's visit began what the Brunei Times called "a whole new chapter" in Sino-Brunei relations.
This year, the chairman of the Chinese People's Political Consultative Conference (CPPCC) Jia Qinglin paid the first visit of its kind to Brunei in April, and Chinese Foreign Minister Yang Jiechi also visited in August. Top officials also have met on the sidelines of key meetings, as Chinese President Hu Jintao and Brunei's Sultan Hassanal Bolkiah most recently did at APEC.
Commercial relations have strengthened considerably, as well. Trade in 2011 soared to US$1.3 billion, nearly four times what it was in 2008 and surpassing the $1 billion target previously set by the two countries. The bulk of that is in energy, which is not surprising since Beijing needs to fuel its rapid growth while Brunei is Southeast Asia's third-largest oil exporter and the world's fourth-largest natural gas exporter.
Soon after Wen's visit to Brunei in 2011, for example, Brunei agreed to increase oil exports to China from 13,000 barrels per day to 16,000 barrels per day. Meanwhile, China's National Offshore Oil Corp has inked a deal with Petroleum Brunei for oil and gas commercial exploration, while Zhejiang Henyi Group and Sinopec Engineering Inc are working to help develop an oil refinery and aromatic cracker plant in Brunei to boost the energy sector in the largest ever foreign direct investment in the country.
Both sides increasingly have tried to broaden the reach of their cooperation beyond energy. Within the economic realm, the two countries signed a Memorandum of Understanding (MoU) to boost cooperation in agriculture in April. Apart from increased trade, the MoU also included more joint efforts in human resource development and providing training for government officials and professional technical personnel.
Both sides have tried to encourage greater investment and private sector interaction. Beijing has signaled that it would like small and medium-sized enterprises from Brunei to invest in "lesser developed" parts of China, while Bandar Seri Begawan has tried to get Beijing to broaden its range of investments in the country through a range of trade fairs, expositions and symposiums.
A recent National Chamber of Commerce and Industry meeting in Brunei, for instance, saw a Chinese delegation comprising government representatives from various industries including real estate, construction, medicine, and gem and jade. Cooperation also has been recently extended to the city level, with Nanjing and Bandar Seri Begawan becoming sister cities last year - an arrangement that is expected to boost tourism and cultural activities.
China and Brunei also continue to place a great emphasis on people-to-people ties, which CPPCC chairman Jia Qinglin singled out as one of the four ways to enhance bilateral cooperation during his visit earlier this year. For Brunei, the main focus is on tourism because aside from its ASEAN neighbors, China brings the most tourists into Brunei.
Beijing and Bandar Seri Begawan have also both been paying increasing attention to the role of youth in bilateral ties. Chinese youth groups have paid visits to Brunei, and the Universiti Brunei Darussalam and Zhejiang University forged an official partnership in July this year, initiatives that not only cement inter-generational ties between the two nations, but also potentially could provide Brunei with young investors or graduates interested in working or doing business there.
The ceremonial dimension of people-to-people ties also should not be overlooked. China continues to invest a great deal in emphasizing the rich history of the relationship, promoting the China-Brunei Friendship Hall completed in 2006 and the Brunei Heritage Garden unveiled in 2008 - both of which are located in Nanjing where the former Brunei sultan is buried. For Brunei's part, the Brunei-China Friendship Association founded in 2006 continues to promote ties through events including cultural exchanges and exhibits.
Yet, despite the great strides in Sino-Brunei relations over the past few years, the relationship still has its limits, which could pose challenges for both sides in the coming years. First and most obviously, China is only one of Brunei's key partners, and the sultanate has boosted its relationships with a wide variety of actors over the past few years ranging from the United States and the European Union to the its ASEAN neighbors and Russia in order to diversify its options.
While this is natural, it is a tricky balancing act to maintain, particularly for a very small country that is trying to manage ties with much larger powers and is acutely sensitive to fears of entrapment or abandonment.
What would happen if, for instance, tensions between Washington and Beijing should increase in the Asia-Pacific in the future? Bandar Seri Begawan would find itself in the middle of a great power rivalry and potentially have to choose sides, which could pose challenges for its diversification strategy. Neither the United States nor China would like being spurned, and Beijing in particular has demonstrated its tendency to use economic coercion in certain circumstances to make its displeasure known. 
Second, Brunei's preferred low-key approach to dealing with contentious issues may be challenged as it assumes a very public role as ASEAN chair in 2013, at a crucial time for the organization. The country has a long tradition of avoiding confrontation and trying to resolve differences peacefully with mutual respect and consensus as embodied in the approach of its foreign minister, Prince Mohamed Bolkiah. 
For instance, despite having a sovereignty claim over the Louisa Reef, a small atoll in the South China Sea that overlaps with Chinese (and Malaysian) claims, the sultanate has not occupied any of the territory and tends to downplay the issue with Beijing by focusing on multilateral mechanisms for dispute resolution and joint development.
Similarly, at the ASEAN deliberations in July this year that were hosted by Cambodia and infamously produced no joint communique because of differences over the South China Sea, Brunei simply said it would be "guided by" the decision of the ASEAN chair. This contrasts with the other Southeast Asian compatriots and South China Sea claimants that insisted on a reference to the dispute. 
As the ASEAN chair next year, Brunei will not have the luxury of simply deferring to other countries or remaining neutral on what to do about the South China Sea question. While it may be tempted to once again downplay or sidestep the issue to avoid angering Beijing, doing so may risk undermining ASEAN unity as Vietnam, the Philippines and other members may want a tougher line.
Third, fundamental domestic challenges also exist for both sides further down the road that could affect ties. For Brunei, it needs to make a difficult transition away from its deep reliance on fossil fuels, which now account for more than 60% of the economy and 95% of export revenues, that are expected to run out in the next two to three decades.
While the government realizes this transition needs to occur and has had its fair share of successes - like in alternative energy sources - the shift required is a dramatic one. This shift entails not only a realignment of economic incentives and priorities but also possibly changing the very relationship between state and society.
The path is not without its risks for Sino-Brunei relations as Chinese interest in the sultanate may ebb as its oil and gas reserves decline or Brunei may itself face domestic hiccups down the road that constrain its ability to act effectively in the international arena. China also faces its own transition and will need to both reorient its economy and renegotiate its social contract domestically while taking on greater responsibilities internationally in line with its growing power.
With the growing breadth and depth of relationships and roles that Beijing will have in the coming years, there is the possibility that tiny Brunei increasingly may be out of China's radar, particularly if the sultanate's economic and geopolitical significance also declines.
When Premier Wen delivered a speech at Universiti Brunei Darussalam during his visit there last November, he praised Sino-Brunei relations as developing smoothly based on mutual respect and equal treatment, and added that he was "fully confident of the future development of bilateral ties".
While the significant progress the relationship has made over the past few years is cause for optimism, the potential challenges of today and the decades ahead may certainly put that prediction to the test.
1. For specific examples and a broader discussion of this, see, Bonnie Glaser "China's Coercive Economic Diplomacy: A New and Worrying Trend," Center for Strategic and International Studies, August 6, 2012. 2. Carlyle A Thayer, "Background Briefing: Brunei: National Security Outlook," Thayer Consultancy, August 22, 2011. 3. Carlyle A Thayer. "ASEAN's Code of Conduct in the South China Sea: A Litmus Test for Community-Building?" The Asia-Pacific Journal, Vol. 10, Issue 34, No. 4, August 20, 2012.
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