That's exactly what they're saying. They are allowing military transit of Chinese ships and aren't building up defensive islands and it's working out for them. To China's point, that's what they're trying to get everyone to do. They want to be the only military in the area, they're not going to do anything else.

China's whole argument is that handing over your corner of the SCS isn't going to make any major difference. Malaysia is agreeing and it's important to note that also is still making military and security agreements with Australia. In other words, besides Chinese patrols nothing will change.

NOW, that said, what right does China have to do that? It's on legally shaky ground at best. I'm not trying to argue that China should have the right to do this. I'm just pointing out that what you're trying to make a "gotcha" isn't a "gotcha" but instead quite literally exactly what's happening.