The South China Sea and Indonesia’s Reluctance
As in the previous years, 2022 also witnessed various developments in the relationship between China and Indonesia.
On the political and security sectors, the South China Sea issue continues to color the cooperation between Jakarta and Beijing this year.While reports on China’s assertive actions were not as frequent as last year’s, they persisted nonetheless, especially with a report of the opening of new Chinese military facility in Ream, near the Gulf of Thailand.
The most recent development took place in November, when the People’s Liberation Army (PLA) declared that the United States’ USS Chancellorsville had trespassed into the waters around the Spratly Islands. The PLA considered the action a provocation and a risk to the security in the South China Sea.
In response to the heightened tension in the region, last year Indonesia had already announced its plans to allocate US$125 billion for improvement and modernization of its military equipment. In August, Jakarta and Washington also expanded the joint Garuda Shield exercise, involving 4,000 military officers from 14 countries.
In spite of this, however, some analysts believe that Indonesia’s response remain weak, given its economic interests towards China. It is reported that when Chinese Coast Guard and ships were seen entering Indonesian water, the Indonesian Navy only monitors them instead of pursuing actions. This reluctance was also seen in the April meeting between the Chinese Ambassador to Indonesia and Indonesia’s Minister of Defense, Prabowo Subianto. In the meeting, Prabowo only mentioned that the comprehensive strategic partnership between China and Indonesia should touch upon resolving “various regional problems, including the South China Sea issue” while also expressing his hope that the deliberation over the code of conduct (CoC) in the South China sea could progress.
Indonesia’s hesitation was also apparent in the China-Taiwan tension this year, following a visit of the Speaker of the Unite States House of Representatives Nancy Pelosi to Taiwan. Jakarta repeatedly echoed its “free-and-active” foreign policy principle and tried to avoid any gestures indicating a rejection of Chinese claims over Taiwan.
Economic Considerations Reign Supreme
Such soft approach in multiple matters would make sense if China-Indonesia economic ties are considered. This year, China remains Indonesia’s number one trading partner both in terms of exports and imports. In January–September 2022, Indonesia’s exports to China reached US$46.88 billion in value. This figure is an increase of 28.87% from the same period the previous year. Additionally, the value of Indonesia’s imports from China reached US$50.67 billion, an increase of 28.33%.
The trade’with China is dominated by such commodities as coal, nickel, copper and palm oil. The issue of nickel was highlighted this year after a report shows that that the production site, where China is also investor, poses environmental and health risks to the surrounding communities. The report accused Indonesia of “destroying its economy to green Chinese cities.”
The growing trade has led the two countries to renew its Bilateral Currency Swap Arrangement (BCSA) on 21 January, which enables the exchange of local currencies of up to US$38.8 billion equivalent to promote the use of yuan and rupiah in trade and investments.
In addition, the food sector is another important focus of China-Indonesia relations this year. China sees Indonesia as an important contributor to its food security endeavors, while the latter views the former as a market for its agricultural products. This will increase in the coming years, especially with the recent decision by China to reopen itself for exports of porang from Indonesia, Beijing’s commitment to buy 2.5 million tons of crude palm oil (CPO) and its derivatives from Indonesia and Indonesia’s decision to finally ratify the China-backed Regional Comprehensive Economic Partnership (RCEP), making it the latest ASEAN country to join.
Beyond trade, Chinese investment realization in Indonesia during January-June 2022 was recorded at US$3.6 billion or a 16.8% portion of the total incoming investments. The value has jumped compared to last year, namely US$1.7 billion during January-June. With this increase, Chinese investment is now in second place, behind Singapore
Major Chinese investment projects in Indonesia include the Jakarta-Bandung High Speed Railway, an electric vehicle or lithium battery factory in Morowali, the Jatigede dam, the Medan-Kualanamu highway, and the Kuala Tanjung port.
Several new agreements were also signed this year, including the Two Countries Twin Park between Yuanhong Investment Zone Management Committee and Beijing Paul Investment Group Co., Ltd on food industry, and between Fuzhou Deyou Information Technology Co., Ltd. and PT. Multi Indonesia Ekspansi on the development of e-commerce.
With the appointment of a new Chinese Ambassador in Jakarta, this year also witnessed the signing of an MoU on renewable energy, minerals and further discussions on digital cooperation. It is important to note that Indonesia is a major destination of China’s Digital Silk Road.
In 2022, China-Indonesia ties have also been strengthened through various high-level exchanges. One of the highlights was President Joko “Jokowi” Widodo’s visit to Beijing in July, which was the first visit of foreign leader since the Beijing Olympics early in the year. In the visit, both countries signed seven agreements on synergizing Indonesia’s Global Maritime Fulcrum (GMF) initiative and the Belt and Road Initiatives (BRI); on the development of vaccines and gnomie; on green development; on maritime cooperation; on the export of Indonesia’s pineapples; on information exchanges on customs violations; and on information technology and cybersecurity.
The G20 Summit in Bali also became another platform for China and Indonesia to strengthen their cooperation. Apart from the fact that China is one of the biggest supporters for Indonesia in leading the G20, Jakarta and Beijing also utilized the summit to sign an agreement on renewing Bilateral Economic and Trade Cooperation (BETC), which is the legal framework for China-Indonesia economic cooperation and has expired in April 2021.
At the same time, the two countries also signed other MoUs to align the GMF and the BRI; on the development of conservation, research and innovation on traditional medicines; on vocational training on industry; on digital economy; and on trade.
Apart from that, Jokowi and Xi also witnessed the trial run of the Jakarta-Bandung high-speed rail. Despite delays, cost-overrun and environmental problems surrounding the project, a series of electric multiple units (EMU) or trains and a comprehensive inspection train (CIT) or inspection train were shipped this year. Both leaders hope that the train could operate by June 2023.
Influential Soft Power Projection
Ties have also been maintained on the soft power side. The most important development was the inauguration of the Sino-Indonesian Industrial Cooperation Research Center in September by Fujian Polytechnic Normal University (FPNU). The center aims to accelerate the realization of the Two Countries Twin Park between the two countries.
In addition, the Chinese Embassy in Indonesia also organized International Chinese Language Day 2022 with Confucius Institute at Universitas Al Azhar Indonesia.
Apart from scholarship events organized to attract more Indonesians to study in China and cooperation on improving teachers’ skills across Indonesia, China also expanded its media efforts to promote its own narratives to Indonesians.
In November, the government-run China Media Group cooperated with Televisi Republik Indonesia (TVRI) to air “Classics Quoted by Xi”, a series comprises six 40 minutes episodes in which China’s president retells classic Chinese stories and famous quotes to “help to comprehend the essence of traditional Chinese culture” but also as “a good reference to understand Xi’s governing philosophy”.
Moreover, the new Chinese ambassador, Lu Kang, is the first Chinese diplomat to open a Twitter account and has been using it to “tell China’s story”.
This has been complemented with the arrival of Chinese hospital ship in November, which is a continuation China’s health diplomacy in Indonesia.
Looking ahead, Beijing-Jakarta ties will grow on various sectors. At the China Homelife Indonesia Exhibition, where 700 Chinese companies took part, China plans to pour investments in development projects in Indonesia. This is only an addition to the investments that are still in preparation and those that have been signed/intended, but not yet implemented, including in Indonesia’s new capital city project and in infrastructure developments in Papua.
Tourism can also be expected to increase, with the opening of direct flight between Beijing and Bali.
In the next year or so, we will also see the possibility of the two countries cooperating on the Afghanistan issue. This was iterated during the visit of delegations from Chinese Ministry of Foreign Affairs in November.
Nonetheless, the South China Sea issue will continue to color China-Indonesia relations, especially given that Chinese plans to accelerate the modernization of its military. This will be made more complicated with a growing anti-China sentiment in Indonesia. Indonesians’ perceptions towards China continue to decline, caused by the entry of Chinese workers and China’s human rights violations against the Uyghurs in Xinjiang. Overall, while these stumbling blocks might not disappear soon, the Jakarta-Beijing relations appear set to grow.