Indonesia and China are very influential states and cooperation between the world’s largest exporter and Southeast Asia’s largest economy is set to grow following a meeting of their senior ministers at the end of last month.
Indonesia’s coordinating minister for maritime affairs and investments, Luhut Binsar Pandjaitan, visited his counterpart, China’s foreign affairs minister, Wa Ying, to discuss potential collaborations between their countries amid the pandemic.
One of the main outcomes of the meeting is a decision to make Indonesia the hub for distributing China’s COVID-19 vaccines in the Southeast Asian region. This co-operation benefits both parties. On one hand, China will have Indonesia with its 270 million people as a testing ground for its COVID-19 vaccines and, at the same time, secure access to the Southeast Asian market.
On the other hand, Indonesia, with the highest number of COVID-19 cases in Southeast Asia, would not only get priority to obtain the vaccine but also gain economic benefits. This latest deal marks a stronger partnership between the two countries, which might impact Indonesia’s relationship with the US.
The relationship between Indonesia and China has been growing in the past few years. Economically, China is Indonesia’s second-biggest source of foreign direct investment (after Singapore) and one of its major trading partners. China was Indonesia’s biggest export destination country in 2019, with a value of US$25.8 billion — around 16.68% of total exports. In the same year, China was the largest source of imports for Indonesia, worth US$44.5 billion, equivalent to almost a third of Indonesia’s total imports.
The two have signed a deal to promote the use of their currencies in their trade agreements, ditching US dollars. China and Indonesia have also expanded their cultural, educational and people-to-people exchanges.
On the other side, unfortunately, the relationship between two states is not without troubles. Despite the COVID-19 pandemic, this year has been marked by increased tensions between Beijing and Jakarta over the South China Sea. Chinese ships have been found trespassing in Indonesian territory near the South China Sea several times, where the two countries have different legal bases.
The growing ties between China and Indonesia could result in the former having strong footholds in the latter, either economically, politically or militarily. This could make Indonesia highly dependent on China. It could also damage Jakarta’s ties with the US.
Indonesia recently rejected a US proposal to allow its P-8 Poseidon maritime surveillance planes to land and refuel on Indonesian territory. The proposal came as the US and China escalated their contest for influence in Southeast Asia. The P-8 plays a central role in keeping an eye on China’s military activity in the South China Sea. Indonesia explained that this decision was part of the country’s neutral foreign policy, which does not take sides between the US or China.
Finally, Indonesia is unlikely to join any sort of U.S.-led coalition against China. The challenge before the Biden administration cannot convince Jakarta that a closer relationship with Washington is in the best interest of an independent and sovereign Indonesia. The Southeast Asian state does not want to be relegated to yet another pawn on the chessboard of the U.S.-China game. Until then, Indonesia will mostly side with Beijing, sceptical of America’s intentions and its foreign policy defined by strategic competition with China.