The long-standing and intricate diplomatic relationship between China and Indonesia has progressed from political mistrust to economic reliance. China is now Indonesia’s biggest trading partner and one of its top investors since the two countries’ relations were normalized in the 1990s. This growing connection is symbolized by significant infrastructure initiatives like the high-speed rail line between Jakarta and Bandung and energy sector investments. However, there is more to economic collaboration than meets the eye. The Natuna Islands continue to be a source of stress. Indonesia has made it clear that it opposes China’s nine-dash line on the SCS, arguing that it violates the UN Convention on the Law of the Sea (UNCLOS). However, detractors contend that Indonesia’s diplomatic standing could be jeopardized due to its increasing economic dependence on China, particularly if collaborative marine accords are interpreted as implicit endorsement of China’s claims (Murphy, 2024)​.
This conflict draws attention to a more general query: Does Indonesia’s closer ties with China represent a risky concession that can endanger its sovereignty and regional power, or is it a practical step to promote economic growth and stability? It is crucial to comprehend both the possible geostrategic hazards and the practical advantages of Indonesia-China ties in order to respond to this topic.
Increasing bilateral links between China and Indonesia is frequently viewed as a practical strategy to help Indonesia’s national development plan and hasten the country’s economic recovery following the pandemic. Indonesia hopes to gain from China’s economic might and technological innovations by strengthening its relations with the country. Indonesia’s aim to strike a balance between its geopolitical concerns and its economic objectives is reflected in this policy. Three main elements can be used to understand the pragmatic nature of this relationship: support for economic stability in the face of global uncertainty, maritime cooperation, and economic rewards.
A key component of Indonesia’s practical strategy is the financial gains it makes from Chinese investment, particularly in major infrastructure projects. China is now the biggest trading partner and a major source of FDI (foreign direct investment) in Indonesia. Indonesia makes use of this collaboration in projects like the high-speed railway between Jakarta and Bandung, which is a component of China’s Belt and Road Initiative (BRI). Despite setbacks and difficulties, the project continues to represent Indonesia’s dedication to expanding its connectivity, which is a key component of President Joko Widodo’s economic strategy for the country (Sutrisno, 2021).
China has made significant expenditures in fields including digital technology, mining, and renewable energy in addition to transportation infrastructure. In order to position Indonesia as a future leader in the global green energy transition, Chinese companies, for instance, have been instrumental in the development of Indonesia’s electric vehicle (EV) battery supply chains by utilizing the nation’s abundant nickel resources (Wijaya, 2023). Additionally, China’s engagement in Indonesia’s digital economy—specifically, the introduction of 5G technology and e-commerce platforms—further emphasizes the two countries’ increasing economic interdependence (Chen & Voon, 2022). Through collaboration with Chinese firms such as CATL and BYD, Indonesia hopes to establish itself as a major global center for the production of EV batteries. President Joko Widodo’s goal to establish Indonesia as a key participant in the global green energy transition is reflected in this strategy.
However, China and Indonesia’s economic relationship goes much beyond trade and investment; it also includes naval cooperation. Fisheries, port development, and maritime security have been the main focuses of Indonesia’s maritime relations with China as part of its larger Global Maritime Fulcrum (GMF) strategy. The GMF strategy seeks to improve Indonesia’s economic and security standing in the Indo-Pacific by establishing the country as a major actor in regional maritime affairs. For example, Chinese investment in Indonesia’s port expansion has improved the nation’s competitiveness in global trade and allowed for increased regional connections (Brahm, 2022).
Additionally, Indonesia wants to draw in more Chinese funding for public-private partnerships and infrastructure projects in response to the prospect of a recession and global financial turmoil. More Chinese investment is thought to be a means of promoting economic expansion and preserving Indonesia’s financial stability. However, detractors caution about the possible dangers of “debt diplomacy”—a scenario in which recipient nations’ economic sovereignty is jeopardized due to heavy debt to China.
Nevertheless, there are still worries that these collaborations would weaken Indonesia’s position on marine sovereignty. China’s attempts to increase its influence in the South China Sea, especially in the vicinity of the Natuna Islands, contrast with Indonesia’s adamant opposition to China’s nine-dash line (Pavlicevic, 2023). Despite its dedication to preserving its independence, Indonesia’s increasing economic dependence on China begs the question of whether this could subtly align with China’s maritime interests, especially when considered in the context of the larger Indo-Pacific geopolitical landscape (Tay, 2022).
The complexity of this relationship becomes especially clear when looking at Indonesia’s diplomatic posture in Southeast Asia and its involvement within ASEAN. The South China Sea issue is one of the many regional conflicts in which Indonesia has long positioned itself as a mediator. But as its relations with China grow closer, it becomes more difficult to determine if Indonesia can continue to be neutral while juggling its responsibilities to regional security and its economic reliance on China. Critics contend that Indonesia may unintentionally align itself with China’s larger strategic aspirations in the area, undermining its neutrality within ASEAN, as a result of its expanding economic relations with China (Simons, 2023).
While Indonesia’s economic strategy focuses on utilizing Chinese investments for infrastructure development, green energy transition, and technology developments, the geopolitical ramifications of this partnership cannot be neglected. As Indonesia continues to align itself more closely with China’s regional goals, its neutrality in the South China Sea dispute may become increasingly precarious. In the context of global power shifts, maintaining an independent diplomatic stance and guaranteeing economic growth are increasingly intertwined, and this dynamic reflects a delicate balancing act between the two. The intricacies of this relationship highlight the necessity of taking a cautious approach to guarantee that Indonesia can maintain its regional influence and sovereignty without jeopardizing its security and economic interests.
In conclusion, Indonesia’s expanding economic links with China certainly bring huge potential, but they also carry a number of hazards, especially with regard to sovereignty and diplomatic autonomy. In order to protect its economic interests without compromising its territorial integrity and diplomatic position, Indonesia must carefully manage this complicated relationship. In order to protect its national interests and continue to play an active and impartial role in regional geopolitics, Indonesia must adopt a strategic strategy that enables it to take use of the economic advantages of its relationship with China.
