Indonesia and China signed a $10 billion trade agreement in the fields of food, new energy, especially in the green transition sectors like new energy vehicles, lithium batteries, photovoltaics and data technology in Beijing. This was signed after Indonesian President Probowo Sabianto’s first foreign visit to China after he got elected as president.
That he chose China as his first official foreign destination is significant. It comes at a crucial time for China when Donald Trump has been elected president of the United States. Trump has shown himself quite hostile to China on trade matters more than on foreign policy issues like Taiwan, or China’s support to Russia in the war in Ukraine.
President Prabowo’s statement after his meeting with Chinese President Xi Jinping assumes significance. Prabowo said, “We must set an example that in this era, cooperation and not confrontation is the path to peace and prosperity.” Indonesian leaders have decided not to get into the “cold war” that is raging between China and the United States.
Geographically, Indonesia’s proximity to China determines its international economic policy decisions. China too is looking to build strong international linkages to counter the diplomatic and political hostility of the United States. Indonesia is not only the fourth most populous country in the world, following India, China and the United States, it also has the largest nickel deposits which is a critical mineral in the new green technologies emerging in the global economy. Interestingly, China’s Internet biggies, Alibaba and Tencent, had earlier invested in Indonesia’s tech company, Go To Gojek Tokopedia.
It is a well-established tenet that geopolitics turns on the pressures exerted by geo-economics. China and the Association of South-East Nations (ASEAN) are in many ways geographical neighbours. Not all members of the ASEAN are in favour of building closer ties with China, excluding the US and other Western countries.
The ASEAN members want to keep the doors open to both China, the US and everyone else. That is why, during the G20 summit at Bali in 2022, then Indonesian president Joko Widodo plainly refused to be drawn into camps. So, Indonesia and many other countries in the region are going to maintain an open door policy towards China.
The Philippines, Malaysia and Vietnam have conflicting territorial claims in the South China Sea with China. Vietnam despite differences is on closer terms with China. The example of Indonesia’s economic collaboration with China is evidence that trade determines foreign relations more than politics and ideology. The Americans too have been quite pragmatic in dealing with the ASEAN despite their attempt to create an Indo-Pacific sphere of influence. The US-Vietnam economic tie-ups are a good example.
Indonesia is keenly aware that the economic ties with China transcend trade. That is, Chinese President Xi emphasised that China-Indonesia relations represent the Global South, and reminded that this year marked the 70th year of diplomatic relations between the two countries, and that next year marks the 70th year of the Bandung Conference of Afro-Asian nations hosted by Indonesia. China is aware of the importance of Global South, and it wants to be seen as the champion of the developing economies and emerging markets.
The Chinese are aware of the power tussle between the advanced economies of the West led by the US and the countries of Asia, Africa and Latin America, and they want to be seen as leaders of the Global South. As the second largest economy after the US, it should not come as a surprise that China is well aware of its own strength and the importance of its economic and diplomatic ties with other countries.