Indonesia, born from its 1945 struggle for independence, has grown into Southeast Asia’s largest economy and a significant global player, yet remains under-discussed in high-level political discourse. Despite ongoing challenges, China and Indonesia specifically have significant potential for cooperation in trade and technology.
Chinese Premier Li Qiang and Indonesian President Prabowo Subianto attend a ceremony for the signing of cooperation documents between the two countries in Jakarta on May 24, 2025. (Photo: China Daily)
On August 17th, 1945, in a nondescript house in Central Jakarta, revolutionaries Sukarno and Mohammad Hatta jointly signed the document proclaiming the independence of the country – against the protestations of elements in the waning Dutch empire. The two men standing nearly side-by-side, surrounded by an eagerly expectant crowd, became one of the most iconic images demarcating the success of the Revolusi – the Indonesian struggle for independence from colonial rule.
Indeed, this streak of struggle spirit – for autonomy, for independence, and for the ability to choose otherwise – undergirded Indonesia’s national character and political ethos for the decades to come, as epitomised by the 1955 Bandung Conference. Eight decades later, Indonesia has now emerged as the fourth most populous nation-state in the world, and the largest economy by far in Southeast Asia.
Perched conveniently in a quasi-triangle with India, the most populous state in the world, and China, the second most populous, Indonesia is a political entity and force to be reckoned with on the global stage.
“One out of every twenty-seven humans is Indonesian, but the rest of the world would have a hard time naming even one of the country’s inhabitants.”
In his widely lauded work Revolusi, historian David Van Reybrouck sought to capture the tens of thousands of years of his profile country’s history, tracking the ebbs and flows of its vibrant cultures, immensely diverse religions, and the geopolitical tides and currents that forged the thousand-island archipelago’s meandering and luscious journey till present day. Despite the country’s pre-eminence as a regional, if not global, geopolitical player, Indonesia has received relatively limited airtime in discourses of high politics.
This is a grave mistake.
Additionally, we don’t talk nearly enough about China and Indonesia – more specifically, how the Sino-Indonesian relationship can and will continue to benefit one another.
From collaboration over the renewable transition and cutting-edge technological infrastructure, to supply chain alignment in advanced manufacturing, from a shared history anchored in resistance against foreign colonial and imperial powers, to an empathetic desire for strategic autonomy, there is much that could unite the two countries, but for the dearth of political appetite for breakthroughs.
How the Sino-Indonesian Partnership Can Serve Both Countries
The most obvious dimension for synergy is rooted in trade and commerce; this dimension also speaks to the greatest common denominator amongst the Indonesian and Chinese publics for peaceful, robust economic development. Whether a government can weather political opposition and establish enduring credibility, turns heavily upon its ability to deliver for its people – to proverbially provide the food for their tables.
With robust bilateral trade traceable to the 15th and 16th centuries, China and Indonesia have a long history of commerce and exchange in goods and services. Over the four decades subsequent to the seminal commencement of reform and opening-up, China has become precipitously important as a trade and financial partner to Indonesia – with the mainland emerging as the largest trading partner and the second largest investor (behind only Singapore) into the country by the early 2020s.
Importantly, Chinese and Indonesian manufacturers specialise in different sectors and industries – whilst Indonesia has a clear cost advantage in labour-intensive industries, Chinese manufacturers excel in robotics-enabled and technologically sophisticated advanced manufacturing. Chinese firms keen to undertake chuhai – going overseas – are eyeing Indonesia as a pivotal nodule of their global supply chains, especially given the escalating tariffs on Chinese exports imposed by the US and select countries in the West. Despite the looming threat of transshipment tariffs, given the logistical and classificatory challenges in enforcement, there remains considerable interest on the part of both private and state-owned enterprises in China to export parts of their manufacturing capabilities abroad – with Indonesians primed to gain from this transformative process through employment openings.
Of course – a key prerequisite is that Chinese firms must think locally. Hiring locals, training, and empowering locals are a must. If Chinese corporations are to truly ingratiate themselves with foreign markets, as opposed to alienating competitors and the people alike, they must possess the largesse and maneuverability to provide meaningful jobs, coupled with pathways for upward mobility, for Indonesian locals.
Additionally, it takes two to tango in healthy trade growth. I have had many conversations with leading manufacturers in Jakarta who are alarmed by the extent to which their Chinese counterparts pose a serious threat to their business. In lieu of dismissing these worries as “smears” or “misinformation” – tempting as it may be to do so – the Chinese state must take seriously the prospects of positioning China as an integral market for Indonesian producers.
With its rapidly emerging middle-class and some indication of political resolve on the part of the leadership – Li Qiang’s speech at Summer Davos this year pledged to turn China into a major consumption power – China must seize upon its standing as Indonesia’s largest export destination since 2016, to convince the ordinary Indonesian citizens on the ground, that it is an important economic partner amidst intensifying global trade fragmentation. The Regional Comprehensive Economic Partnership (RCEP) and ASEAN+3 arrangements will go some way in shoring up this process, but more work must be done.
As the Indonesian government seeks to up-skill and facilitate the upgrading of human capital, Chinese education and research institutions have a rich role to play. From artificial intelligence to quantum computing, from biotechnology to health sciences, China is rapidly emerging as a prominent technological power – at a pace that could enable it to overtake, if not having already done so, the US across many fronts. Yet such knowledge dividends should be shared with its friends in the South – especially given the young, energetic, and increasingly innovative entrepreneurial scenes in Jakarta, Bandung, and Yogyakarta. More Chinese universities (including those in Hong Kong) should offer targeted scholarships for high-calibre, high-potential Indonesian youth – especially those who lack the means and access to ascend the often-steep career and job ladder back home. Improving social mobility in Indonesia is also in the interest of its neighbouring economies, including China.
Finally, governments in Beijing and Jakarta alike have made sustainability high up in their political agenda. Indonesia is the world’s largest producer of palm oil – which could well become a leading candidate of energy generation qua biofuel; China, on the other hand, has leapfrogged many of its counterparts in the West, with its wind, solar, and hydroelectric infrastructure and technologies.
Closer alignment and cooperation over the development, adoption, and integration of renewable energy into both economies, would go a long way in not only mitigating against their respective contributions towards climate change, but also in providing jobs for operational and maintenance service personnel attached to such structures. Furthermore, a China-Indonesia joint carbon market – which requires extensive but by no means impossible regulatory alignment and engagement. This move is certainly in line with Indonesia’s ongoing efforts in initiating a Mutual Recognition Agreement on carbon trading with numerous countries, including Norway.
Indeed, the market platform can be hosted in Hong Kong, which possesses the most mature and developed legal infrastructure out of all Chinese cities and special administrative regions. The SAR government must correspondingly do more in elevating the visibility and presence of Hong Kong in the Sino-Indonesian conversation.
The Various Challenges Ahead
There are apparent challenges that behoove our cognisance. Setting aside persisting questions concerning overarching stability – which could potentially be ameliorated through more inclusive and socially conscious pro-growth policies on the part of the political elite – Indonesia must contend with the persistence of anti-Chinese sentiments. With a recent nadir being the ignominious episode involving a former governor of Jakarta, inter-ethnic relations in the country have gradually improved, albeit not without troubling undercurrents that could well flare up in elections.
Furthermore, the South China Sea remains the elephant in the room. Recent attempts by the Prabowo administration to adopt an economically oriented approach to disputed territories in the North Natuna Sea have been met with effervescent openness from Beijing, yet have drawn the ire and consternation of many domestic stakeholders. Assuaging these individuals’ worries whilst preventing undue escalation will require a delicate yet complex balancing act.
Finally, Jakarta must carefully juggle its pursuit of a closer relationship with Beijing, alongside its long-standing commitments and ties with Washington. With the erratic, capricious, and strategically inept incumbent administration in the US creating more strategic leeway and room for Jakarta, it is vital that both those in favour of warmer Sino-Indonesia ties carpe diem in fostering more communication and cooperation channels. Beijing should also recognise that for a country long steeped in the non-alignment tradition (indeed, many would dub it the birthplace of such thought), no Indonesian politician worth their salt will put all their eggs in one single basket.
These barriers and impediments are not intractable. Yet tackling them requires a blend of acumen, patience, and attunement to optics from both leaderships. Concurrent to such government-to-government exchanges and dialogues, however, it is equally imperative for the two peoples to talk, exchange, and get to know each other – not as denizens of some abstract faraway entity on a map, but as people with their own aspirations and dreams.
Let us begin with the next generation. I strongly hope that Chinese and Indonesian youth can step up in advancing much-needed people-to-people engagement and earnest collaboration that yields dividends for both sides. The Garuda and the Dragon can indeed dance together.
