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Indonesian leader Widodo’s emphasis on development boosts China ties

Boosting economic ties with China will top Indonesian President Joko Widodo’s agenda at the G20 summit in Hangzhou in September rather than wider Southeast Asian concerns about issues such as territorial disputes in the South China Sea, analysts say.

He will be seeking to build on commitments to economic and trade cooperation announced following a meeting with President Xi Jinping at last year’s G20 summit in Antalya, Turkey.

Widodo and Xi have a lot in common as the leaders of populous developing nations with bad reputations for corruption. The Indonesian leader is a former entrepreneur and governor of Jakarta who rose from a humble background to the top office in 2014 on a wave of public support for his promises of reform and reputation as a down-to-earth, clean politician. Xi is also known for his reformist agenda and an unprecedented crackdown on graft.

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“Jokowi (Widodo’s nickname) seems to have a lot of respect for Xi as somebody who is a can-do reformer, which is how Jokowi views himself … and they both focus on development,” said Aaron Connelly, a research fellow and Indonesian affairs specialist at the Lowy Institute for International Policy in Sydney.

Indonesia, which sees itself as a rising power in the region, is looking to China for inspiration as it strives to accelerate economic growth.

“Indonesian nationalists within the Democratic Party of Struggle (PDI-P), the political party serving as the vehicle for Jokowi’s presidential bid, look up to China as an Asian role model that has successfully modernised itself and competed effectively against established Western powers that are clearly more privileged by the current global economic rules and institutions,” said Pierre Marthinus, executive director of the Marthinus Academy, a Jakarta-based international relations think tank.

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Their common interest in development is the key link between the two leaders. Xi was the first foreign leader Widodo met on his first overseas trip as Indonesia’s president in November 2014. Widodo was also greeted warmly by Xi in Beijing in March last year, when they pledged to increase maritime cooperation, with Xi promising to support the development of Indonesia’s maritime infrastructure through funding from the Asian Infrastructure Investment Bank and the Silk Road Fund.

Indonesia is the only Southeast Asian member of the G20. But Marthinus said that unlike his predecessor as Indonesian president, Susilo Bambang Yudhoyono, who promised to represent the interests of other Association of Southeast Asian Nations (Asean) member states at G20 summits, Widodo was not interested in “summit diplomacy”.

“[Indonesia] will be focusing more on its own strategic interest and aspirations as a rising power,” he said.

Widodo’s centrepiece policy – to build Indonesia into the “global maritime fulcrum” – places great emphasis on accelerating Indonesia’s economic growth, securing its borders and protecting the resources, including fish, oil and gas, within its exclusive economic zone. Indonesia’s relations with China will have a major impact on all three areas.

“Jokowi regards China as an important partner, particularly in terms of infrastructure investment,” Connelly said. “He won’t be going to make an impact on the summit, he’ll be going for the bilateral opportunities.”

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China, meanwhile, is well aware of Indonesia’s rising influence and eager to capitalise on it.

“Indonesia, with the biggest population in Asean, has great influence in the region,” said Du Jifeng, an expert on Southeast Asian politics at the Chinese Academy of Social Sciences. “China has always put great emphasis on its relations with Indonesia.”

Situated between the Indian and Pacific Oceans and abutting the South China Sea, Indonesia is the largest archipelagic country in the world. It is of global significance geopolitically because the Strait of Malacca, a key shipping lane which carries about 40 per cent of world trade, runs between Indonesia, Malaysia and Singapore.

In 1990, China and Indonesia resumed diplomatic relations that were suspended 23 years earlier over Beijing’s alleged support for a coup attempt by Indonesian communists.

Trade between the two countries has been on the rise since then, especially after the implementation of Asean–China Free Trade Area in early 2010, and topped US$50 billion in 2014 according to International Monetary Fund figures.

Indonesia is also expected to be the largest Southeast Asian recipient of the US$87 billion in foreign infrastructure investment China has committed to under its One Belt, One Road Initiative. Chinese investment in Indonesia rose 400 per cent year on year in the first quarter of this year.

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But the bilateral relationship has also experienced occasional strains, with the two countries clashing in recent months over Indonesia’s crackdown on Chinese fishing boats caught fishing near Indonesia’s Natuna Islands, in the South China Sea.

Indonesia has in recent years tried to stay out of territorial disputes in the South China Sea involving China and several other Southeast Asian countries. But when responding to Indonesia’s crackdown on Chinese fishing boats in June, Beijing said they had been operating in China’s “traditional fishing grounds”.

In a televised state of the nation address in mid-August, Widodo vowed to defend “every inch” of Indonesian territory.

While it won’t be the top agenda item, Widodo is likely to raise the issue when he meets Xi in Hangzhou.

“There will efforts from Widodo’s side to come to some sort of renewed understanding as to an equilibrium between China and Indonesia in the Natuna Sea,” Connelly said.

“Indonesia has been very frustrated about [China’s] failure to clarify the nine-dash line,” he added.

While both sides have signalled they want to de-escalate the confrontation, China’s longstanding refusal to clarify its maritime claims in the South China Sea, despite repeated requests from Indonesia, has made the issue a sticking point in bilateral relations.

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“Jokowi believed that if Indonesia did not play a particularly active role organising regional opposition against the nine-dash line, then China would leave Indonesia alone,” Connelly said, keeping such disputes away from Indonesia’s exclusive economic zone. “But that hasn’t happened. There have been [such incidents] three times since March. That dispute is ongoing.”

On top of its own disputes with China, both Connelly and Marthinus said Indonesia was also becoming increasingly wary of China’s wider actions in the South China Sea.

“Indonesia is very eager to accommodate the rise of Chinese power, more so than any other country in the region,” Connelly said. “But what they are most concerned about is the nature of that power.

“If China continues to behave in that kind of way, many Indonesian officials are concerned about where that leads in terms of its relations with Indonesia in medium and long term.”

Marthinus added many Indonesian academics had similar concerns.

“Three out of the four main Indonesian think tanks covering international relations issues are slowly shifting towards a more critical stance on Chinese actions in the South China Sea,” he said.

In an interview with Japan’s Yomiuri newspaper published in March, Widodo said China’s claims to most of the South China Sea had “no legal foundation in international law”. His foreign policy adviser, Rizal Sukma, later said Widodo had been talking about the nine-dash line.

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In a statement issued after a landmark ruling last month by the Permanent Court of Arbitration in The Hague that denied China’s historical claims over the South China Sea, Indonesia called for all parties to exercise self-restraint and to refrain from any action that could escalate tensions, as well as “to protect the Southeast Asian region particularly from any military activity that could pose a threat to peace and stability”. It also urged efforts to “respect international law”, including the UN Convention on the Law of the Sea, to which China and the Philippines, which brought the case against China, are signatories.

The statement was criticised by Chinese scholars and former diplomats as a departure from Indonesia’s impartial stance on the disputes, the Jakarta Post reported.

The two countries’ flagship economic cooperation project has also run into difficulties. A US$5.5 billion Chinese high-speed rail project in Indonesia, linking Jakarta and Bandung, was halted in January after China failed to submit documents for approval. An Indonesian official complained that some of the documents submitted were in Chinese and Indonesian officials could not read them, the Jakarta Post reported.

The high-speed rail project resumed in March but ran into trouble again in April when five Chinese workers were found to be working on it without proper work permits.

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China’s reputation as an investor in Indonesia had already been tarnished by an earlier project – a coal-fired electric power plant in Celukan Bawang in North Bali, which was criticised for being poorly managed and also employing illegal Chinese labour.

Its latest high-profile investment in Indonesia will have to be more carefully managed.

“This is China’s chance to change that impression,” Connelly said. “If it goes badly, it will have very negative impression for years to come.”

Sino-Indonesian relations timeline

1950 – China and Indonesia establish diplomatic relations

1965 – Following failed coup attempt, large-scale killings of communists, ethnic Chinese and alleged leftists are perpetrated by Indonesian death squads linked to army

1967 – Suharto becomes president of Indonesia and severs ties with China

1985 – A memorandum of understanding for the re-establishment of direct Sino-Indonesian trade is signed between the Indonesian Chamber of Commerce and the China Council for the Promotion of International Trade

1990 – Diplomatic relations between the two countries are restored

1994 – Taiwanese President Lee Teng-hui visits Indonesia, angering the government in Beijing

1998 – Ethnic Chinese are targeted in Indonesia during the riots triggered by the Asian financial crisis. The Chinese government expresses concern and asks Indonesian authorities to investigate

2005 – President Hu Jintao visits Indonesia and signs a Sino-Indonesian strategic partnership agreement

2009 – Indonesia detains 75 Chinese fishermen off the Natuna Islands

2010 – Indonesia submits a letter to UN challenging China’s expansive territorial claims in the South China Sea

2011 – First joint military training between the People’s Liberation Army and Indonesia’s armed forces

2012 – Indonesian President Susilo Bambang Yudhoyono visits China and Sino-Indonesian deals worth US$17.65 billion are signed

2015 – Indonesian President Joko Widodo issues a joint statement with President Xi Jinping on strengthening the comprehensive strategic partnership between their countries during visit to China

Xi attends commemoration marking the 60th anniversary of the Asian-African Conference in Bandung, Indonesia