China growing influence ‘good for RI’

Lilian Budianto, The Jakarta Post, Jakarta | Fri, 03/19/2010 10:36 AM

Indonesia and China have increasingly boosted economic and defense ties amid the absence of attention from the US, observers and officials say.

China and Indonesia will celebrate their 60th anniversary of bilateral relations on April 13 as Chinese Premier Wen Jiabao will visit Jakarta later in April, less than a month after the country hosts US President Barack Obama.

China’s influence in Indonesia has been said to have grown after both countries restored diplomatic ties in 1990, marked by the domination of Chinese products and investment in local industries.

Indonesia and China signed a strategic partnership in 2005 during the visit of President Hu Jintao to Jakarta in 2005. Bilateral relations have run at a rapid pace since then, with Chinese investors now replacing South Korean and Japanese investors.

Indonesia and China bilateral trade stood at US$31.5 billion in 2008, surpassing the Indonesia-US 2008 trade figure of $21 billion.

Teuku Faizasyah, foreign ministry spokesman, said Indonesia had increasingly embraced China in its foreign agenda because Jakarta wanted to secure regional stability amid the rise of China’s economy and defense.

China’s defense budget stood at $70 billion in 2009 — the second largest after the US. While in 2008, Jakarta and Beijing began joint military production to boost Indonesia’s ailing defense industry.

“The rise of China will benefit the region because a more prosperous China means better regional security,” Teuku said.

Former foreign minister and current presidential adviser Hassan Wirajuda said the rise of China was also an opportunity for Indonesia because it offered a vast market for local products.

“Indonesia’s strategic partnership with China is also an effort to ensure the rise of China is beneficial to us,” he said.

Although Jakarta said the rise of China would ensure opportunities regarding Indonesian products, experts have said it would pose a threat to the largest economy in Southeast Asia.

Indonesia and China bilateral trade was in favor of China. Indonesia’s exports to China was worth $14.2 billion and imports from China was worth $17.3 billion in 2008.

The trade deficits have sent some bad signals into the China-ASEAN Free Trade Agreement with local businessmen opposing the inflow of more Chinese products into domestic markets.

“Economic relations will become the main highlight when we discuss Indonesia’s foreign relations with China,” Syamsul Hadi said, an international relations lecturer at the University of Indonesia.

“China is vying Indonesian markets and looking to secure investment in energy sectors to support its domestic growth. Jakarta must make sure the cooperation will be mutually beneficial,” he said.

In 1967, Indonesia’s diplomatic relations with China were suspended in the aftermath of a failed coup in 1965 to oust then president Sukarno. Sukarno’s successor, Soeharto, blamed the upheaval on China-backed Indonesian Communist Party (PKI).

For two decades now, Indonesia and China have not only cooperated bilaterally with a record trade figure, but also at the multilateral forums of the ASEAN+3 and the East Asia Summit. The US is not a member of these forums but has expressed interest in joining in a move experts have said was to contain China’s influence in Asia.

Hassan said Jakarta would not tilt toward any particular country in determining the course of Indonesian foreign policy. “We will maintain the free and active foreign policy,” he said.

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