This article is co-authored by Yeta Purnama, a researcher at the Center of Economic and Law Studies (CELIOS) and Muhammad Zulfikar Rakhmat, director of the China-Indonesia desk at CELIOS.
On August 23, 2023, Indonesian Foreign Minister Retno Marsudi embarked on a pivotal visit to China, participating in the fifth Joint Commission for Bilateral Cooperation (JCBC) meeting held at the Diaoyutai State Guesthouse in Beijing. Accompanied by a significant delegation, including Indonesia’s Ambassador to China and Mongolia, Djauhari Oratmangun, and Consuls General from Guangzhou, Hong Kong, and Shanghai, Marsudi’s visit underscores a critical moment in the evolving relationship between Indonesia and China.
A notable outcome of this visit is Indonesia’s plan to establish a new Consulate General in Chengdu, Sichuan Province. This move aims to extend Indonesia’s diplomatic presence in China, complementing existing consulates in Guangzhou, Shanghai, and Hong Kong and the embassy in Beijing. Chengdu’s selection as the site for the new consulate highlights its growing importance as an economic and cultural center, promising to enhance bilateral cooperation at the provincial level.
It is important to note that provincial ties between Indonesian and Chinese provinces have increased over the past years. The Center of Economic and Law Studies (CELIOS) recently issued a study explaining Chinese footholds in Indonesian provinces. This move to open a new Consulate General in Chengdu could indicate improved provincial and sister-city cooperation between the two countries.
Meanwhile, during the JCBC meeting, Marsudi and Chinese Foreign Minister Wang Yi discussed several key topics. Wang Yi emphasized a mutual commitment to continuing the “four patterns” of cooperation. These include strengthening strategic communication, consolidating mutual trust, expanding mutually beneficial cooperation, and enhancing mutual understanding through increased exchanges among youth, think tanks, and media from both countries.
Such aspects are not new in China-Indonesia relations. China has approached Indonesia through academic soft power, think tank diplomacy, and media diplomacy. The main objective is to push positive narratives about China in Indonesia.
Wang Yi also underlined China’s intention to maintain and expand cooperation within the framework of the Belt and Road Initiative (BRI), focusing on areas like clean energy, electric vehicles, and digital economy. This aligns with Indonesia’s strategic interests, allowing the country to engage more deeply in major Chinese-led projects while advancing sustainable economic development.
Marsudi, for her part, reiterated Indonesia’s openness to high-quality investments from China, emphasizing the need for adherence to Environmental, Social, and Governance (ESG) standards and United Nations principles. This commitment reflects Indonesia’s focus on economic benefits and ensuring that investments meet high environmental and social standards.
This should be encouraged, especially in cooperation on clean energy. Over the years, Chinese investments in Indonesia have been focusing on dirty energy, such as in the nickel industry. Not only are the environmental impacts massive, but China actively engages in the construction of captive power plants. These issues have impacted many people in the industry.
The mention of ESG during the meeting should be appreciated, given that this has been an issue in Chinese investments in Indonesia.
However, while economic issues were prominently addressed, other critical areas, such as labor rights, were not extensively covered. The focus was primarily on investment and trade, focusing less on workers’ rights and working conditions. Chinese investments in Indonesia have been dominated by the issue of workers, who have not been treated very well. There are many human rights issues among Chinese and Indonesian workers working in Chinese companies in Indonesia.
Addressing these issues in future dialogues is essential to ensuring that economic advancements do not undermine labor standards.
The economic discussions during the visit highlighted significant progress in trade and investment between the two countries. In 2014, Chinese investment in Indonesia was $800 million, but by 2023, it had surged to $7.43 billion, making China the second-largest investor in Indonesia after Singapore. Bilateral trade also saw a dramatic increase, with trade volume reaching $139.26 billion in 2023 and Indonesia achieving a trade surplus of $8.88 billion. This marks a substantial turnaround from a previous deficit and reflects growing economic interdependence.
The discussion also touched upon the operational stability of the Jakarta-Bandung High-Speed Rail project and the accelerated implementation of the Regional Comprehensive Economic Partnership (RCEP). Both sides agreed to explore collaboration in new areas, including electric vehicles, lithium batteries, photovoltaics, and agricultural products, enhance cultural exchanges, and increase people-to-people connections.
While the economic ties have been increasing, several inconsistent policies are still in place, including the recent imposition of 200% tariffs on Chinese products, which could ignite retaliation from the Chinese side. Apart from the need to have proper regulations to ensure that Chinese investment follows environmental and societal protections, there is also a need to ensure the enactment of consistent policies to ensure a mutually beneficial relationship between China and Indonesia.
In conclusion, Retno Marsudi’s visit to China marks a significant step in deepening Indonesia-China relations. The discussions and agreements reached during this visit highlight a similar pattern in China-Indonesia relations during the Prabowo Subianto Era. With the celebration of the 75th anniversary of the relationship, there are several issues that color the relationship. As both countries move forward, ensuring that all aspects of the relationship, including labor rights and environmental responsibilities, are integrated into the broader strategic partnership is crucial. This balanced approach will be key to maximizing the benefits of this crucial bilateral relationship while addressing the challenges and opportunities that lie ahead.
