Indonesia’s Delicate Dance Between China and the US

In late June, Jakarta and Washington began construction on a $3.5 million maritime training center in Batam, close to Singapore and the southern entrance to the Straits of Malacca. The development is strategically significant due to the planned center’s proximity to trade routes running between the South China Sea and the Straits. The move is also the latest sign that the U.S. is stepping up its presence in Indonesia in order to counter China’s growing influence in Southeast Asia.

During the training center’s ground-breaking ceremony on June 27, U.S. Ambassador Sung Kim said that the initiative was part of Washington’s ongoing efforts to partner with Indonesia in fighting transnational crime, which includes the provision of equipment, support, training, and technical assistance to the Indonesian maritime security agency (Bakamla).

“As a friend and partner of Indonesia, the United States remains committed to supporting Indonesia’s leading role in advancing regional peace and security by fighting domestic and transnational crimes,” he said.

The center builds on the increasing U.S. security engagement with Indonesia. According to the U.S. State Department, Indonesia received $39 million in aid from the U.S. last year for military and security assistance, training, and education. Earlier, Indonesia also received $5 million in assistance to build up its defense resource capacity, including strengthening maritime security, between 2016 and 2020. The Indonesian Armed Forces and U.S. Army Pacific also regularly conduct the Garuda Shield military exercises, which focus on peace support training capacity and stability operations.

The maritime training center, situated at the strategic meeting point of the South China Sea and Malacca Strait, can be considered as an American effort to reaffirm Washington’s status as Indonesia’s top defense partner and to contain China’s influence in Southeast Asia.

Since U.S. President Joe Biden took office in January, his policy toward China has shifted in some ways. “I’m not going to do it the way Trump did,” he said. “We are going to focus on the international rules of the road. We need not have a conflict but there is going to be extreme competition.” At the same time, the policies remain in many ways unchanged from the Trump era.

The continuing competition between the U.S. and China has put Indonesia in a difficult position. But Indonesia enjoys a vital strategic position in the region, and could benefit as the two superpowers seek to strengthen their presence in Southeast Asia.

So far, Indonesia has been relatively successful in maintaining bilateral relations with the two world powers and maintaining its long-standing principle of a “free and active” foreign policy. Relations are also complementary. According to Collin Koh, a researcher at the Institute for Defense and Strategic Studies in Singapore, Indonesia’s relations with China are overwhelmingly economic, while it “is closer to the U.S. in terms of defense and security.”

However, China is also trying to improve defense relations with Indonesia, including assisting in the operation to lift the KRI Nanggala submarine that sank off the coast of Bali in May. In mid-2020, Defense Minister Prabowo Subianto met with Chinese Defense Minister Wei Fenghe to discuss cooperation in handling COVID-19, including the manufacture of China’s Sinovac vaccine, hospital ventilators, and sterilization and disinfection robots for health isolation rooms, in addition to other health care products.

While China’s defense engagement with Indonesia still lags behind the U.S., it excels in investment and trade. China is the second largest investor in Indonesia after Singapore, with an investment value of $4.8 billion. Even last year, in the midst of the COVID-19 pandemic, Chinese investment increased by 9 percent. China was also Indonesia’s largest trading partner in 2020 with a trade value of $71.4 billion, while trade with the U.S. came to just $27.2 billion.

As Chinese Foreign Minister Wang Yi pointed out during the inaugural meeting of the Dialogue Mechanism of High-Level Sino-Indonesian Dialogue in Guiyang in June, “China has been Indonesia’s largest trading partner for 10 consecutive years and remains Indonesia’s second largest source of investment.”

As China-U.S. tensions continue to increase, President Joko Widodo must be able to engage proactively with the two hegemons. While China and Indonesia’s economic cooperation remains robust, surveys conducted by Pew Research report have found that 48 percent of the public believes that Chinese investment will only have a negative impact on society, especially on levels of employment. Recent xenophobic sentiment has strengthened as China’s economic activities in the country have grown, especially with the influx of Chinese workers into the country.

Taking into account the strategic position it enjoys in an era of China-U.S. competition, Indonesia needs to maximize the existing potential of its relations with both superpowers in order to safeguard its prosperity and sovereignty over the long term. Indonesia should improve military ties with China and investment with the United States. Only be creating a greater balance in its relations with the two superpowers can Indonesia make “free and active” the reality of its foreign policy, rather than just the slogan.