A Decade of “Belt and Road” in China-Indonesia Cooperation

Indonesia has a very important position in China's regional diplomacy. The formation of a comprehensive strategic partnership between the two countries is in line with the interests of the nation, region and global community.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Satu Dekade “Sabuk dan Jalan” dalam Kerja Sama China-Indonesia

KOMPAS/HERYUNANTO

Illustration

On October 3 2013, Chinese President Xi Jinping introduced the concept of ”21st Century Maritime Silk Road” in his speech at the Indonesian Parliament.

Over the past decade, collaboration between China and Indonesia in the Belt and Road Initiative (BRI) has resulted in a number of significant achievements. This could even be used as a model for cooperation with other developing countries.

According to a study conducted by Peking University in 2018, Indonesia is considered as one of the 11 partner countries that has achieved the highest level of cooperation within BRI. It can be said that the BRI cooperation between China and Indonesia is broad and deep.

In the field of policy coordination, the two countries have signed a memorandum of understanding to enhance synergy between BRI and the Global Maritime Axis. In June 2021, China and Indonesia introduced a mechanism for high-level dialogue cooperation. This serves as a catalyst for cooperation covering political, economic, cultural, and maritime dimensions.

Both countries also frequently hold consultations to overcome challenges in practical collaboration. This offers policy support for the implementation of large-scale projects.

In the infrastructure sector, China actively supports the "sea toll" development initiative proposed by President Joko Widodo and is involved in the development of strategic infrastructure projects in Indonesia. This includes highways, railways, ports, telecommunications networks, and more. The Jakarta-Bandung High-Speed Train is one of the flagship projects under the BRI cooperation umbrella.

Chinese companies have also contributed to providing a quarter of the total power generation capacity in Indonesia through the construction of power plants. The second largest dam in Indonesia, Jatigede Dam, completed in 2015, is also a form of cooperation between China and Indonesia.

For the past decade, the collaboration between China and Indonesia in the Belt and Road Initiative (BRI) has resulted in a number of significant achievements.

In terms of trade and investment, in 2013, the total trade in goods between China and Indonesia reached 52.45 billion US dollars. Then it jumped to 149.1 billion US dollars in 2022. The structure of bilateral trade between the two countries has also become more balanced compared to previous years.

Investment takes center stage in practical cooperation between the two countries. Throughout 2022, the Indonesian government noted that China's investment realization in Indonesia reached 8.2 billion US dollars. Indonesia is China's second largest investment destination in ASEAN.

China and Indonesia are collaborating in the fast-growing digital realm. Digital products from Chinese companies such as Xiaomi, Vivo, Oppo, Lenovo, and Huawei are booming in the Indonesian market. Out of the top 100 most downloaded apps in Indonesia in 2018, more than 30% were products of collaboration between Chinese and Indonesian companies.

In terms of financial connectivity, both countries have expanded their local currency swap agreement. Indonesia is also a founding member of the Asian Infrastructure Investment Bank (AIIB). In addition, the Silk Road Fund has committed to invest 20 billion yuan in the Indonesia Investment Authority (INA).

In terms of inter-society relations, prior to the Covid-19 pandemic, China consistently held the top ranking as Indonesia's primary source of tourism, with 2.07 million Chinese tourists visiting Indonesia in 2019.

Exchanges between regional governments are also running smoothly. A total of 28 pairs of provinces and cities from the two countries have formed sister city relationships.

Chinese Prime Minister Li Qiang (center, left) and Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan passed through the entrance as they were about to try riding the Jakarta-Bandung high-speed train on Wednesday (6/9/2023).

In 2019, more than 15,000 Indonesian students pursued their education in China. This makes China the second most popular destination for Indonesian students who want to study abroad. Amid the Covid-19 pandemic, China has provided more than 300 million vaccine doses to Indonesia. This multi-faceted effort highlights the depth of collaboration and the importance of inter-community relations that have strengthened bilateral relations.

Reflection

Over the past decade, several factors have contributed to the success of BRI projects in Indonesia. First, the alignment between BRI and Indonesia's domestic development agenda, such as Indonesia 2045, Ibu Kota Nusantara, and industrialization. This alignment has also created a strong foundation for cooperation in various fields, such as sustainable infrastructure, renewable energy, and inclusive development.

Basically, China's role is not to plan infrastructure projects and direct economic modernization in Indonesia, but rather as a collaborator that responds to Indonesia's requests and according to China's capacity. China plays a supporting role, not a leading one, in these efforts.

Second, the principles of Joint Consultation, Joint Contribution and Joint Benefits have formed a strong basis for BRI cooperation. This approach reflects an open and inclusive spirit. This is in accordance with the Chinese philosophy of balance between truth (righteousness) and benefit (benefit).

This principle also emphasizes the concept of harmony in diversity rooted in the cultural heritage of China and Indonesia. This principle not only legitimizes the BRI, but also ensures its long-term sustainability.

Third, BRI's flagship projects, such as the Jakarta-Bandung High-Speed Train, the Comprehensive Regional Economic Corridor, and the Twin Parks of Two Countries, have become milestones in the evolution of this cooperation. These projects reflect the growing demands of development and the deepening interdependence between the two countries. In addition, they also demonstrate increasing inclusivity, making BRI's efforts open to various investors from various sectors.

Essentially, China's role is not to plan infrastructure projects and direct economic modernization in Indonesia, but rather to collaborate in response to Indonesia's demands, and in accordance with China's capacity.

Fourth, providing public services and contributing to the local community are important elements in the success of BRI projects. Chinese companies investing in Indonesia have increased their understanding of social and environmental responsibilities and actively participate in various charitable services, including supporting education, community health programs, environmental conservation efforts, and others.

These efforts are documented in the Chinese Company Social Responsibility Report in Indonesia prepared by the China Chamber of Commerce in Indonesia in 2022.

China-Indonesia cooperation within the context of the BRI has resulted in many positive achievements. However, it should be noted that challenges and problems still exist. In facing the complexity of infrastructure projects and environmental impacts, Indonesia and China need to collaborate further to ensure the sustainability of their cooperation.

In addition, transparency and involvement of civil society in BRI projects should be improved to minimize investment risks and enhance the sustainability of existing cooperation.

Future potential

BRI China-Indonesia cooperation could have wider implications. In the future, this partnership has the potential to go beyond bilateral benefits and contribute to regional integration as well as global problem solving in various aspects.

First, promoting the resolution of global challenges. China must enhance cooperation with partner countries, such as Indonesia, to provide innovative insights on global issues, including climate change, environmental preservation, and food security. This collaborative effort will foster real cooperation and help address emerging problems in global governance.

Secondly, China must participate in shaping global governance norms. China must continue to collaborate with developing countries and partners from the Global South to achieve a balance in global governance norms. So far, global governance norms have tended to prioritize standards set by developed countries.

KOMPAS/AHMAD ARIF

Participants in the 2018 Indonesia-China student exchange. Kompas/Ahmad Arif

Collaboration between China and other developing nations as partners can create opportunities to establish global governance norms that better support the rights and needs of developing countries.

Third, reducing trade barriers and improving cooperation in industry and supply chain. Currently, China and ASEAN are actively negotiating the China-ASEAN Free Trade Area 3.0 with the aim of expanding cooperation in new sectors such as digital economy and green economy.

All parties involved in BRI projects must also develop a more balanced financing structure for investments. Careful monitoring and assessment of debt quality is crucial to ensure long-term sustainability.

Fourthly, achieving modernization together for the benefit of the people. China and Indonesia, with large populations and similar levels of development in the modernization process, face similar development challenges. The two countries have reached significant consensus in building the China-Indonesia Community of Shared Destiny and have formulated a framework for the Global Development Initiative. The evolution of BRI in the future can make a substantial contribution to reducing poverty, revitalizing rural areas, and financing development in various sectors for both countries.

Indonesia holds a very important position in China's regional diplomacy. For the past decade, China and Indonesia have established extensive and profound cooperation. The formation of a comprehensive strategic partnership between the two countries is in line with the interests of their respective nations, the region, and the global community.

In the constantly changing global landscape, the China-Indonesia BRI partnership is expected to continue providing benefits for both countries and their citizens, and play a critical role in promoting prosperity regionally and globally.

Xue SongAssociate Professor of Institute of International Studies at Fudan University, Shanghai