China and the US are wooing Indonesia. Beijing has the edge

When US Defence Secretary Lloyd Austin visited Indonesia in November, he pressed his counterpart there about a deal to buy 36 American fighter jets. He left without an agreement.

Just days before, the same Indonesian official, Prabowo Subianto, met with China’s defence minister, and the two countries pledged to resume joint military exercises.

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Located across the southern edge of the South China Sea, Indonesia, the resource-laden nation with a fast-growing trillion-dollar economy and a large population, is a big prize in the geopolitical battle between Washington and Beijing for influence in Asia. And its strategic location, with 17,000 islands straddling thousands of miles of vital sea lane, is a defensive necessity as both sides gear up for a possible conflict over Taiwan, the island democracy that China claims it possesses.

In wooing Indonesia, Beijing increasingly appears to have the edge.

China has delivered sizeable investments to win over a wary populace in Indonesia, pouring billions of dollars into developing the world’s biggest nickel deposits and expediting shipments of Covid-19 vaccines at a critical time. It has been a major partner in the country’s infrastructure push, including building a high-speed train, albeit late and over budget.

China invested more than $5 billion in Indonesia in the first nine months of 2022, compared to around $2 billion from the US.

“They never, ever dictate,” Luhut Binsar Pandjaitan, coordinating minister of maritime and investment affairs, said of the Chinese during a recent interview.

He said that American officials often come with a list of onerous conditions before an investment can be approved. “I told Washington about this: ‘The way you deal with us, forget it,’” said Pandjaitan, who is also the chief lieutenant of Indonesia’s leader, Joko Widodo.

Indonesia, in turn, has delivered for China. The majority Muslim nation has voted in favour of China’s position at the United Nations on Beijing’s persecution of Uyghurs, a largely Muslim group. In the halls of the leading regional bloc, the Association of Southeast Asian Nations, diplomats say Indonesia is a consistent cheerleader for China’s untrammeled economic involvement in all 10 member nations.

Widodo likes to say he remains independent of either country’s influence. But he and his top lieutenants have shown a special affinity for China’s leader, Xi Jinping.

A month after he came to power in the fall of 2014, Widodo travelled to Beijing for his first overseas trip. Since then, he has met Xi one-on-one eight times, and with former President Donald Trump and President Joe Biden on just four occasions in total, according to Teuku Faizasyah, a spokesperson for Indonesia’s Ministry of Foreign Affairs.

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Indonesia’s warmth with China is based in part on the confluence of their leaders’ political interests. From the start of his presidency, Widodo made infrastructure a recurring theme of his tenure, and Xi had made infrastructure investments a backbone of his diplomatic strategy. During his first visit to Beijing, Widodo was ushered onto the high-speed train from Beijing to Tianjin, a port city, and in October 2015, he signed a multibillion-dollar deal for China to build one in Indonesia.

Historically, Indonesia has demonstrated a strong anti-China streak. In 1965, mobs made up of military, paramilitary and religious groups rampaged against Indonesia’s Communist Party, the largest outside China. The mobs killed at least half a million people, including many ethnic Chinese. Hard-line generals accused Beijing of being behind a coup attempt that they said was organised by the Indonesian Communist Party. As a result, relations between Indonesia and China were frozen for decades.

Memories from the slaughter remain, and China’s ambassador to Indonesia, Lu Kang, a former spokesperson for the Ministry of Foreign Affairs in Beijing, appears careful not to stoke smoldering suspicions, choosing diplomatic niceties over nationalistic bluster on social media. On his Twitter account, Lu showcases his visits to the balmy landscapes of Bali and friendly footage of China’s prime minister, Zhou Enlai, visiting Indonesia in 1955, before the tensions erupted.

“China is by far the No.1 trading partner, No. 1 foreign investor and, before the pandemic, the No. 1 source of international tourists,” said Tom Lembong, a former trade and investment minister in the early years of Widodo’s tenure. “Many Indonesian business and political elites believe that China is the relevant superpower and the US is in relative decline — and, geographically, far away.”

Still, China and Indonesia’s relationship is not without challenges.

When Indonesia announced that China would build an 142-km, $5.5 billion high-speed train from Jakarta to Bandung, a provincial capital, the project was promised to be completed by 2019.

However, the project’s financials didn’t make sense from the start, said Faisal Basri, a prominent economist at the University of Indonesia and a critic of the project. Ticket sales wouldn’t provide sufficient revenue, the land was prohibitively expensive and the final station would stop miles from Bandung, forcing passengers to finish their trip by other means.

The project is now three years late, and the cost overrun could be as much $1.9 billion, according to Katadata, a research firm in Jakarta.

A refinancing deal that the Indonesian government and Beijing are discussing is likely to result in China increasing its ownership stake in the rail from 40% to 60%, Basri said.

A trial run to showcase the train during the Group of 20 meeting in November with Xi and Widodo was canceled. A complete set of shiny new carriages shipped from China for the event sit idle in a hangar.

As Washington works to bolster ties in Asia to counter China’s influence, Indonesia remains cautious, careful not to anger Beijing.

Much to the chagrin of the Biden administration, Indonesia has strongly opposed the US plan to arm its ally, Australia, with nuclear-powered submarines. Indonesian officials have said they want to have a nuclear-free zone around its territory. Those boats would need to sail through or past Indonesian waters in a battle between the US and China over Taiwan.

“We would stay neutral” in a US-China conflict over Taiwan, said Santo Darmosumarto, director of East Asia and Pacific Affairs at Indonesia’s Ministry of Foreign Affairs. Indonesia’s neutrality complicates Washington’s expanding efforts in Asia to counter China, said Hugh White, an Australian defence strategist.

“Militarily, access to bases in Indonesia would be a big asset to US forces in a war over Taiwan, but that’s not going to happen,” White said.

In August, Indonesia’s military participated with US forces in a multinational air, land and sea exercise. But while its weapons — many of them from Russia — age, buying replacements from the US appears unlikely. Meanwhile, last February, Indonesia bought 42 Rafale fighter jets from France.

The New York Times