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China-Indonesia after 60 years of diplomatic relations

Updated On: Mar 31, 2010

Jakarta Post, 31 Mar 2010

The CSIS held a joint seminar recently with a prestigious institution in China, the China People’s Institute of Foreign Affairs (CPIFA), in commemoration of the 60th anniversary of diplomatic relations between China and Indonesia.

In this effort the CSIS was supported by PERMIT (Indonesian Chinese Entrepreneurs Community). The purpose of the seminar was to examine ways to deepen and expand China-Indonesia relations.

China is important to Indonesia because it has become the most important country in East Asia, while its rapid growth will have an impact on the region and the world in a big way over the next 10-20 years. The impact of its economic strength will change its strategic importance in the future.

Indonesia, as with other countries in the region, has been benefiting from economic relations with China. Trade between China and Indonesia increased dramatically in the first two months of 2010 (with a more than 90 percent increase in exports from Indonesia to China and a 60 percent increase in exports from China to Indonesia), now reaching just over US$30 billion annually.

Yes, there is the China-ASEAN Free Trade Agreement (CAFTA), which could create problems for several sectors of Indonesian manufacturing, but in the end economic growth will be the answer. China is aware of these possible impacts, and together with Indonesian stakeholders is willing to do a lot more fair trade with and investment in Indonesia to overcome these problems.

The Chinese trade minister will be coming to Jakarta earlier than Premier Wen Jiabao and will take businessmen from the Chinese machinery and electronic sectors to look for projects in Indonesia.

China, which has extensive experience in infrastructure development, is also interested in investing in this critical part of the Indonesian economy.

Indonesia is important to China because it is the biggest country in Southeast Asia and is an informal leader of the ASEAN. Indonesia’s economy has markedly improved in recent years and together with India and China achieved growth during the crisis of 2008/2009 — and is expected to sustain this growth into the future. Indonesia has consolidated its democracy on its own, and although it is not yet a mature one, a stable and working democracy has evolved.

Compared to instabilities in some other ASEAN member states, Indonesia has achieved solid stability and dynamism after 10 messy years caused by financial, economic and political crises that began in 1997.

The two countries also realize the importance of cooperation with each other in the region and 

globally. In East Asia, China and Indonesia have focused their cooperation on the APT (ASEAN Plus Three) as the East Asian institution for functional cooperation, particularly in the field of economics, while in the EAS (East Asia Summit) they see the emergence of a forum for leaders’ strategic dialogues, to which both USA and Russia could be invited.

Because of the confusion and duplication caused by the emergence of the two East Asian institutions (APT and EAS), both sides have agreed that the ASEAN, and especially Indonesia, should decide on a more definite division of labor between the two, so that they can move forward again after a period of confusion.

If this confusion can be overcome, the US could be invited (together with Russia) into the EAS, since they have shown an interest in participating more fully in East Asia. Both also think the APEC is still important for trans-Pacific economic cooperation, and that it should be supported in the future.

At a global level, an informal consultation could be started between the two before the G20 Summit, 

in order that decisions at the Summit are more compatible with the interests of East Asia and developing countries. Indonesia believes these consultations could be extended in the future to informal ones among East Asian members of the G20. This would strengthen the input from East Asia and help socialize the decisions to others in the region.

For all this to happen, consultations between the two countries should be increased and held at regular intervals involving all levels and sectors of Chinese and Indonesian societies.

We also have to better understand each other’s developments and challenges because only then can we expect to make correct assessments and judgments about each other’s policies, and in that way strengthen the relationship.

For that purpose, the efforts of PERMIT are not only confined to activities of the private sector — although that should be its main focus, for example by opening offices for assisting entrepreneurs on both sides to facilitate two-way trade and investment, and preparing them with information about the country, the customs and people with whom they are going to work — but also by providing scholarships to Peking University to assist Indonesian students studying there.

The Chinese Government is also going to open six Confucius Institutes for language training  in Indonesia, which will be critical to understanding China.

The recent CSIS-CPIFA seminar was an excellent exchange, in which we learned a lot about each other. This could serve as a model for future efforts to enhance mutual understanding and appreciation.

Jusuf Wanandi
About the author: 

The writer is deputy chairman of the Centre for Strategic and
International Studies (CSIS) Foundation.

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