The election has also highlighted the key concerns of Indonesian voters, including the cost of living, employment, and the broader state of democracy in the country. With economic growth and employment being pressing issues, any new government under Prabowo will need to address these domestic concerns while navigating its international relations, particularly with its major trade partners. Given China’s role as Indonesia’s largest trade partner and the complex dynamics of Indonesia-US relations, especially regarding military technology, it remains to be seen how Prabowo’s administration will manage these relationships. The balance he strikes between economic and military considerations could influence Indonesia’s foreign policy direction, but a drastic pivot seems unlikely given the economic imperatives at play.
China is Indonesia’s largest trading partner, with significant trade and investment ties. In 2021, China exported goods worth $60.4 billion to Indonesia, including key products like broadcasting equipment, vaccines, and computers. Indonesia exported $54.5 billion to China, with coal briquettes, ferroalloys, and lignite among the main products. The trade volume between the two countries reached 114.5 billion U.S. dollars in the first ten months of 2023, with China investing 5.6 billion U.S. dollars in Indonesia, marking a nearly 8 percent increase year on year. This trade dynamic is supported by the Regional Comprehensive Economic Partnership (RCEP), which has further facilitated economic cooperation between China and Indonesia, reducing tariffs and opening up new market opportunities.
Chinese investments in Indonesia have been substantial across various sectors. High-profile projects include toll road constructions, significant investments in the digital economy through platforms like Tokopedia (now GoTo), and substantial contributions to Indonesia’s mining and infrastructure development. Notably, companies like Xiaomi have established a strong presence in the Indonesian market, leading the smartphone segment in 2021. Alibaba and Tencent have also expanded their cloud computing infrastructure in the country, indicating the depth of technological and economic integration between China and Indonesia.
Given this context, any pivot in Indonesia’s foreign policy towards the US under Prabowo’s leadership would need to navigate these deep economic ties with China carefully. While the US can offer advanced military technology, China’s role as a key trade partner and investor in critical sectors of Indonesia’s economy, including technology and infrastructure, is a significant factor that any Indonesian government would consider in its foreign policy decisions.
The extensive trade relationships and investments highlight the complexity of Indonesia’s position. As it stands, Indonesia’s economic partnership with China, particularly in trade and technology, is substantial. Therefore, while military technology from the US may be appealing, the economic benefits of a strong relationship with China are likely to remain a priority for Indonesia’s new government.
