Can Indonesia Weather A Global Recession by Working Closer with China?

KOMPAS.com - Indonesian President Joko “Jokowi” Widodo is visiting China, Japan, and South Korea this week to boost trade and investment partnerships with Jakarta’s closest economic partners amid warnings of a global recession.

Indonesia is the largest economy in Southeast Asia and hopes to chair the Association of Southeast Asian Nations (ASEAN) in 2023. Indonesia also hosts the G20 summit in November.

During Jokowi’s visit to Beijing on Tuesday, July 26, the president met with his Chinese counterpart Xi Jinping and Premier Li Keqiang.

A joint statement released by the Chinese Foreign Ministry hailed both countries setting an example “of major developing countries seeking strength through unity and win-win cooperation.”

On Wednesday, July 27, Jokowi continued to Japan for talks with Prime Minister Fumio Kishida. The President expressed condolences for the death of former Japanese Prime Minister Shinzo Abe, lauding the late Japanese leader’s efforts to improve strategic relations with Indonesia.

Also read: China, Indonesia Agree to Boost Relations during Beijing Meeting

His trip will conclude on Thursday with a visit to South Korea that includes a stop at the Hyundai Motor Company’s research and development center, before talks with President Yoon Suk-yeol.

Hyundai recently opened its first manufacturing plant in Indonesia, which will become the “manufacturing center for Southeast Asian markets” and includes the company’s first battery electric vehicle production facility in the region.

Joining Jokowi on the tour is Indonesia’s minister of state-owned enterprises, Erick Thohir, the head of the investment coordinating board (BKPM), Bahlil Lahadalia, as well as high-ranking business tycoons.

China the top partner

Veronika S. Saraswati, an expert on China studies at the Jakarta-based think tank Center for Strategic and International Studies (CSIS), said Indonesia was prioritizing increasing its strategic and economic partnerships with China.

“Both Indonesia and China bilaterally, as well as ASEAN and China, have been establishing long-term strategic partnerships. We’ve seen that our trade with China has steadily increased over time,” Saraswati told DW.

Saraswati added that Indonesia and China have a long diplomatic and trade history and that Jokowi seeks to strengthen this while negotiating the current “chaotic” economic climate.

China is Indonesia’s largest trading partner, with a total value reaching $110 billion in 2021. China is the third-biggest investor in Indonesia after Singapore and Hong Kong, with investment value totaling up to $3.2 billion in 2021.

Indonesia tries to increase exports

Dok. Sekretariat Presiden Indonesia's President Joko widodo (L) meets with China's President Xi Jinping (R) at Villa 14, Diaoyutai State Guesthouse, Beijing, Tuesday, July 26, 2022.