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

Bhima Yudhistira, an economist and executive director at the Center of Economics and Law Studies (CELIOS), a Jakarta-based think tank, told DW that the Indonesian President wants to balance trade between the West and China.

“For military equipment, we import a lot from the US and EU. Yet for other goods and commodities, we source many of them from China,” said Yudhistira.

Also read: China Nods to Increase Palm Oil Imports from Indonesia

However, the economist said that Indonesia is struggling to find new export markets for its products, especially as more products come in from China and other global markets contract.

He said the Jokowi’s tour amounted to “asking or begging partner countries to absorb excess supply in Indonesia,” such as crude palm oil, which was affected by a one-month export suspension earlier this year.

“We lost a lot as India now gets their supply from Malaysia. Now, where can we sell those supplies of palm oil? China is most prepared to buy it,” said Yudhistira.

However, Jokowi did succeed on Tuesday in getting China to agree on importing an additional 1 million tons of crude palm oil, while prioritizing imports of agricultural products from Indonesia, according to Indonesian Foreign Minister Retno Marsudi.

As comprehensive strategic partners, Indonesia and China must fill its partnership with cooperation that is mutually beneficial for the two countries, for the region and for the world

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— Menteri Luar Negeri Republik Indonesia (@Menlu_RI) July 26, 2022

Having China as a top trading partner, however, comes with problems. Several ambitious China-funded infrastructure projects were allegedly plagued by problems like substandard planning and negative environmental impacts.

Yudhistira warned that without proper oversight, mega infrastructure projects could bring long-term consequences to the economy.

The economist added it would be a mistake to disregard long-term negative impacts, as China offers plenty of liquidity that Indonesia needs right now.

“We must learn to be selective like Malaysia. They do not say yes to all projects, but rather select which projects will benefit society and the environment.”