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STRATEGIC ASSESSMENT. The Indonesian Trade Ministry confirmed that China will disburse funds in Indonesia worth $2.81 billion, obtained at the 2023 Trade Expo Indonesia (TEI) into the health and education sectors in Indonesia. However, Trade Ministry Director Didi Sumedi could not yet detail in what form the investment would be disbursed.
Investment Minister/Investment Coordinating Board (BKPM) Chair Bahlil Lahadalia on Friday emphasized that currently foreign investment is not only controlled by one country, with China and South Korea being recognized as the most “aggressive” in investing in Indonesia.
He then compared the investments made with European countries and the United States, which were considered “slow” and required more patience to make them happen.
Economic Affairs Coordinating Minister Airlangga Hartarto said China’s Belt and Road Initiative (BRI) is contributing to Indonesia’s economic development. According to Airlangga, China’s investment in Indonesia increases with each passing year, exceeding $3.8 billion in the first half of 2023.
He believes that the BRI will continue to encourage the development of industry and special economic zones in North Sumatra, North Kalimantan, Sulawesi, and Bali.
Over the past two decades, China has been an engine of economic growth capable of hoisting demand for commodities. Between 2001–2012, China’s average economic growth reached double-digits and the international market experienced a commodity boom. Indonesia’s economy gained momentum during the boom, leading to expanded growth and increased exports of commodities.
But the situation has begun to change in recent years. The ongoing slowdown of China’s economy — affected by COVID-19 and the downturn of its domestic property market — is likely to have a significant impact due to lower demand for commodities. China imports over 70 per cent of global iron ore, 72 per cent of aluminium and over 60 per cent of copper. From the demand-side, China’s economic dynamics inevitably affect commodity prices in international markets.
After a decline in COVID-19 cases, there was hope that China would experience an economic rebound and return to pre-pandemic levels. But China’s economic reopening in the second quarter of 2023 has been slower than predicted. China’s economic growth in 2023 is expected to be 5.2 per cent, before further falling to 4.5 per cent in 2024. As Indonesia’s largest trading partner, the impact of China’s weakening economy will be felt in Indonesia’s commodity market.
Chinese President Xi Jinping promised greater access to the Chinese market for foreign companies and new funding for the Belt and Road Initiative (BRI), which began ten years ago, in his speech at the opening of the third Belt and Road Initiative Forum on Wednesday at the Great Hall of the People in Beijing.
China will inject around $100 billion (more than IDR1,500 trillion) in new funding into the BRI through the initiative’s main lenders, the China Development Bank and the Export-Import Bank. The two banks will provide $47.9 billion (CNY350 billion) in financing for projects in this initiative.
Indonesia and China have agreed to increase trade and investment cooperation, Trade Minister Zulkifli Hasan has said. “There was the signing of ten investment collaborations in various fields, including defense, electric cars, energy security, and cooperation on village development and poverty alleviation,” the minister said in a statement on Wednesday.
President Jokowi praised China’s interest to invest in the housing and health sectors for the new capital city (IKN) of Nusantara in East Kalimantan during a meeting with Chinese Premier Li Qiang in Beijing, China, on Tuesday.
“We also ask for your support to accelerate the realization of investment in IKN Nusantara,” Jokowi told Premier Qiang. In addition, the president lauded the positive development of the comprehensive strategic partnership between the two countries over the last decade where China has become Indonesia’s largest trading partner and second-largest investor.
President Joko “Jokowi” Widodo asked China to speed up its investment in the construction of Indonesia’s new capital city as he met with top leaders in Beijing. Jokowi held talks with Chinese President Xi Jinping and Premier Li Qiang in separate meetings during the second day of his three-day visit to Beijing, where China is hosting the third Belt and Road Forum for International Cooperation.
Jokowi aims to inaugurate Nusantara, the name of the new capital which Indonesia is building on Borneo island, before his term ends in October 2024. But his administration has encountered challenges in attracting foreign investors for this ambitious project, which comes with a hefty price tag estimated at U.S. $33 billion.
During his visit to China, President Jokowi received $12.6 billion (IDR197 trillion) from Chinese investors for the development of the country’s electric vehicle (EV) battery industry, green energy, and health technology. At least eleven documents were signed at the Indonesia-China Business Forum held at the China World Hotel, Beijing
Not only the United States, but China is suspected of carrying out cyber espionage operations against a number of Asia-Pacific countries, including strategic trading partners such as Indonesia. China’s state-sponsored campaign, according to the Microsoft Digital Defense Report 2023, “reflects the Chinese Communist Party’s (CCP) dual efforts in gaining global influence and intelligence gathering.” “China also targets its strategic partners,” Microsoft stated.
Chinese cyber threat actors are conducting global cyber operations against private and public entities while expanding their global influence through the Belt and Road Initiative (BRI). “They often target countries that are in line with the Chinese Communist Party’s BRI strategy — including Malaysia, Indonesia, and Kazakhstan,” the company said. Microsoft disclosed that the majority of the intelligence gathered was related to countries dealing with the South China Sea.
President Jokowi met Chinese President Xi Jinping on the sidelines of the third Belt and Road Forum for International Cooperation in Beijing, China, where the two leaders discussed strengthening bilateral cooperation. Jokowi and Xi witnessed the signing of ten memorandums of understanding (MoU) on bilateral cooperation.
According to data from the American Enterprise Institute think tank, China’s commercial investment in BRI projects of more than $90 billion is facing insurmountable challenges.
According to Raffaello Pantucci of the S Rajaratnam School of International Studies in Singapore, the biggest problem for China is the large amount of debt in developing countries. China encouraged the development of a new blueprint for higher-quality cooperation at the third BRI Forum
