- The area that China claims in the South China Sea crosses into the northern reaches of Indonesia’s Exclusive Economic Zone. Exploitation of that area by China could damage Indonesia’s economy.
- Indonesia needs to bolster its naval force if it is to ensure the security of its waters in the event of a maritime conflict.
- Indonesia has been cautious in accepting Chinese investment, but there are still concerns that those economic ties could lead to Indonesia handing over political power.
- Maintaining the relationship with China will be especially important to preserve dialogue and avoid escalations in the South China Sea.
- Bilateral ties with China could be threatened by political divisions and ethnic tensions in Indonesia, as well as Beijing’s treatment of Uighur Muslims.
China is perhaps the most important economic partner for Indonesia, being both the second-largest investor in the country and the leading market for exported goods. Beyond economic ties, however, the relationship with Beijing is relatively weak and Jakarta often sees China as a strategic challenge. This paper looks at some of the challenges that China might pose to Indonesia in the longer term.
The South China Sea and “Nine-Dash Line”
China’s attempts to exert ever greater control over the South China Sea are perhaps the most obvious long-term security concern for Indonesia. As can be seen in the map below, China uses the so-called “Nine-Dash Line” to outline its territorial claim over much of the South China Sea. That claim includes a significant portion (around 83,000 square kilometres) of Indonesia’s Exclusive Economic Zone (EEZ), lying to the north of the Natuna Islands. The waters surrounding the Natuna Islands contain valuable oil and gas fields as well as recently established fishing grounds.
By cementing its presence in the South China Sea, China threatens Indonesian sovereignty over that area, and has already resulted in economic damage from instances of illegal, unregulated and unreported (IUU) fishing in Indonesia’s EEZ. In a bid to deter potential future incursions from China, Indonesia has recently taken steps to reinforce its sovereignty in the region. Those measures include establishing a military base on Natuna Besar Island, renaming the EEZ north of the Natuna Islands as the North Natuna Sea and establishing fishing grounds in the northern waters.
While the direct implications of China’s growing control in the region are primarily economic for Indonesia, the risk that some future regional dispute might escalate to a military conflict is also a concern. In the context of the South China Sea, the United States and other Western countries frequently embark on “freedom of navigation” exercises. During those exercises, the US Navy, for instance, would sail within twelve nautical miles of Chinese-claimed artificial islands without prior notice or authorisation. China has reacted strongly to those exercises by increasing its military build-up on the artificial islands. It has also recently deployed DF-26 intermediate ballistic missiles, capable of sinking US ships, to the South China Sea. Escalating conflict in the South China Sea could have wider implications for maritime security and threaten the secure sea lines of communications, which Indonesia relies upon for the bulk of its oil and gas imports.
To mitigate that potential maritime threat, Indonesia is spending significant sums to expand its naval capabilities. According to Dr Peter Chalk, an independent international security analyst and maritime security expert, Indonesia would need 300 vessels operating around the clock to adequately protect and monitor its three million square kilometres of archipelagic waters. The Indonesian Navy (TNI-AL), however, only has approximately 178 vessels in active service. It is aiming to have up to 274 craft in service by 2024 under the Minimum Essential Force (MEF) programme, but it is highly unlikely that that target will be achieved, given the many challenges surrounding the programme, including budget constraints and management issues.
The planned expansion of the Indonesian submarine fleet may help to offset weaknesses resulting from low ship numbers in the TNI-AL. Indonesia recently received the second of three Nagapasa-class submarines (Type 209/1400) from South Korea, which will operate alongside two German Cakra-class submarines (Type 209/1300) from the 1980s. Under the MEF programme, the plan was to have at least twelve submarines operational by 2024, but that has since been revised down to ten.
In the context of the South China Sea dispute, a formidable submarine force will be beneficial if tensions escalate into military confrontation between China and the US. First, submarines act as a force multiplier, as a single hidden submarine warrants a disproportionate response from the opposing navy. If military confrontations escalate, the threat of undetected submarines patrolling the waters surrounding the Natuna Islands could work to deter a Chinese military presence in those waters, even though the TNI-AL would be dwarfed by the Chinese navy, which is the world’s second-largest. Second, submarines are effective tools of sea denial and sea control, which will be important in safeguarding vital chokepoints, such as the Malacca Strait, from attempts by foreign navies to control or blockade them. Finally, submarines can be used for covert operations much more effectively than surface ships, allowing Indonesia to maintain a closer watch over China’s activities in the South China Sea. It is also worth noting that China’s recent advancements in anti-submarine warfare capabilities indicate that Beijing recognises submarine fleets as a significant threat to its control of the region’s waters.
Is China an Economic Threat?
In a poll conducted in 2017, 22.7% of Indonesian respondents named China as the country that poses the biggest threat to Indonesia. The public perception of a potential Chinese threat, however, is not necessarily modelled in the sense of a traditional military threat. As noted by Trissia Wijaya, a doctoral candidate at Murdoch University, some Indonesians view their country’s economic ties with China as a negative force. They fear that those ties could give the Chinese Government the power to exert its influence over their country. That concern, whether real or imagined, is also reinforced by misinformation campaigns surrounding various high-profile infrastructure projects funded by China. Additionally, during the recent election campaign, several politicians also stirred anti-Chinese rhetoric in attempts to bolster their own support bases and weaken incumbent President Jokowi.
An example that is widely cited by critics of Chinese investment is the Hambantota port in Sri Lanka. In December 2017, Sri Lanka granted to China a 99-year lease of Hambantota port and 60 square kilometres of surrounding land. The handover, which was completed in December 2017, came after the Sri Lankan Government had failed to pay off the mounting debts owed to Chinese firms for helping to build the port. As noted in a previous Strategic Weekly Analysis, while the port itself was a commercial failure, its close proximity to India and to vital shipping routes raised concerns that it could potentially be used by China for military purposes. For that to happen, however, the Sri Lankan Government would have to revise agreements that forbid such use by the Chinese military. Current plans for the port have the Sri Lankan Navy overseeing security and operations. During the presidential election campaign, such examples lent credence to the undertaking by Prabowo Subianto that, if elected, he would reassess Indonesia’s investment deals with China.
According to Nithin Coca writing in World Politics Review, Indonesia has been careful in its dealings with Chinese investors. He commented:
Most of the deals prioritise the role of Indonesian state-owned enterprises, while limiting the ability of China to import workers. They also don’t involve sensitive infrastructure that could put the country at risk of losing its sovereignty.
An example of that caution was seen recently, when Indonesia offered China investment projects worth $127.5 billion, but with four strict terms attached. According to those terms, investors had to: adhere to standards for environmentally friendly practices; use local labour on the projects; facilitate technology transfer to local partners; and the projects must bring economic benefit to Indonesia. At the same time, however, Indonesia has to balance that caution with the urgent need to secure infrastructure investment. Procuring more investment for infrastructure projects is vital for the long-term growth of the Indonesian economy, but investment levels are currently falling short of what is required. Poor infrastructure across the Indonesian archipelago has also contributed to the loss of billions of dollars each year due to lower rates of GDP growth.
Maintaining the Bilateral Relationship
In the medium-to-long-term, it will be important for the Indonesian Government to sustain the relationship with China, as a significant deterioration could heighten security risks; especially if the dialogue on potential maritime disputes is undermined. Maintaining that relationship, however, could be difficult given the significant influence that domestic politics exerts on Indonesia’s relationship with China. Internally, there are three political factors that could damage the relationship, as examined in a recent FDI Strategic Analysis Paper.
First, there is a divide among political groups, which are seen as being either pro- or anti-China. That has led to anti-Chinese rhetoric from politicians at the far end of the anti-China spectrum being widely circulated across social media groups. One such example is from former TNI Commander Gatot Nurmantyo, who told university students in 2016 that if Chinese refugees come down to take over South-East Asia, he would: ‘butcher 10 cows in the middle of the ocean. The sharks will definitely gather… After that I will shoot at them, just by using small weapons so the boat will leak, and they all can be eaten by the sharks’. Such comments will undoubtedly cause a certain amount of unease among Chinese officials about the possible future state of the relationship, especially if those in the anti-China camp gain more political influence.
Second, the high levels of economic inequality in Indonesia have the potential to fuel ethnic violence. Ethnic tensions in Indonesia were most apparent shortly after the Asian Financial Crisis and the collapse of the Suharto Government in 1998. During that period, a number of factors, including economic aspects, contributed to resentment against Chinese Indonesians. That led to riots in which protesters looted and burned Chinese-owned shops, with reports of owners being murdered and raped. Today, ethnic tensions continue to simmer below the surface and, while those tensions have lessened considerably, there have been recent flare-ups. On 2 December 2016, hundreds of thousands of Muslims gathered to protest against the Governor of Jakarta, a Chinese Christian who was accused of blasphemy. During the protests, a clear undercurrent of resentment towards the ethnic Chinese populace was on display. As noted by Future Directions International, however, while similar, smaller, outbursts may still occur, it is highly unlikely that ethnic violence will erupt on a scale comparable to that seen in 1998. Nonetheless, Beijing will hold reservations about the treatment of ethnic Chinese in Indonesia.
Finally, China’s treatment of Uighur Muslims in its far-western Xinjiang province has the potential to antagonise the relationship. While Indonesia has not yet voiced a strong response, it could become a future keynote issue for the Indonesian Foreign Ministry, much as the Palestinian issue is today. Indonesia’s longstanding support for the Palestinian people primarily stems from their common religion and shared experiences. In both countries, the majority of the population follows the Shafi’i school of Sunni Islam. Indonesia also has a history of facing and overcoming oppression, having experienced Dutch colonial rule and Japanese occupation. From the perspective of many Indonesians, their Muslim brothers and sisters are being oppressed by a non-Muslim power, just as they were in the past.
Some similarities could also be drawn between the plight of the Palestinian people and the Uighurs: the majority of Uighurs are Sunni Muslims, although they traditionally follow the Hanafi school of Sunni Islam and have frequently been in conflict with the Shafi’i. They see themselves as being oppressed by a non-Muslim government and it could also be argued that their plight is a product of internal colonialism. In the run-up to the election, the Uighur issue was taken up as a rallying cry against Jokowi by opposition politicians, who accused him of being a Chinese sympathiser.
While there are a number of long-term concerns for Indonesia’s relationship with China, the abovementioned areas of possible future conflict are not inevitable. As Future Directions International has observed, the Indonesia-China relationship is, at its core, based on mutually-beneficial foundations. Working to avoid increasing the areas of stress will be beneficial for both countries, although perhaps more so for Indonesia. Jakarta will thus seek to continue building its economic ties with Beijing to procure further investment and maintain the trading ties that are vital to the Indonesian economy.
 Chalk, P., ‘The Maritime Dimension of International Security: Terrorism, Piracy and Challenges for the United States’, Rand Corporation, 2008, p. 12.