The rise of China as an economic superpower with commensurate military capability has been the most consequential development since the end of the Cold War, particularly in the East Asian and wider Indo-Pacific regions. China has become a very important and indispensable economic partner for countries in the Indo-Pacific region, particularly as a market for exports and a source of foreign investment. However, China’s increasingly aggressive policy in asserting its territorial claims, particularly in the contested East China Sea and South China Sea, as well as Beijing’s use of its immense economic resources to exert political pressure on other countries to protect its perceived interests have caused alarms in neighbouring countries. Under President Xi Jinping China is seen to be abandoning its earlier policy of a peaceful rise in favour of a more revisionist policy that pays scant regard to international laws, particularly in the contested waters, which can threaten regional stability and security. In response, Indonesia has carried out an eclectic mix of approaches that can be summed up as a hedging plus middle power policy to maximise the benefits and mitigate the risks of China’s rise and the resulting great power rivalry.
Indonesia was one of the first countries that established diplomatic relations with the People’s Republic of China (PRC) in 1950, adhering to the One-China policy and refusing to participate in the U.S.-led containment of China. In the first 20 years of its independence under President Sukarno Indonesia prioritized the completion of its de-colonisation process, seeing Western neo-colonialism and imperialism as the main threats to Indonesia’s independence and territorial integrity. During this period, Indonesia developed particularly close relations with China culminating in a Jakarta-Beijing axis. In contrast, the army-led New Order government which dominated Indonesian politics from 1966 till the 1998 Asian Financial crisis regarded communist subversion, particularly coming from China, as the main threats to Indonesia’s security and political stability. Beijing was accused of being involved in the attempted coup d'etat carried out by the Indonesian Communist Party (PKI) against the Army leaders in a struggle of power as a successor to President Sukarno. The Suharto government banned the PKI and froze Indonesia’s diplomatic relations with China from 1967 to 1990, while developing close relations with the US and other western countries. Thus, notwithstanding Indonesia’s “free and active” foreign policy doctrine, during the Cold War Sukarno adopted a balancing strategy against the West while Suharto carried out a balancing policy against China.
With the end of the Cold War and attracted by China’s economic modernisation Jakarta normalised its diplomatic relations with Beijing in 1990. While remaining cautious of China's intentions the bilateral relations between Jakarta and Beijing blossomed rapidly, particularly in the economic field, with the signing of a strategic partnership in 2005, which was elevated to a comprehensive strategic partnership in 2013. Despite the increasingly close bilateral relations between Jakarta and Beijing, however, Indonesia continues to harbour reservations signifying its deep-seated ambivalence towards China and has avoided being too closely identified with Beijing. China is perceived as both an opportunity and a challenge, if not a direct threat. China’s increasingly assertive policy in the South China Sea since 2009 has reinforced concerns about whether China’s rise would continue to be peaceful, especially in light of Beijing’s perceived role in undermining ASEAN’s unity. ASEAN’s failure to issue a joint communique at its summit in Phnom Penh in 2012 for the first time in history, over a disagreement about a statement regarding the South China Sea, was widely known to be caused by Beijing’s influence on Cambodia. The incursions of Chinese coastguard boats while escorting Chinese fishing vessels into Indonesia’s Exclusive Economic Zone (EEZ) around the Natuna Islands have heightened Indonesia’s security concerns. Jakarta has consistently refuted China’s Nine-dash line claim which impinges on the Indonesian EEZ as being baseless and not supported by the 1982 UNCLOS.
Indonesia’s Hedging Policy vis-à-vis China
The mix between the need to engage closely with China and concerns about China’s policies and intentions have led Indonesia, like most ASEAN and other countries in the region, to pursue a hedging policy towards China. Hedging behaviour is located in the middle within a spectrum of a balancing strategy which rejects a certain power and a bandwagoning strategy which accepts and acquiesces to that power. Kuik (2016) describes the hedging behaviour of ASEAN member-states vis-à-vis the rising China as returns-maximizing and risk-contingency. The returns-maximazing options are threefold, namely, economic pragmatism, binding engagement and limited bandwagoning, while the risk-contingency options are two-fold namely limited balancing and dominance denial. Kuik further adds that “hedging must entail three policy elements: (a) an insistence on not taking sides among competing powers; (b) the practice of adopting opposite and counteracting measures; and (c) the use of the opposite acts as instruments to pursue the goals of preserving gains while cultivating a ‘fallback’ position”. Here Indonesia’s hedging policy towards China will be examined briefly at both the bilateral and regional levels.
Economic pragmatism is undoubtedly the main driver for Indonesia’s currently very close relations with China. It has been mentioned earlier that Indonesia normalised its diplomatic relations with China in 1990 because it wanted to benefit from China’s economic modernisations. Indonesia-China relations flourished at both the government-to-government and people-to people levels with significant increases in two-way trade and tourism. China has now become Indonesia’s largest trading partner and second largest foreign investor. Indonesia also began to look to China for investment in infrastructure projects, such as to build roads, bridges, and power plants.
Indonesia has also developed binding engagements with China at the bilateral and regional levels. At the bilateral level, Indonesia-China signed a Strategic Partnership in 2005, which was elevated to the level of a Comprehensive Strategic Partnership in 2013. The two countries agreed to enhance cooperation in trade and economic development, science and technology, socio-cultural areas, defence industry as well as in regional and global arenas. At the regional level, Indonesia and other ASEAN member-states have developed binding engagements with China through various ASEAN-centric regional mechanisms. China is a full dialogue partner of ASEAN and participates in various ASEAN-led multilateral forums. In the economic field, China is among others tied to the ASEAN countries through the ASEAN Plus Three (APT), the ASEAN-China Free Trade Agreement (ACFTA) and the Regional Comprehensive Economic Partnership (RCEP).
As part of the return-maximazing option Indonesia is also engaged in a limited bandwagoning vis-à-vis China. Indonesia has joined China’s Belt and Road Initiatives (BRI) and the China-led Asian Infrastructure Investment Bank (AIIB) under the Joko Widodo government to fund his ambitious infrastructure development projects. Indonesia’s position in the South China Sea is at times also equivocal, as can be seen from its muted response to the PCA ruling which had angered Beijing.
In the risk-contingency option Indonesia’s hedging behaviour vis-à-vis China also displays a limited balancing strategy, both internal and external balancing, particularly in relations to the security of the waters around the Natunas, which Indonesia has renamed the North Natuna Sea. Indonesia’s defence posture which was heavily inward-looking and army dominated throughout the New Order period has increasingly become much more outward-looking and paying more attention to maritime security than before. Since the Yudhoyono presidency Indonesia has consistently increased its defence budget to modernise its weapon system, with more attention being given to the air-force and the navy to build a “Minimum Essential Force” (MEF), starting in 2009.
Equally important, the increasing role played by the Chinese coastguard in the South China Sea has added further impetus for Indonesia to strengthen its own maritime security agency (Bakamla), which is still in the process of becoming a full-fledged coastguard. Both the Indonesian military and Bakamla have developed close relations with the United States.
In August 2021, Indonesian and U.S. armies carried out their largest ever joint exercises code-named Garuda Shield XV, involving well over 3000 soldiers in the islands of Sumatera, Kalimantan and Sulawesi. The U.S. is also involved in improving the capacity of Bakamla. In June 2021, the US began the construction of a maritime training centre in the Indonesian island of Batam, strategically located at the southern entrance of the Strait of Malacca.
Dominance denial is another option in the risk-contingency option. This strategy is inherent in Indonesia’s foreign policy approach with its “free and active” doctrine and non-alignment stance. Indonesia has for the most part tried to avoid over dependence on a single country, particularly in the economic field and in military procurement, thus diversifying its external economic resources and weapons’ suppliers to avoid becoming vulnerable to external pressures and embargoes. At the bilateral level, Indonesia has signed a number of strategic or comprehensive partnerships with key powers, including with China, Japan, India, Australia and the United States. These strategic or comprehensive partnerships serve to highlight both Indonesia’s increasingly close and wide-ranging relations with key regional players or “omni-enmeshments”, as well as Jakarta’s careful strategy of maintaining “pragmatic equidistance” vis-a-vis the major powers (Laksmana, 2017). At the regional level, Indonesia has played a leading role in ensuring the existence of a “dynamic equilibrium”. At the formation of the East Asia Summit (EAS) in 2005 Indonesia insisted the EAS membership be widened beyond the ASEAN and ASEAN Plus Three countries to include Australia, India and New Zealand to prevent the EAS from being dominated by China.
Indonesia’s Middle Power Diplomacy
Besides hedging vis-à-vis China, Indonesia’s security outlook and foreign policy towards the immediate region and beyond can also be analysed from the perspective of its status and role as a middle power. Many observers consider Indonesia as an ascendant middle power, signalled by its return to political stability and new credentials as the world’s third largest democracy, its renewed economic growth marked by its membership in the G 20, as well as its foreign policy activism. As the largest member, Indonesia is generally regarded as a natural leader in ASEAN and has greatly influenced the development of the norms, values and principles within ASEAN. Indonesia’s cherished long-term objectives for ASEAN is to ensure its strategic autonomy and ASEAN centrality.
The Treaty of Amity and Cooperation in Southeast Asia (TAC) which emphasises non-use of force and pacific settlement of disputes has become the most important regional code of conduct within ASEAN and which ASEAN is keen to promote to other countries as well, particularly in the Indo-Pacific region. Indonesia’s middle power diplomacy is based on a strong constructivist perspective of the possibility of peaceful change in international relations by forming habits of dialogues and cooperation, mostly on non-sensitive low politics issues.
ASEAN is by nature highly diverse and member-states are used to dealing with different systems and outlooks. While prioritising the consolidation of ASEAN after its enlargement to 10 member states, Indonesia with ASEAN has also tried to engage all of the relevant countries in the wider region in the creation of wider regional architectures with ASEAN as its hub. Informed by the Bandung Spirit of peaceful coexistence ASEAN has espoused the principle of inclusive regionalism transcending ideological and political differences. The establishment of the ASEAN Regional Forum (ARF) in 1994, the first multilateral forum for discussing geo-political and security issues encompassing the Asia-Pacific region, clearly reflects this inclusive regionalism where former and current adversaries are accepted as members.
Faced with the many opportunities and challenges in the wider Asia-Pacific, Indonesia was at the forefront in promoting the development of a more inclusive regional architecture at the highest level, based on ASEAN centrality, by widening the membership of the East Asia Summit (EAS) to foster dialogue and ensure a dynamic equilibrium between the various major powers. Among the conditions for membership in the EAS is accession to the TAC. All of the salient regional powers are now members of the EAS, which beside the ten ASEAN member-states include the United States, China, Japan, India, Russia, South Korea, Australia and New Zealand.
Lately, geostrategic discussions have increasingly broadened from a focus on the Asia-Pacific to encompass the wider Indo-Pacific region. Several countries have come up with different perspectives on the Indo-Pacific construct, reflecting differences in looking at the nature of the problems and the means of addressing them. The United States and Japan have both proposed the concept of a Free and Open Indo-Pacific (FOIP) that among other things, emphasises rules of law, freedom of navigation and democracy, which are implicitly directed against China. China has opposed the use of the Indo-pacific terminology, deeming it to be a U.S.-led strategy to contain China.
Concerns about the growing polarisation brought about by the U.S.-China rivalry – with consequences that included mounting pressures on other countries to take side and the possible marginalisation of ASEAN in the face of other Indo-Pacific initiatives, propelled Jakarta to push for the acceptance of the Indonesian-initiated ASEAN Outlook on Indo-Pacific (AOIP) that is open, transparent, inclusive and rules-based founded on ASEAN centrality using existing ASEAN regional mechanisms. The AOIP, endorsed by the ASEAN Summit in June 2019, is aimed at promoting habits of dialogue and cooperation in mostly low politics areas, namely connectivity, maritime issues, economic cooperation, and SDGs and explicitly rejects a zero-sum approach in international relations (Anwar, 2020).
Managing its bilateral relations with China has become a major theme in Indonesia’s foreign policy. Indonesia, like other countries in the region has mostly followed a hedging strategy vis-à-vis China which comprises both a return-maximizing and risk-contingency elements. Economic pragmatism, binding engagement and limited bandwagoning are among the policies adopted by Indonesia to maximize the benefits of close relations with China, while limited balancing and dominance denial are the strategies adopted to mitigate risks. Indonesia’s hedging policy vis-à-vis China is in line with the former’s “free and active” foreign policy doctrine and non-alignment stance that prevent Indonesia from entering into military alliances or follow a full-fledged balancing or bandwagoning strategy.
Besides carrying out hedging vis-à-vis China as a realist response to both the opportunities and challenges offered by China, Indonesia has also been active in pursuing a constructivist middle power diplomacy promoting regional norms, values and principles within the ASEAN regional framework.
Anwar, D.F. (2020). “Indonesia and the ASEAN outlook on the Indo-Pacific” in International Affairs, Volume 96, Number 1, January 2020, pp. 111-129.
Kuik, C.C. (2016). “How Do Weaker States Hedge? Unpacking ASEAN states’ alignment behaviour towards China”, in Journal of Contemporary China, Vol. 25, Issue 100, pp. 500-514.
Laksmana, E.A. (2017). “Pragmatic Equidistance: How Indonesia Manages its Great Power Relations” in Denoon, D. (ed) China, the United States, and the Future of Southeast Asia. New York: New York University Press, pp. 113-135.