China and Indonesia have a special chemistry in which the Belt and Road Initiative (BRI) has played an important role, further consolidating their relationship through foreign direct investment, trans-regional connectivity and world-class infrastructure, including rail and integrated transport systems. The economies of both countries support each other, as China is the largest economy in the Asia-Pacific region, while Indonesia is the largest economy in ASEAN and its only G20 member, creating numerous favorable propositions.
China supports ASEAN to maintain its strategic autonomy and unity, while Indonesia helps China better cooperate with ASEAN, promote regional integration and build an Asian community with a shared future. Thus it is in the mutual interest of both sides to safeguard regional development and play bigger roles in maintaining regional peace and stability. Economic participation, trans-regional connectivity, energy, food and green technological cooperation is the way forward for both sides.
It seems that current political consultation has been geared up between two countries China and Indonesia have agreed to deepen high-quality cooperation, with their enhanced strategic mutual trust and strong friendship setting an example of mutual respect and mutual benefit for other developing countries to follow.
It is good omen that Indonesia’s Global Maritime Fulcrum strategy and China’s Belt and Road Initiative in 2018 has further deepened the bilateral economic cooperation. The two sides have decided to introduce projects that reflect policy coordination, infrastructure connectivity, unimpeded trade, financial integration and stronger people-to-people relations.
Under the leadership of incumbent President Joko Widodo, Indonesia has wholeheartedly embraced the Belt and Road Initiative (BRI), attracting a record amount of Chinese investment. The Maritime Silk Road serves as a prime example of the bilateral cooperation and joint ventures that are accelerating investment inflows between the two nations. Infrastructure and economic development have become hallmarks of China-Indonesia relations during Jokowi’s tenure, positioning China as Indonesia’s largest trading partner and its second-largest investment partner.
A significant milestone in this partnership is the introduction of Southeast Asia’s first high-speed train, which connects Indonesia’s capital, Jakarta, to Bandung in just 40 minutes—an impressive reduction from the previous three-hour travel time. The two countries have made notable progress on several landmark cooperation projects, including the Jakarta-Bandung High-Speed Railway, the Regional Comprehensive Economic Corridor, and the “Two Countries, Twin Parks” initiative.
In the past decade, numerous projects have emerged in Indonesia, particularly in the energy sector. Notable examples include the hydroelectric power station on the Kayan River in Borneo and the industrial parks focused on the nickel industry and its derivatives in Sulawesi (formerly Celebes) and the Moluccas. Additionally, the Digital Silk Road Initiative, driven by Chinese telecommunications and internet giants like Huawei and Alibaba, further contributes to the vision of creating a “community with a shared future for mankind.
According to official data in 2023, Southeast Asia received around 50 percent of China’s regional investments, marking a 27 percent increase from the previous year. Indonesia emerged as the leading recipient of these funds, attracting approximately US$7.3 billion.
During a bilateral meeting on September 8, 2023, Indonesian President Joko Widodo and Chinese Premier Li Qiang confirmed a new investment pledge of US$21.7 billion from China, covering sectors such as e-commerce, industry, agriculture, fisheries, science and technology, and innovation.
The manufacturing sector has become the primary recipient of Chinese investment in Indonesia. Chinese FDI has played a significant role in supporting Indonesia’s dominance in the nickel market, with projects like the Morowali Industrial Park in Central Sulawesi, heavily backed by Chinese investment.
Additionally, Chinese investors are rapidly entering Indonesia’s electric vehicle (EV) market, exemplified by companies like Yadea and BYD establishing manufacturing facilities, contributing to Indonesia’s industrial capacity and infrastructure development in downstream sectors aimed at creating value-added products.
China’s investment in Indonesia’s transportation sector has been marked by significant contributions, notably the development of the Jakarta Bandung high speed railway. This flagship project, largely funded by China with an investment of US$7.3 billion, exemplifies the robust collaboration under the BRI. The high-speed rail, which became operational in October 2023, has improved travel between Jakarta and Bandung, reducing travel time from over three hours to around 40 minutes.
China’s investment in Indonesia’s renewable energy sector is pivotal as the country navigates its energy transition. The technological advancements developed in China are crucial for Indonesia to achieve its ambitious goal of 34 percent renewable energy generation by 2030.
At the 2023 Indonesia-China Business Forum in Beijing, eleven deals worth US$12.6 billion were signed, primarily focusing on electric vehicle (EV) batteries and clean energy projects. Earlier in 2023, Xinyi Glass Holdings from China announced a US$11.5 billion investment to build a quartz sand processing plant on Indonesia’s Rimpang Island, which is essential for solar panel production. Moreover, in January 2024, Chinese EV manufacturer BYD established a US$1.3 billion plant in Indonesia with a capacity to produce 150,000 units annually, marking a significant boost to the country’s burgeoning EV industry. During an event in Jakarta, BYD also introduced its three new EV models—BYD Seal, BYD Atto 3, and BYD Dolphin—into the Indonesian market. Coordinating Minister for Economic Affairs Airlangga Hartarto hailed this investment as a move that will strengthen Indonesia’s position in the global EV market, part of a broader trend driven by the country’s vast nickel reserves, which are essential for EV battery production.
Energy, mining, financial services, automotive, healthcare, and the green economy remain particularly attractive sectors for Chinese investors. Given the burgeoning interest in these areas, focusing on investment proposals within these sectors can help attract and accommodate Chinese capital more effectively.
China remains a pivotal source of capital for Indonesia, playing a crucial role in the country’s foreign direct investment landscape. As of 2024, the Indonesian government actively promotes 81 projects across diverse business sectors to attract Chinese investors. These projects, included in the Regional Investment Potentials list, span various sectors such as economic zones, real estate, tourism, agro-industry, renewable energy, industry, infrastructure, and industrial estates.
In summary, the Indonesian government is highlighting 81 projects and offering additional investment opportunities in renewable energy, natural resource downstreaming, and the development of the Nusantara Capital City (IKN). In the tourism sector, notable investment opportunities include destinations such as Lake Toba, Borobudur, Labuan Bajo, Mandalika, and Likupang. These initiatives reflect Indonesia’s commitment to enhancing its economic landscape while attracting foreign investments.
As efforts continue to facilitate investments and explore new opportunities, Indonesia and China are poised to deepen their collaboration, driving sustainable development and fostering greater regional economic integration. This evolving partnership emphasizes the importance of integrating their comprehensive strategic partnership and development policies. The Global Development Initiative, Global Security Initiative, and Global Civilization Initiative proposed by Xi Jinping have injected positive energy into their high-quality cooperation, reinforcing the need for coordinated efforts.
To maximize their collaborative potential, it is suggested that the two sides further strengthen cooperation in various fields, including infrastructure, energy, minerals, manufacturing, investment, fisheries, food security, medicine, and health. Additionally, they should focus on emerging industries such as new energy, the digital economy, and smart cities to enhance their positions within global industry chains.
