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Jakarta Post

Indonesia-China co-leadership could play key role in the region

Devina Heriyanto (The Jakarta Post)
Jakarta
Tue, November 22, 2016

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Indonesia-China co-leadership could play key role in the region The Middle Kingdom: Chinese President Xi Jinping (right) welcomes Indonesian President Joko “Jokowi” Widodo to the West Lake State Guest House in Hangzhou in Zhejiang Province on Friday. (AP/-)

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peakers at an Indonesia-China bilateral relations seminar being conducted on Tuesday in Jakarta by Center for Strategic and International Studies and Chinese People’s Institute of Foreign Affairs (CPIFA), agreed that the countries’ relations are not only influenced by strategic realities in East Asia but also the global dynamics and interestingly, Indonesian domestic politics.

The seminar was conducted under Chatham House Rule, meaning The Jakarta Post cannot attribute arguments or opinions to its sources. The Rule was enforced to ensure free discussions between participants.

“Trump is a game-changer,” said one speaker.  The rise of Donald Trump in the US along with Brexit has shown a world trend toward unilateralism and de-globalization. “The world is now standing at a crossroad,” one said.

The new US President-elect is considered to be an inward looking leader with a strong anti-trade sentiment during his campaign. Trump sees world politics as a zero sum game, in which the US has been cheated by the world, concluded one speaker.

This isolationist trend can also be seen in the case of Brexit. The trend is rooted in the “poor people that have been left out of economic growth and development” theory.

Meanwhile in Asia, both China and Indonesia are pursuing a greater degree of free trade for economic growth. The idea of Free Trade Area of the Asia-Pacific (FTAAP) was proposed through Asia Pacific Economic Cooperation (APEC) in 2014 to nurture trade in high potential regions, which accounts for 60 percent of the world’s population.

The challenges in the region are not isolationism like in the US or in Britain but more to the lack of regional order in the region, more significantly how other countries in the region have perceived China’s rise. Despite its claim of a peaceful rise, China has been considered hegemonic due to its aggressive military build-up in the South China Sea.

Once again, Trump’s victory plays a key role in regional economic growth. Trump’s isolationism is not only about trade. During his campaign, Trump repeatedly stated his readiness to pull US troops from allied countries – a lesser US presence is expected in the region. US’s ‘pivot to Asia’ has been famously known as a balancing act to China, preventing the feared full-blown conflict over the contested South China Sea.

Experts attribute the region’s potential economic growth and development to peace and stability in the region. A strong regional order is highly needed for the economy.

The seminar dismissed the popular perception of China as a hegemonic power. “Both China and Indonesia can take co-leadership in dealing with regional challenges,” agreed the experts. China-Indonesia co-leadership is not only needed to defuse the tension over South China Sea through ASEAN, in which Indonesia is considered as a primus inter pares, but also in the economy. Both countries should cooperate to secure the success of a new economic regime, citing China’s owned Asian Infrastructure Investment Bank (AIIB) as an example.

A look at bilateral economic relations

Experts also called for stronger industrial relations between Indonesia and China. Both Indonesia and China have not fully benefited from international trade, despite contributing greatly in raw materials and manufacturing.

A more concerning issue is shrinking trade, as Chinese Custom data shows 6% decrease in the bilateral trade during January to October 2016. A strong economic regional order such as FTAAP is much needed to increase the trade.

Among other challenges in the economic relations is the perception that opening up Indonesian markets to China’s products will result in severe damages.

Strengthening bilateral economic relations would benefit the two, particularly considering the massive potential of Chinese investment in Indonesia. China’s investment to Indonesia has grown a staggering 532 percent year-on-year, but this is still small compared to China’s investment to the rest of the world.

Indonesian domestic politics play a role too in the bilateral economic relations, particularly the sentiment toward Indonesians of Chinese decent. The ethnic tension following the alleged defamation case involving Jakarta’s non-active governor Basuki “Ahok” Tjahaja Purnama could harm economic bilateral relations. The seminar mentioned that many Chinese investors decided to hold their investment due to the conflict. (dmr)

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