As this tech rivalry intensifies, decisions on technology, digital infrastructure and cyberpolicy are increasingly intertwined with economic security and geopolitical strategy. While much of the restricted products currently center on minerals, chemicals, electronics and equipment parts, we are also seeing the competition spillover into data, software and connected devices.

Geopolitical and security considerations will increasingly guide trade, investment and industrial policy decisions. The risk that these policy movements will be extra-territorialized is likely to increase, as the US and China will expect key partners to impose similar measures.

Yet, Indonesia’s approach to these challenges remains largely reactive, prioritizing short-term economic gains over long-term strategic positioning. Without a coordinated strategy, Indonesia risks being shaped by external pressures rather than defining its own digital trajectory.

While Indonesia currently benefits from sustained Chinese and US investments in its Information and Communication Technology sector, it must prepare for deeper strategic competition in technology that extends beyond sensitive industries.

Crucially, Indonesia has not fully assessed the extent to which Chinese components are embedded in its technology exports to the US. There is potential for indirect trade, where products manufactured in China are rerouted through third countries before reaching the US market.

Additionally, Chinese firms may circumvent restrictions by shifting production to Indonesia, leaving Indonesian companies vulnerable to high tariffs or export bans. If US-China tech tensions escalate further, and all Chinese entities are designated as Foreign Entities of Concern, Indonesia’s access to the US market could face significant risks due to the lack of comprehensive supply chain mapping.