China-Indonesia Monthly Brief: January 2024

• China’s Economic Slowdown and Impact on Indonesia:
  Predictions indicate a slowdown in China’s economic growth, raising concerns about its impact on neighboring Southeast Asian countries, notably Indonesia. As China is a major trading partner and investor in the region, any downturn in its economy could have ripple effects on Indonesia’s economy. It necessitates careful planning and response strategies from Indonesian policymakers to mitigate potential negative consequences.
• Reimposition of Import Duties on Coal Imports:
  Effective from January 1, 2024, China reinstated import duties on coal imports. This decision is significant for Indonesia, a major coal exporter, as it could affect its coal trade with China, potentially impacting Indonesia’s coal industry and overall export revenues.
• Improving Diplomatic Achievements Between Indonesia and China:
  The Indonesian Ambassador’s statement on January 8, 2024, signifies improving diplomatic ties between Indonesia and China. Strengthening diplomatic relations could foster better cooperation in various sectors, including trade, investment, and regional security. He also invites Indonesian students studying in China to participate in strengthening bilateral relations underscores the role of youth diplomacy in fostering closer ties between the two countries.
• Growing Chinese Product Presence in Indonesia:
  Recent studies suggest a growing interest among Indonesian consumers in Chinese products, particularly in electronics and electric vehicles. This trend underscores China’s expanding market influence in Indonesia and its ability to cater to local consumer preferences.
• Entry of BYD into the Indonesian Electric Vehicle Market:
  BYD’s entry into the Indonesian electric vehicle market signifies China’s growing presence in the country’s automotive industry. This development could contribute to Indonesia’s efforts to promote electric vehicle adoption and reduce carbon emissions. The availability of Chinese electric car models in Indonesia, with prices starting from Rp180 million, offers consumers more options in the electric vehicle market. This diversification could stimulate competition and drive further innovation in the Indonesian automotive sector.
• Bilateral Cooperation in the Transportation Sector:
  The meeting between Indonesia’s Minister of Transportation and COMAC officials in China, culminating in a cooperation agreement with TransNusa, highlights opportunities for bilateral collaboration in the transportation sector. Such partnerships could lead to advancements in aviation technology and infrastructure development.
• South China Sea Disputes and Indonesia’s Diplomatic Approach:
  The prominence of South China Sea disputes in a recent presidential debate highlights Indonesia’s strategic considerations regarding its relationship with China. As a key player in Southeast Asia, Indonesia’s approach to navigating territorial disputes and maintaining regional stability vis-à-vis China remains crucial. At the same time, Indonesian Foreign Minister’s readiness to work with Southeast Asian countries to finalize a code of conduct in the South China Sea underscores Indonesia’s proactive stance in addressing regional security challenges.
• Chinese Embassy’s Opposition to Taiwan’s Statements:
  The Chinese Embassy in Indonesia made a strong opposition to statements by Taiwan’s foreign affairs head. In response, Indonesia reaffirmed its commitment to the One China Policy on January 14 reflecting its adherence to diplomatic principles and its recognition of China’s sovereignty over Taiwan.
• Energy Transition Partnership and Chinese Investment in Renewable Energy:
  Indonesia’s collaboration with developed countries in launching the Just Energy Transition Partnership (JETP) underscores its commitment to transitioning towards sustainable energy sources. China’s involvement in renewable energy investment in Indonesia presents opportunities for collaboration and technological exchange in the renewable energy sector.
• Scrutiny on President Widodo’s Downstream Policy:
  President Joko Widodo’s downstream policy faces renewed scrutiny due to concerns over poor health and safety standards, resulting in injuries to Indonesian and Chinese workers. This underscores the importance of enforcing stringent regulations to ensure the safety and well-being of workers in downstream industries.
• Environmental Concerns over Nickel Mining Activities:
  Reports of extensive forest damage caused by nickel mining activities, predominantly conducted by Chinese companies in Indonesia, raise environmental concerns. This highlights the importance of sustainable mining practices and environmental regulations to mitigate ecological impacts.
• Coal Downstreaming Project Targeting Chinese Companies:
  Indonesia’s decision to target Chinese companies for the coal downstreaming project following the U.S. withdrawal reflects shifting dynamics in the global coal market. Indonesia also plans to boost coal production with assistance from China and India.
• Repatriation Efforts and Cooperation with China:
  The collaboration between the Indonesian Consulate General and the Directorate General of Immigration for the repatriation of an Indonesian fugitive from China highlights bilateral cooperation in law enforcement and extradition matters.
• Enhancing Bilateral Relations Between Legislatures:
  Discussions between the Chairman of Indonesia’s Inter-Parliamentary Cooperation Agency and the Chinese Ambassador underscore efforts to enhance bilateral relations between legislative bodies. Strengthening parliamentary ties could facilitate greater cooperation and understanding between Indonesia and China.

Compiled by:
Fenny Desmi Widiastuti
Tiara Ayu Fatmasari

Edited by:
Muhammad Zulfikar Rakhmat
Yeta Purnama