Indonesia-China Relations

China and Indonesia established diplomatic relations on 13 April 1950, which has suspended on 30 October 1967 due to the occurrence of the "September 30 event" of 1965. The bilateral relations began to ease since 1980s. In December 1989, the two sides held talks on the technical issues regarding the normalization of bilateral relations and signed the Minutes. Foreign Minister Ali Alatas of Indonesia visited China on invitation in July 1990 and the two sides issued the Agreement on the Settlement of Indonesia's Debt Obligation to China and the Communique on the Resumption of Diplomatic Relations between the two countries.

Chinese Prime Minister Li Peng visited Indonesia on invitation in August 6, 1990. In his talks with President Soeharto, the two sides expressed their willingness to improve and develop the friendly relations and cooperation between the two countries in the spirit of looking forward and on the basis of the Five Principles of Peaceful Co-Existence and the Ten Principles of Bandung Conference. On 8 August, Foreign Ministers of Indonesia and China on behalf of their respective governments, signed the Memorandum of Understanding on the Resumption of Diplomatic Relations. The two sides declared the formal resumption of the diplomatic relations between China and Indonesia on that day.

The bilateral relations developed steadily since the resumption of diplomatic relations of the two countries. The leaders of the two sides have maintained exchange of visits and contacts. As a result, mutual understanding and trust had been increasing, laying the foundation for the healthy and steady development of bilateral relations. The two Ministries of Foreign Affairs set up a consultative mechanism. The recent years have witnessed the constant deepening of economic and trade cooperation and increase of the trade volume year by year. Exchanges and cooperation in other fields are under way. China and Indonesia have maintained good coordination and cooperation in international and regional affairs. Some of the issues between the two countries left over by history are starting to be solved.

On 25 April 2005, the Heads of Government of the two countries signed the Joint Declaration on Strategic Partnership between China and Indonesia. The idea is to develop a strategic perspective in addressing the two countries’ long-term interests on the basis of shared interests and aspirations and a clear-eyed appreciation of the differences and complementarities between the two countries.

The establishment of the strategic partnership between Indonesia and China is indeed a landmark development in the history of the two countries’ bilateral relations. It signals the determination of both countries to complement each other to achieve common national purposes and still serve constructive regional and global ends.

A remarkable aspect of this partnership is its being non-aligned and non-exclusive. Moreover, both partners commit themselves to conforming to the principles enshrined in the UN Charter, the Five Principles of Peaceful Co-existence, the Ten Principles of the Asian-African Conference, and the Treaty of Amity and Cooperation in Southeast Asia.

In the bilateral economic cooperation, the annual growth rate of bilateral trade between Indonesia and China between 2001 and 2006 was 18.6 %. China is now the 5th largest export destination for Indonesian products and the 3rd largest source of Indonesian imports.  The total bilateral trade volume in 2006 reached US$19.06 billion – or almost three times greater than the US$6.7 billion trade in 2001. Apart from oil and gas, Indonesia’s main exports to China are chemical products, wood, pulp and paper, rubber and sulphate.  Meanwhile, Indonesia’s imports from China include semi-finished products of iron or non-alloy steel, parts and components of vehicles, motorcycles, machinery, electronics and automatic data processing machines.

In the field of investment, Chinese investment in Indonesia, excluding the oil and gas, banking, insurance, leasing and mining sectors, accumulated to over US$8 billion during the past decade, ranked 5 among foreign investors.  Most projects concentrate in the wholesale and retail industries as well as the commercial service industry.

In the field of energy, greater cooperation between Indonesia and China is mutually symbiotic in nature.  To sustain its phenomenal economic development, China needs to fulfill its huge energy demand. Indonesia, on the other hand, needs to enhance its capacity-building for exploring and exploiting its vast, yet untapped energy resources.

Meanwhile in the field of infrastructure, some Chinese enterprises have actively participated in Indonesia’s a number of infrastructure projects such as the 10000 MW coal-fired power plants, dam, bridge and other large scale projects.