In the jostling for power, influence and authority in Asia – political, economic and military – the diplomatic tightrope being walked by Indonesia to maintain cordial and peaceful relations with both China and the USA is one to watch in the future. So far, Indonesian President Joko Widodo and his team have managed to steer a central course, despite increasing pressure from both sides, whilst grappling with a deadly surge of the Delta variant and some of the highest numbers of daily Covid-19 cases and deaths reported anywhere in the world. At the time of writing, Indonesia has taken over from India to become the new epicentre of the COVID pandemic which is placing enormous pressure on their health system and increasing criticism of the Government for prioritising the economy over public health.

From an economic perspective, China is Indonesia’s most important trading partner, representing 21% of exports, over 30% of imports and increasing levels of foreign direct investment, particularly in agriculture, tourism and manufacturing. Indonesia is a major focus of China’s Belt and Road Initiative, with several major Chinese infrastructure projects in the pipeline, including the Jakarta-Bandung fast train and the Batang Toru Hydro Power Plant in North Sumatra, plus a growing list of regional projects initiated by provinces on both sides. Like all Asian countries, Indonesia has dependencies on China which have only been reinforced during the Covid-19 pandemic. Late last year, China designated Indonesia as a test site for vaccine development by Sinovac in collaboration with a local producer, Bio Farma, and China promised to make Indonesia a hub for vaccine delivery across SE Asia.

With a population of over 270 million people, Indonesia is the fourth-largest country in the world and the third-largest in Asia. Made up of over 17,000 islands that straddle the Pacific and Indian oceans, Indonesia occupies a commanding position over the vital Strait of Malacca, the traditional maritime approaches to Australia and, most significantly, the Natuna Islands which overlap with the “nine-dash line” drawn by China to claim its sovereign rights in the South China Sea. Indonesia’s position as a strong independent force in Asia is critical to maintaining peace and prosperity in the region.

So far, Indonesia has managed to keep America close and China closer, suggesting that they will resist attempts to take sides. Indonesia’s leaders will have been relieved to hear US Defense Secretary Lloyd Austin say, during his visit to Singapore last week, that “we are not asking countries in the region to choose between the United States and China” and that America is committed to having a constructive relationship with China.

In the short term, Indonesia’s future and the whole of SE Asia depends on their ability to control the spiralling COVID-19 crisis and bounce back on the other side. Everything else will have to wait.

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