News / Asia

Trade, Investment Dominates China's Premier's Visit to Indonesia

Chinese Premier Wen Jiabao hakes hands with Indonesian President Susilo Bambang Yudhoyono prior to their meeting at Merdeka Palace in Jakarta, Indonesia, April 29, 2011
Chinese Premier Wen Jiabao hakes hands with Indonesian President Susilo Bambang Yudhoyono prior to their meeting at Merdeka Palace in Jakarta, Indonesia, April 29, 2011

Last year when President Barack Obama visited Jakarta, the U.S.-Indonesia bilateral talks focused in large part on education and democracy building. Friday the Chinese Premier Wen Jiabao came to Indonesia, and the talk was almost exclusively about trade and investment.

China is already Indonesia's largest trading partner and Friday's meeting in Jakarta between Indonesian President Susilo Bambang Yudhoyono and Chinese Premier Wen Jibao further solidified their economic ties. After bilateral talks the two leaders announced China will give $9 billion in loans to support Indonesia's infrastructure development, and another $10 billion in export credits.

Natalia Soebagjo is the chairperson of the Center for Chinese Studies at the University of Indonesia. She compared the Chinese Preimer's visit to Indonesia with President Obama's visit last year and says unlike Indonesia's complex relationship with the United States, trade dominates its ties to China.

"When the Americans come to Indonesia the focus is primarily on issues related to democratization, if you look at the USAID programs a lot of it is also related to democratization, also a little bit of economic empowerment. Whereas the Chinese when they come, it is just about money," said Soebagjo.

Indonesia is Southeast Asia's biggest economy and ties with China have been growing for years. Since the two countries signed a strategic partnership agreement in 2005 trade between China and Indonesia has increased from $12.5 billion to over $42 billion in 2010. A Chinese official said Friday they want to double that number by 2015.

The free trade agreement between China and Southeast Asian nations that began last year has made it easier for the two countries to do business, but some Indonesian labor groups complain that local industries are being hurt by the influx of cheap Chinese imports. Indonesia does import more from China than it exports to China. The Indonesian president said earlier he would seek protection for some local industries but Chinese officials have not been receptive to re-negotiating the agreement.

Soebagjo says overall Indonesia's economy is expanding, and that in a global market place domestic manufacturers can compete if they improve quality and productivity.

"Our trade with China has also expanded as a result. Ok, we are running at a deficit but at least it is expanding too. But the whole point is the trade agreement forces us to look at ourselves and to make the necessary improvements in order to really capitalize or take advantage of what it can offer," she said.

And she says while America could learn something from China on improving economic ties, the Chinese need to emulate to a degree the U.S. to do business on mutual security, education and even governance issues.

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