CHINA and Indonesia are set for high-level talks on Friday covering defence, regional security, politics, trade and investment, as Jakarta navigates increasingly complex ties with Beijing and Washington amid tensions in the South China Sea and growing competition between the two powers.
Chinese Foreign Minister Wang Yi, making his first visit to Jakarta in two years, is meeting Indonesian Foreign Minister Sugiono and joining a “2+2” dialogue with the two countries’ defence ministers.
Reuters reported on Friday that the talks come against the backdrop of a rare joint naval exercise between China and Indonesia earlier this month east of Taiwan, which drew criticism from Taipei and highlighted the growing defence engagement between Beijing and Jakarta.
Taiwan, which China claims as part of its territory, condemned the exercise, while the Indonesian navy said its vessel had also conducted routine exercises with Japan and the United States.
Defence analyst Curie Maharani said Indonesia regarded the exercise as routine, but its location allowed Beijing to project a broader political message.
“Indonesia learned a valuable lesson about how great powers use defence diplomacy more as an instrument of influence projection,” she said.
The episode has added significance given Indonesia’s own differences with China over the South China Sea, where Beijing claims much of the disputed waters.
During Prabowo’s visit to China in 2024, the two countries signed a maritime development agreement referring to a common understanding on “joint development in areas of overlapping claims”.
The wording sparked controversy after analysts interpreted it as potentially signalling a shift in Jakarta’s longstanding position that it is not a claimant in the South China Sea disputes.
Indonesia subsequently reiterated that it does not recognise China’s claims.
“Indonesia does not wish to escalate the situation and prefers to engage China through defence diplomacy,” Curie said.
She said defence engagement between the two countries had increased significantly over the past five years, although it remained well below Indonesia’s defence cooperation with the United States and Australia.
For Prabowo, the challenge is to expand strategic and economic cooperation with China while maintaining Jakarta’s longstanding diplomatic independence.
The Indonesian president has repeatedly reaffirmed the country’s “free and active” foreign policy, saying Jakarta intends to maintain friendly relations with all countries, including China and the United States.
Economic ties are another major pillar of the relationship, with China contributing US$3.9 billion in foreign direct investment to Indonesia during the first half of 2026, according to Indonesia’s investment ministry.
But Chinese investors have increasingly voiced concerns over Indonesia’s regulatory environment.
In May, Chinese companies operating in the country urged Jakarta to adopt more business-friendly policies, warning that higher taxes and a new nickel pricing formula were increasing costs and threatening investment.
In a letter seen by Reuters, the China Chamber of Commerce in Indonesia complained of “excessively stringent regulation, over-enforcement” and alleged corruption and extortion by authorities.
China’s major investments in Indonesia include projects by Contemporary Amperex Technology Co, the world’s largest electric vehicle battery maker, and steel producer Tsingshan Group, which have established smelting operations in the country, which possesses the world’s largest nickel reserves.
Prabowo has himself acknowledged complaints from foreign investors over the number of permits required and lengthy approval processes, and has called for deregulation to improve Indonesia’s investment climate.
The talks therefore come at a delicate juncture for Jakarta, with closer defence and economic engagement with Beijing testing its ability to preserve strategic autonomy while keeping strong ties with Washington and other regional partners. - August 21, 2026
