Indonesia-China Energy and Mineral Ties Broaden

Indonesia-China Energy and Mineral Ties Broaden
Date of publication:  2015
Publisher:  Institute of Southeast Asian Studies
Number of pages:  29
Code:  TRS14/15

About the publication

Bilateral energy cooperation between China and Indonesia is not new. It can be traced back to the 1980s. Although the share of Chinese overseas oil and gas upstream acquisitions in Indonesia and the inflow of investment from China were minor, China's recent investment flow to Indonesia's mining sector has been increasing rapidly. The reason for the increase of China's FDI in the mining sector is mainly China's increased demand for coal. Indonesia-China energy cooperation is far from smooth. Public debate over the their energy trading agreement arose in 2009. The other concern is the increasing trade deficit with China. Among the ASEAN countries, Indonesia had the highest trade deficit with China after Vietnam. Rising fears that this widening trade gap might affect its national economic security have stirred debates over how Indonesian industries can remain competitive as the country seeks improved trade ties with Beijing, and in turn, this has aroused domestic economic and resource nationalism.Based on mutual need and benefit, the relationship between Indonesia and China is likely to become stronger and to grow in the future. Viewed through China's lens, Indonesia's bountiful mineral wealth has elevated relations between Jakarta and Beijing to a position of strategic importance.


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