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A Chinese View of Indonesia

From the series Asian giants

The Chinese bourgeoisie is reflecting on the crisis in the world order and looking towards Asia: towards the tumultuous capitalist development of the continent’s working-class conurbations; towards the political and military upheavals that this development generates and continually exacerbates; towards rearmament; and towards the foreign policy initiatives of the middle powers, on the move to make room for themselves in the twilight of the old global order.

The world today is at a turning point of profound turmoil. The Russian-Ukrainian war is not just an isolated conflict; it is a microcosm of the disintegration and reorganisation of the global order. From the White House to the Kremlin, from Paris to Brussels, from changes in national defence strategy to the restructuring of national security logic, it is becoming increasingly clear that the old rules-based system is failing, while a new order has yet to emerge. The flames of war are igniting not only the borders between nations, but also fundamental human concerns about peace, power, and the future.

So writes the journal of the Guangzhou Institute of Public Policy, founded by Mo Daoming, in the introduction to an article on American foreign policy, European rearmament, and the prospects of war in Asia. Throughout history, every attempt to rebuild the world order has been accompanied by conflict. [...] Conflicts and wars continue to occur in different regions, and this will be a trend for a considerable period of history.

Military parade for the “Global South”

Hong Kong’s South China Morning Post devotes space to Asian reflections on the occasion of Beijing’s military parade marking victory in World War II. Sophie Wushuang Yi, a researcher at Tsinghua University and a student of Kerry Brown at King’s College London, reports the following considerations: China is experimenting with a new grammar of military power that particularly resonates with the Global South, because the ambiguity of the concept of “active defence”, a global projection with ostensibly defensive aims, suggests they need not choose between capability and non-alignment. In this interpretation, Beijing is suggesting to Asian powers that they should arm themselves without accepting distinctions between defensive and offensive capabilities, and without predetermining who will be defended or attacked.

The Chinese aircraft carrier is an example of this: For Washington, it represents a worrying projection. For Beijing, it ensures that economic lifelines remain open. [...] The central insight isn’t that China disguises offensive intentions as defensive doctrine, but that this distinction lacks meaning in contemporary competition. When supply chains span oceans and economies depend on distant resources, where does defence end and projection begin? The parade on September 3rd didn’t resolve this ambiguity; it celebrated it. An important recipient of the message, according to the South China Morning Post, was the group of medium-sized powers such as Indonesia.

“Chinese collision” and Indonesian class struggle

The Chinese press gave extensive coverage to the meeting between Xi Jinping and Indonesian President Prabowo Subianto, who flew to Beijing at the last minute to attend the military parade, leaving Jakarta grappling with a wave of unrest repressed by the police. According to Japan’s Nikkei, the trade union and student demonstrations, which arose over a controversy around parliamentary perks, spread after the killing of a motorcycle taxi driver by a police van, and incorporated wage demands, protests against layoffs in the textile and tourism sectors, and petty-bourgeois demands related to public spending in Indonesian provinces. According to the Financial Times, regional governments added fuel to the fire by threatening to increase land taxes in response to cuts in central government funding. On his return from Beijing, Prabowo dismissed Finance Minister Sri Mulyani Indrawati, the former World Bank director and long-time technocrat who had been responsible for the cuts.

The Chinese bimonthly Wenhua Zongheng framed the crisis as one of the possible unintended effects of Beijing’s projection, seeing it in a combination of uneven domestic development, restructuring in the textile, industrial, and mining sectors, and the Silk Road initiative. An example of a historical collision – or social and political upheaval – provoked from outside that would have exacerbated Indonesia’s imbalances.

The long essay, by Sun Yunxiao of the Beijing School of Humanities, traces the industrialisation attempt by Joko Widodo, Prabowo’s predecessor. Widodo was the proponent of a model driven by a strong sense of resource nationalism, which aims to restore Indonesian industrial autonomy through export restrictions and a resource-based downstream industrial strategy. The current turbulence reflects the inherent tensions of this path of development.

International dimension of the Indonesian crisis

The author attributes to Widodo, the infrastructure president, the connection with the Silk Road and the attempt to break the “Java-centric mentality” of Indonesian development through the transport system. Between 2014 and 2022, the number of Indonesian ports doubled, from 1,655 to 3,157, and infrastructure spending accounted for 12% to 20% of public expenditure. The rebalancing of development towards the east was accompanied by the 2019 decision to transfer the capital from Jakarta to East Kalimantan, on the island of Borneo – Indonesia’s third major region after Java, the traditional centre of power and seat of the old capital, and Sumatra, a cosmopolitan commercial hub overlooking Malacca.

Three interpretative strands are interwoven. The first is Indonesia’s dependence on the fluctuating cycle of raw materials, of which it is a major producer and exporter. The 1997 Asian crisis, which saw Indonesia coerced by the International Monetary Fund, was also a mining battle. The mining industry, already dominated by American groups under Suharto, had to wait at least a decade to renegotiate foreign licences and launch, under Widodo’s mining democracy, a restructuring fuelled by Chinese capital. According to a domestic perspective, Sun points out, this would be driven by a new emerging bourgeoisie linked to the mining sector. But the domestic interpretation alone would be limiting, overlooking Jakarta’s attempt to exploit the window of opportunity provided by Sino-American competition to relaunch its own industry against Asian competitors and reduce its dependence on commodity prices.

Taxation and metals

The international dimension – the search for a strategic space between the US and China – is the second strand of interpretation. Widodo secured the Jakarta-Bandung high-speed rail link with Chinese capital, rather than Japanese, which has historically been established in Indonesia (a fact overlooked in Sun Yunxiao’s analysis). However, the attempt to capture a share of the relocation of Chinese factories to Southeast Asia was controversial, with the crisis in the textile sector, hit by a series of major bankruptcies, leaving Indonesia caught in the grip of wider Asian, as well as Chinese, competition.

This is where the third strand comes in – involving tax issues, labour legislation, and relations with local governments. The 2020 Omnibus Law, implemented by decree in 2022 against parliamentary resistance, centralised foreign investment authorisations and simplified the rules on hiring and firing, depending on capital imports; but it also revealed the clash with local governments over tax revenue and spending.

Finally, unexpected developments in the nickel industry shook things up once again. Chinese capital flooded the sector, linking it to the great green leap of electric cars, on the one hand returning Jakarta to the raw materials nexus, and on the other reviving its heavy industries, refining protected by laws against the export of raw materials, and new sectors linked to electrification.

According to AMRO (the ASEAN+3 Macroeconomic Research Office), the industrial and financial centres of Java, together with the established settlements of Sumatra and Kalimantan, accounted for the bulk of Indonesia’s growth before the islands of Sulawesi and Maluku regained momentum on the strength of extractive and metal refining activities linked to the electrification cycle. The 2022 law entrusted local authorities with land taxes and a share of mining rights but forced provinces to align their budget priorities with quality spending directed by the centre and presidential directives. Prabowo has relaunched Golden Indonesia 2045, the plan to become a key political and economic player by the centenary of Indonesia’s independence, expanding its strategic space between the US and China. That project will still have to reckon with internal imbalances, mitigated or aggravated by international factors.

We will have to return to the Indonesian dynamic, given the importance that this rising middle power, with a population of close to 300 million, now has in Asian multipolarism. For now, we take note of China’s interested view of Indonesia.

Lotta Comunista, September 2025

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