Chinese Media Highlights Indonesia-Beijing Relations: Why?

The economic relationship between Indonesia and China is under the spotlight of Chinese media, including Hong Kong’s South China Morning Post (SCMP). In an article titled ‘Can China and Indonesia’s strong financial ties withstand resource nationalism?’, it notes that while both countries enjoy increasingly close economic cooperation in sectors such as nickel, electric vehicles (EVs), manufacturing, and finance, changes in Indonesia’s natural resource management policies are beginning to pose challenges for Chinese investors. The publication suggests the Jakarta-Beijing economic relationship is entering a new phase as Indonesia seeks to extract greater added value from its mineral wealth. For more than a decade, China has been Indonesia’s primary partner in developing resource-based industries, particularly nickel, a crucial material for stainless steel and EV batteries. One of the Chinese companies that has benefited most from Indonesia’s nickel potential is Tsingshan Group, which entered the country in 2009 to secure nickel supply. Leveraging Indonesia’s vast nickel reserves, Tsingshan grew into one of the world’s largest stainless steel producers, recording revenues of approximately 432 billion yuan, or US$63.8 billion, in 2025. The economic relationship has since expanded beyond mining to include mineral processing, manufacturing, electric vehicles, and financial services. Zhao Xijun, a finance professor at Renmin University of China, stated that Indonesia provides the resources while China supplies capital, technology, and manufacturing expertise, creating an increasingly integrated economic ecosystem. The administration of President Prabowo Subianto is reportedly pushing downstream policies to ensure Indonesia does not merely export raw materials but also produces high-value-added goods, with a primary focus on the EV and battery industries. Indonesia aims to have 2 million electric cars and 12 million electric motorcycles in use by 2030, prompting Chinese automakers to aggressively build production facilities in the country. BYD, for instance, is preparing an EV factory in West Java with an annual production capacity of up to 150,000 units, involving an investment of approximately Rp11.2 trillion, or US$616 million. Beyond vehicles, Chinese firms are expanding battery investments, with Shenzhen-listed Azure Corporation announcing plans for a US$290 million lithium battery facility with an annual capacity of 5 gigawatt-hours. SCMP notes that Indonesia’s strategy is not merely about creating an EV market but positioning the country as a global EV battery production hub due to its vast nickel reserves. Financial cooperation is also deepening. In June 2026, the People’s Bank of China designated the Jakarta branch of Bank of China as Indonesia’s official yuan clearing bank. Concurrently, Bank Mandiri became a direct participant in China’s Cross-border Interbank Payment System (CIPS), an alternative to the SWIFT global payment system. Bank Indonesia and Chinese authorities have also expanded local currency settlement cooperation, with transaction values more than doubling to US$13.19 billion in 2025 from US$4.9 billion in 2024. However, SCMP reports that this economic closeness faces challenges from Indonesia’s tightening natural resource management policies, described as rising resource nationalism, aimed at ensuring greater domestic benefit from its mineral wealth. The government has capped national nickel production for 2026 at approximately 260-270 million tonnes, a roughly 30% reduction from the previous year, affecting foreign investors. Operations at the Weda Bay Nickel mine, one of the world’s largest involving Tsingshan, Eramet, and Antam, were temporarily halted after its production quota was exhausted. Analysts view the policy as an effort to stabilise nickel prices and boost state revenue, though it has made some Chinese investors more cautious. Hu Jie of the Shanghai Advanced Institute of Finance noted that China remains vital capital for Indonesia’s economic development, a reality Jakarta understands. Despite these challenges, China has been Indonesia’s largest trading partner for 13 consecutive years and among the top three sources of foreign direct investment over the past decade. Chinese Foreign Ministry spokesperson Lin Jian affirmed that Indonesia remains an important investment destination, with Jakarta repeatedly expressing readiness to deepen industrial and supply chain cooperation with Beijing. Analysts, however, suggest the future of the economic relationship will depend on the ability of Chinese companies to adapt to Indonesia’s policies, with ties expected to remain close but under new dynamics where Beijing provides capital and technology while Jakarta asserts greater control over the added value of its natural resources.