Sumitronomics 4.0: Indonesia’s Digital Non-Alignment Strategy

When Sumitro Djojohadikusumo was appointed Finance Minister in 1952, Indonesia was caught between two blocs. The West offered conditional aid, the East promised solidarity. Sumitro rejected this binary logic. For him, Indonesia must be a principal, not a proxy—sovereign by leveraging tensions between the blocs as manoeuvring space (Djojohadikusumo, 1985).

Seven decades later, Indonesia faces structurally similar conditions but far more complex ones. The battleground is no longer political ideology, but the global technological order.

The United States leads the semiconductor, software, and advanced cloud computing ecosystem through Nvidia, Amazon Web Services, and Google Cloud. China is building a parallel ecosystem via Huawei, DeepSeek, Alibaba Cloud, and BeiDou navigation. These two powers form new geopolitical gravity centres.

Sumitro’s question echoes once more: how can developing nations maintain strategic autonomy amid tectonic geopolitical shifts in technology?

Tech Decoupling as a Paradigm Battle

Tech decoupling is not merely a trade war. It is a struggle to dominate the techno-economic paradigm—the dominant technology system defining production and value creation in an era (Perez, 2002). Both superpowers simultaneously claim absolute leadership over future technology.

China is no longer just the ‘world’s factory.’ With R&D investment at around 2.7% of GDP in 2024 (National Bureau of Statistics of China, 2025), it surpassed the US in international patent applications via WIPO in 2019—the first time in four decades (World Intellectual Property Organization, 2020). The global innovation gravity centre is shifting east.

This confrontation has morphed into techno-nationalism: each side pushing to build closed ecosystems deliberately incompatible with each other (Petricevic & Teece, 2019).

The US began by placing Huawei on the Entity List in 2019, then expanded to nationwide chip export controls against China in October 2022, reinforced by the $52.7bn CHIPS and Science Act (2022) for domestic semiconductor reindustrialisation (Congressional Research Service, 2022).

China responded with DeepSeek—a model that in January 2025 shook global markets, wiping nearly $600bn from Nvidia’s market cap in a single day, proving competitive AI models can be built efficiently despite strict premium chip access restrictions.

For nations outside both blocs, the consequences are severe. Aiyar, Presbitero, and Ruta (2023) warn that geo-economic fragmentation risks slashing global GDP by up to 7% in the worst-case scenario.

Ironically, countries deeply integrated with both blocs will bear the heaviest burden—and that is precisely ASEAN’s current position. With a combined GDP of $4.3tn in 2025 (World Economic Forum, 2025), the region’s economy is too large to ignore, yet too dependent on both blocs to escape fragmentation costs.

Indonesia feels this dilemma acutely. From the West, strong diplomatic pressure urges Jakarta to restrict Huawei’s 5G infrastructure use citing cybersecurity risks, even as China has become a key trade partner and investor in domestic industrialisation.

This polarisation manifests as daily contradictions. At consumer level, hundreds of millions of Indonesians rely heavily on Chinese platforms and devices—from TikTok and Shopee to Huawei phones. Yet the cloud infrastructure underpinning government operations and major corporations depends entirely on US tech giants.

This contradictory dependency reflects the classic Global South dilemma: too tied to both sides to choose one, yet too weak to set the rules independently.

Translating Sumitro’s Legacy

History shows developing nations gain the strongest bargaining power when global superpowers compete for access to their resources (Djojohadikusumo, 1985). In the contemporary era, Sumitro’s legendary principle must be rearticulated as Digital Non-Alignment—an active strategy to capitalise on Indonesia’s geostrategic position as a crucial partner too significant for either bloc to ignore.

Here, analytical honesty is essential. Referencing Susan Strange’s structural power theory (1994), a nation’s strength rests on four pillars: security, production, finance, and knowledge (knowledge structure). Strange considered all four equal.

But in the digital age, the knowledge pillar is arguably the most decisive. Unlike relational power based on horizontal coercion, knowledge structure operates vertically—capable of dictating and shaping ecosystems where other actors are forced to operate.

The harsh reality shows stark contrasts. Indonesia is strong in production—holding 42% of the world’s nickel reserves (USGS, 2024)—but suffers an acute deficit in knowledge, specifically in chips, algorithms, and operating systems, which are the true battlegrounds of geopolitical competition. This structural asymmetry must form the foundation of strategy, not be concealed behind rhetoric.

Nickel leverage is a 20th-century structural power form: tangible but eroding. Indications are seen in lithium battery chemistry trends…