The future of cooperation between China and Indonesia

Natalia Soebagjo, Shanghai

Tong Djoe must feel quite honored that Susilo Bambang Yudhoyono, our President, has asked for his help in opening the door to mainland China's corporate community.

Hopefully, he's not also shaking his head in dismay that after all the years since he lent a hand in paving the way to reestablishing Indonesian-Chinese relations back in 1990, the Indonesian government is still seeking his advice. One would have thought that in the meantime others besides Tong Djoe would have learned something about China.

The "bamboo curtain" has long been raised but it makes one wonder what our people in government, in diplomatic circle, in the private sector and even in academia have been doing in trying to learn about the workings of the Chinese system so that the President can be properly advised and prepared for his coming visit to China.

China has changed beyond imagination since Indonesia resumed diplomatic ties with the country in 1990, after being frozen since 1966 following Indonesia's allegation that China backed the Indonesian Communist Party's alleged coup attempt in 1965. China's leadership has passed from Deng Xiaoping to Jiang Zemin and now to Hu Jintao, while the next generation of leaders is being groomed. Gone are the stiff, somber-faced senior government and party officials, and in their place are more youthful and articulate, seemingly more open and accommodating individuals, such as Bo Xilai, the minister of commerce, and Hu Jintao himself.

The corporate sector has also changed quite dramatically, especially since Deng Xiaoping's visit to southern China in early 1992 to resuscitate China's faltering economic reforms after the bloody 1989 demonstrations in Tiananmen. As a frail man of 88, Deng Xiaoping went to the cities of Wuchang, Shenzhen, Zhuhai and Shanghai to witness the economic progress made there and called on the leadership to continue to press ahead with reforms.

He told them to be "bolder", "have the courage to experiment" and not "act like women with bound feet". He also reminded them that if they wanted China's "socialism to achieve superiority over capitalism, "we should not hesitate to draw on the achievements of all cultures and to learn from other countries, including the developed capitalist countries". And so the Chinese have learned, and very fast at that.

The pace of reform was quickened, loss-making state-owned companies continued to be restructured and the growth of a local private sector was encouraged. Negotiations for entry into the WTO were intensified, culminating in China's 2001 ascension. Now China is established as a full member of the global trade regime and there is very little debate over socialism and capitalism. So much so, outsiders joke about China's "capitalism with Chinese characteristics" instead of "socialism with Chinese characteristics".

China's economy has moved away from a rigid, centrally planned economy where the state sector dominated, to a system which is increasingly dictated by market forces. Since 1996 the number of state-owned enterprises continuously fell while the number of private enterprises grew. It is reported that the private sector has grown at an average annual rate of 30 percent and that it now accounts for about one-third of China's GDP. Twenty years ago, the private sector produced less than 1 percent of the national economic output.

Having said that, however, the concept of the "private sector" in China is still at times quite confusing. Although the number of independent, private businesspeople is growing many of the major supposedly private companies still have links with the state, be it at the national or the local level, either through their management or through ownership.

Doing business with such major companies is not easy. One needs to understand where the company stands in the industry, know the right people to talk to and a little of their backgrounds, and to gain their trust in order to negotiate effectively with them. Most importantly one needs to have credibility and something to offer because everyone is knocking on China's door, wanting to take a slice of the market, take advantage of the country's manufacturing skills, even to have a share of China's investment dollars. Competition is fierce.

To succeed in China, one needs to have a fair amount of understanding of what China is trying to achieve. Simply put, the Chinese are trying to undertake the gradual transformation of a socialist society whereby economic prosperity is achieved, while maintaining social stability and the political status quo in an increasingly open and globalized environment.

Change in China is an ongoing and very rapid process. In the major cities such as Beijing and Shanghai, for example, change is not only visible from the towering high-rises, shopping malls and fleets of luxury cars, but is also palpable. Those who are able to take advantage of the reform policies are optimistic and confident, enthusiastic in their drive to better their lives and, in so doing, believe that they are contributing to China's overall development. Yet underneath all the urban glitter lies many potentially explosive social problems which the Chinese government is trying to anticipate and mitigate.

Susilo's visit to China next month will no doubt involve our economic and trade ministers and a whole entourage of businesspeople eager to take advantage of the closer trade and economic relations between our two countries. While they narrowly focus on the profit prospective, we should not neglect the broader learning experience that closer relations with China has to offer.

We need to better understand China's history, political and social development not because we are overawed by what the Chinese have achieved, but more because we need the knowledge to force us to reflect upon our own strengths and failings.

We will then know what we are up against when dealing with the mainland Chinese who are driven by a single-mindedness of purpose to build China into an economic and political force to be reckoned with regionally and globally. Perhaps we will then also know why we ourselves are lacking this drive and sense of purpose.

Natalia Soebagjo works for the Center for Chinese Studies in Shanghai.