Indonesian President Prabowo hails China ties as key to regional peace, prosperity

Premier Li Qiang's visit to Indonesia signals deepening strategic ties between China and Indonesia, with President Prabowo Subianto emphasizing their role as pillars of regional peace and prosperity. The leaders oversaw the signing of memoranda on banking, economic cooperation, tourism, agriculture, health, and traditional medicine, building on a prior agreement to establish a "China-Indonesia community." Against a backdrop of US-China rivalry, Indonesia, now a member of the China-led BRICS, sees China as a key partner in infrastructure and industrial development, with bilateral trade reaching $135.17 billion in 2024 and Chinese investment totaling $8.1 billion.

Analysis

The visit of Chinese Premier Li Qiang to Jakarta signifies a substantial deepening of the comprehensive strategic partnership between Indonesia and China, underscored by President Prabowo Subianto's characterization of the relationship as a cornerstone for regional peace and prosperity. Bilateral trade has surged, more than doubling from US$52.45 billion in 2013 to US$135.17 billion in 2024, with China also standing as Indonesia's leading foreign investor, contributing US$8.1 billion in 2024 alone. This enhanced cooperation, formalized by agreements in banking, economic cooperation, tourism, agriculture, health, and traditional medicine, builds upon the November 2024 accord to create a "China-Indonesia community of destiny." The engagement occurs amidst heightened US-China geopolitical rivalry, with Indonesia, a new BRICS member since January 2025, strategically strengthening ties with Beijing. Key collaborative projects highlighted include the Jakarta-Bandung high-speed rail, industrial parks, and downstream nickel development, with President Prabowo inviting further Chinese investment in education, healthcare, tourism, and science and technology. The strongly positive sentiment surrounding the visit points to sustained momentum in bilateral relations, with implications for regional trade dynamics and infrastructure development.

Key Decisions for Investors

• Investors should monitor companies and sectors in Indonesia poised to benefit from increased Chinese foreign direct investment, particularly in infrastructure, industrial development including nickel processing, technology, and tourism.
• Consider the implications of strengthened Sino-Indonesian trade ties for supply chains and market access for businesses operating within or trading with these two nations, especially given Indonesia's BRICS membership.
• Evaluate opportunities in sectors explicitly targeted for cooperation, such as banking, agriculture, and healthcare, as these are likely to see policy support and capital inflows from both governments.