Indeed, China’s growing economic influence has drawn mixed perceptions in Indonesia. As the country approaches the elections, the topic of China’s domination in the economy can become a provocative issue. In the 2019 election, opponents of Jokowi used the same issue to stir negative perceptions concerning his economic policy platform, which they said laid a “red carpet” to China. Will the same pattern happen in the coming elections?

We argue that this election may be different. First, Indonesia’s government and the next administration need more Chinese investment to support the country’s downstreaming policy, which all three presidential candidates rhetorically support, albeit in differing degrees.

The present government openly invited foreign countries to invest in the nickel processing industry, given that Indonesia needs capital and technology in this field. The United States, European Union, Japan and China responded, but Beijing, which offered more competitive prices and superior technology, ultimately won out. This decision has proved critical for Indonesia to accelerate its downstreaming policy in the nickel industry.

Second, whoever wins the presidential election will need to maintain good relations with China. In varying degrees, the three candidates perceive China as a trusted development partner.

For instance, when Anies was Jakarta governor, he met then-Chinese ambassador Xiao Qian to discuss sister city potentials. Ganjar Pranowo, as former Central Java governor, had a good relationship with Chinese officials and his province has had substantial investment from China in recent years. Defence Minister and front runner candidate Prabowo Subianto is not averse to China’s growing investment role in Indonesian industry. He met his former ministerial counterpart General Wei Fenghe multiple times to foster the possibility of industrial cooperation between the Indonesian and Chinese militaries.

Campaign-wise, no presidential candidate has snubbed China’s growing role in the Indonesian economy. However, both Anies and Ganjar recently said they preferred to diversify Indonesia’s economic partnerships with other countries, to reduce its dependency on China.

Will Indonesia’s Anies and Ganjar team up to deny Prabowo an outright poll win?

On its part, Jokowi’s government maintains a positive view about future bilateral relations with Beijing. In December 2023, Erick Thohir, as ad interim Coordinating Minister of Maritime Affairs and Investment (during minister Luhut Panjaitan’s period of ill health), stated at the fourth Indonesia-China Business Partnership meeting in East Nusa Tenggara that the government appreciated the role of Chinese investors who had become industrial pioneers, laying the foundation of the downstream industry and helping develop remote regions in Indonesia.

Thohir pointed out that under the bilateral strategic partnership that started in 2013, several important achievements, including the Jakarta-Bandung High-Speed Railway and work on Indonesia’s green energy transition, had been made. He added that Indonesia-China cooperation would be lasting, as it was built based on mutual trust and mutual benefit.

During the Jokowi administration, there is no doubt that China’s investment and economic role in Indonesia has grown, which matches Indonesia’s ambitions for a push in its industrialisation through infrastructure and downstream industry. Nevertheless, China’s domination in the nickel industry in Indonesia is a case for concern. One repercussion in the climate of decoupling has been on access to Western markets. In fact, Indonesia’s nickel products have no access to the US market, partly due to this “China factor”.

It is important to note that Indonesia has been trying to invite larger investments from Western countries, but the latter are currently distracted by domestic concerns, the Ukraine war, and the Gaza crisis. Their appetite for open international trade and investment has been weakening.

Conversely and opportunistically, China has won partners and expanded its economic influence, particularly in Africa and Southeast Asia. According to official data, as of the third quarter of 2023, mainland China and Hong Kong were the second- and third-largest investors in Indonesia after Singapore, with total investment reaching US$3.5 billion.

While the China factor is unlikely to be a controversial election issue in 2024, Indonesia still needs to carefully manage existing public apprehension concerning China’s growing economic role, especially when Indonesian lives are at stake. The new administration will need to continue diversifying Indonesia’s economic cooperation, including with Australia, Canada, New Zealand, the Middle East and Africa.