June 23, 2021

Why Indonesia needs to study China’s economic rise?


The long history between Indonesia and China has encouraged several institutions in Indonesia to build centres for studies on China.

For example, Al Azhar Indonesia University in Jakarta founded a centre dedicated to Mandarin language and Chinese culture in 2005 and Petra Christian University (UKP) in Surabaya, East Java, established its “Center for Chinese Indonesian Studies/CCIS” in 2011.

Many Chinese study centres in Indonesia focus on just Chinese culture and language. While crucial, it is not enough.

The rise of China and the growing ties between Indonesia and China should be a wake-up call for Indonesia to have more study centres focusing on the Chinese economy. Indonesia needs to learn about China’s economic success. Indonesia-China relations are also mainly based on economics.

To learn from China’s economic success

In today’s globalised world, the most incessant expansion is in the economic field.

We have seen China transformed since the time of Deng Xiaoping’s leadership (1978-1989). Deng was very aggressive in improving China’s domestic economy.

In aiming for economic advantage, China adopted five strategies:

  • modernisation with peaceful development
  • promoting world peace in development
  • reform and innovation in the search for mutual benefits and development co-operation with other countries
  • development efforts depending on their strength
  • building a world of sustainable harmony and shared prosperity.

To accelerate economic growth, China industrialised its trade and investment activities. In 2017, according to McKinsey, China became the second-largest source of investment flows and also the largest recipient of investment flows.

In addition, China has transformed into a technology giant. Chinese brands such as Xiaomi, OPPO, Vivo, Huawei and e-commerce Alibaba have boosted the country’s economy.

Jakarta has been planning to boost its trade, investments abroad and technological advancements.

The Indonesian government can learn a thing or two from China’s economic expansion.

Indonesia-China’s heavily economic relations

Relations between Indonesia and China are concentrated in the economic sector, such as investment and export-import activity.

Last year, China was the second-largest investor in Indonesia after Singapore.

In 2020, Chinese investments in Indonesia include 2,130 projects worth a total of US$4.8 billion. The previous year’s number was $4.7 billion.

In the same year, Indonesia’s exports to China reached $37.4 billion, based on total trade value. This was a 10.10% increase from 2019.

Meanwhile, Indonesia’s imports from China in 2020 were recorded at $41 billion.

The trade balance is weighted in China’s favour. One of the most crucial reasons is that Indonesia has not been able to identify what kind of products are in high demand in China.

Wang Runsheng, president of China Foreign Trade Center – a unit under the Chinese Ministry of Commerce – stated that one of the ways Indonesia can deal with the decline in primary commodity exports to China is by researching what products the Chinese people need.

To balance China’s economic footholds in Indonesia, the Indonesian government needs to have a proper understanding of how China works overseas, its strategies and how to benefit from China’s economic rise.

Cultural understanding won’t cut it

Studying its culture alone is not enough to understand China.

In today’s world, the economy is a weapon for actors in international relations to influence and seek profits for their country.

Indonesia needs to examine the strategy and growth of China’s economic progress by mobilising its best scholars to help policymakers formulate effective policies.

Moreover, looking into the patterns of co-operation China has established, as well as its successful economic development strategies, will provide vital and up-to-date knowledge of the world’s second-largest economy.

It is not enough for Indonesia to rely on centres of cultural studies to understand China and its movements.

China’s Belt and Road Initiative’s primary blueprint states that the pursuit of cultural and academic exchanges between China and its partners is aimed at legitimising the implementation of Chinese projects. In essence, the cultural and academic exchanges are grounded in economic interests.

At the end of the day, China’s exertion of cultural influence is part of an effort to advance its economic interests.

Yeta Purnama, a Universitas Islam Indonesia student, contributed to this article.

Muhammad Zulfikar Rakhmat does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.


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