China's Foreign Minister Wang Yi and Defense Minister are scheduled to meet with their Indonesian counterparts in Jakarta on Friday for discussions on security, politics, and economic issues. The meetings come as Indonesia navigates its relationships with both China and the United States amid escalating trade tensions and maritime disputes in the South China Sea.
Indonesian officials stated that the foreign ministers' meeting would prioritize economic matters and political relations, while the '2+2' session involving defense ministers would delve into political and security issues, defense cooperation, and the broader international and regional landscape. These talks occur in the context of recent joint naval exercises between China and Indonesia east of Taiwan, which analysts suggest may have been used by China to project political influence, despite Indonesia's assertion that the exercises were routine and conducted with multiple nations including the U.S. and Japan.
Indonesia maintains its own disagreements with China over the South China Sea, where Beijing asserts extensive claims. While a maritime development deal signed during President Prabowo Subianto's visit to China in 2024 suggested a "common understanding" on joint development in areas of overlapping claims, Indonesia has since reiterated its non-claimant status and does not recognize China's assertions. Analysts note that Indonesia prefers to manage these disputes through defense diplomacy rather than escalation, though engagement with China has increased significantly in recent years, albeit less than its defense cooperation with the U.S. or Australia.
Economically, China is a substantial investor in Indonesia, contributing $3.9 billion in foreign direct investment in the first half of 2026. However, regulatory challenges have created friction. Chinese companies operating in Indonesia have called for more business-friendly policies, citing high taxes and a new nickel pricing formula that increases costs. Concerns have also been raised about "excessively stringent regulation, over-enforcement," and alleged corruption and extortion by authorities, impacting major investors in the nickel sector, such as Contemporary Amperex Technology Co. and Tsingshan Group. President Prabowo has acknowledged investor complaints regarding the lengthy permit and approval processes and has advocated for deregulation to stimulate investment.
