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Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
China's Economic Engagement with Southeast
Asia: Indonesia
Ari Kokko
To cite this article: Ari Kokko (2014) China's Economic Engagement with Southeast Asia: Indonesia, Bulletin of Indonesian Economic Studies, 50:3, 505-506, DOI: 10.1080/00074918.2014.980392
To link to this article: http://dx.doi.org/10.1080/00074918.2014.980392
Published online: 03 Dec 2014.
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theory and ‘open regionalism’ aspect. The latter aspect is useful for identifying the potential beneits to the AEC of the socalled ASEAN Plus frameworks.
Kiki Verico
University of Indonesia
© 2014 Kiki Verico
http://dx.doi.org/10.1080/00074918.2014.938420
Centre for Strategic and International Studies. 2014. Dampak FTA di Indonesia: Studi dan Hasil Survei Perspektif Bisnis 2013 [The impact of FTA in Indonesia: Study and business perspectives survey 2013] Jakarta: Centre for Strategic and International Studies. Eichengreen, Barry. 2007. The European Economy since 1945. Princeton, NJ: Princeton Uni
-versity Press.
Hayakawa, Kazunobu, Daisuke Hiratsuka, Kohei Shiino, and Seiya Sukegawa. 2009. ‘Who Uses Free Trade Agreements?’. ERIA Discussion Paper Series 22, Economic Research Institute for ASEAN and East Asia, Jakarta.
Park, Donghyun, Innwon Park, and Gemma Esther B. Estrada. 2008. ‘Prospects for an ASEAN–People’s Republic of China Free Trade Area: A Quantitative and Qualita -tive Analysis’. ADB Economics Working Paper Series 130, Asian Development Bank, Manila.
China’s Economic Engagement with Southeast Asia: Indonesia. By John Lee.
Trends in Southeast Asia. Singapore: Institute of Southeast Asian
Stud-ies, 2013. Pp. 40. Paperback: $9.90/S$12.90. PDF available at http:// www.iseas.edu.sg/documents/publication/Trends_20133.pdf.
Is China acquiring the economic levers to draw Indonesia into its political and strategic embrace? This is the core question in the second issue of a series on China’s economic engagement with Southeast Asia, from the Institute of South
-east Asian Studies, written by John Lee (who was also the author of the irst instal
-ment in the series, focusing on Thailand). The proposed answer is no, for three main reasons. First, there is little evidence that China is trying to use its economic weight to inluence Indonesia’s strategic decisions. Second, Indonesia’s economic structure—with substantial geographical and industrial diversity, relatively weak integration with regional value chains, and strong reliance on domestic demand and productivity growth as drivers of economic development—would make it dificult for China or any other foreign power to push Indonesia to act against its own interests. Third, Indonesia’s strong ambition to maintain its independ
-ence and autonomy means that it will be hesitant to enter into engagements that
threaten to reduce its strategic options.
Economic data appear to support these arguments. China is an increasingly important investor in Indonesia, but the Chinese share of inward foreign direct investment is still small, even in the sectors favoured by Chinese investors— energy, metals and minerals, and transportation and logistics. Hence, John Lee concludes that ‘there is no evidence that Indonesia is becoming overly reliant on Chinese capital’. The bilateral trade relation seems a bit more problematic. Trade with China has grown rapidly, accounting for more than 20% of Indonesia’s total trade. Indonesia is not only recording a deicit, but the structure of trade also
506 Book Reviews
looks unfavourable to Indonesia. Exports to China are mainly raw materials and lowvalue products, while imports are largely made up of highervalue industrial goods. This imbalance may grow in the future, as Indonesian exports of petro
-chemicals and natural resources decline in importance. Although cheap Chinese machinery, equipment, and components may be necessary to raise the competi
-tiveness of Indonesian manufacturing, there is growing resentment against China among some Indonesians, who believe that it is China rather than Indonesia that is the main beneiciary of the relationship. Lee therefore argues that increasing Chinese trade penetration will not give Beijing more leverage over Jakarta, but rather result in a more cautious and sceptical Indonesian attitude towards China. The analysis presented by John Lee is reasonable, but some questions remain unanswered (or even unasked). For example, what roles do different Indone
-sian interest groups play in forming the attitudes towards China? The Chinese minority in Indonesia is mentioned in passing, but there are other actors whose views may inluence both policy and public opinion—what are the views of dif
-ferent political parties or industry associations like the Indonesian Chambers of Commerce or to Indonesian Association of Entrepreneurs? The analysis is clearly based on an Indonesian perspective—the key questions concern the impacts on and risks for Indonesia of deeper engagement with China—but there is no dis
-cussion of what China wants to achieve through its interaction with Indonesia, apart from the obvious commercial objectives related to raw materials and natural resources. Is there more than this to China’s southeast agenda? To paraphrase Sun Tzu: if you know your own strategic objectives but not those of your partner, for every victory you will also suffer a defeat.
Obviously, it is no easy task describing China’s strategic objectives. One com
-plication concerns the level of analysis. Does China have speciic strategic aims with regard to Indonesia (and all other countries in the region), or would it be more appropriate to discuss a Chinese strategy for Southeast Asia or ASEAN?
Perhaps one of the future contributions to this series could address this
ques-tion, and complement the analyses of individual Southeast Asian countries with a regional perspective.
Ari Kokko
Copenhagen Business School
© 2014 Ari Kokko
http://dx.doi.org/10.1080/00074918.2014.980392
