ASEAN

'Win-Win' Not Enough for China and Indonesia

China has designated 2010 "The Year of China-Indonesia Friendship" to mark the 60th anniversary of establishing diplomatic relations with the world's fourth-largest country. But while both countries are poised to reap major benefits from their improved bilateral ties, Beijing and Jakarta must manage their asymmetric relationship skillfully to mitigate potential tensions in the future.

Relations between China and Indonesia have certainly come a long way since the height of the Cold War. Beijing, then reviled by Jakarta as a fomenter of communist insurrection, is now welcomed as a key investor in Indonesia's economic future. Bilateral trade has mushroomed by an average annual rate of 20 percent since 2001, and China is now Jakarta's largest source of imports and third-largest export destination. The relationship has also matured beyond the economic realm, with more regularized people-to-people exchanges and the inking of a defense cooperation agreement in 2005. Beijing's ambassador to Jakarta, Zhang Qiyue, described Sino-Indonesian relations as having completed "one full cycle in the lifespan of a man," and added that it is now time "to start a new cycle of friendship."

Yet while it is in both nations' interest to continue to increase trade, strengthen cultural ties and even forge closer security ties, the asymmetric nature of the relationship requires that both China and Indonesia be attentive to each others' perceptions and fears. As the scholar Brantly Womack has argued, China's vastly superior size and capabilities make Jakarta more sensitive and vulnerable to the risks of its relationship with Beijing, since it has proportionally more at stake. That may cause Indonesia to hesitate, even in a case where both countries benefit in an absolute sense. "Win-win," to use the Chinese term for mutually beneficial bilateral cooperation, may not be enough.

The recent controversy over the ASEAN-China Free Trade Agreement (.pdf) (ACFTA) illustrates this dynamic. According to official ASEAN statistics, ACFTA is expected to bring great benefits for ASEAN countries like Indonesia in the medium to long term, by further opening Chinese markets for ASEAN exports, attracting increased investment to the region, and enhancing economic efficiency. Yet, last month, Jakarta, after weeks of intense pressure from lobby groups and street protests, backtracked and asked to rewrite ACFTA's terms. Fearing a flood of low-cost goods from China, Indonesia submitted a lengthy list of over 200 "vulnerable" industries for which it hoped to keep protections in place.

The "win-win" that ACFTA offered was not enough for Jakarta, due to its fears that its smaller economy could not handle the short-run displacements in several key industries resulting from Chinese competition. Similar tensions could also arise in the future should Chinese companies gobble up stakes in the archipelago's mineral and natural resource sectors, as investment forecasts predict. Indonesia could view Chinese dominance of its markets as an affront to its sovereignty, even if Beijing is merely trying to do business with it -- particularly given Jakarta's historical problems with the privileged position of its ethnic Chinese.

The same thing applies to the security realm. Though China has made a concerted effort over the past decade to engage Southeast Asia and embrace multilateralism, it has more recently become more assertive, and even provocative, regarding conflicting maritime and territorial claims in the South China Sea. Instead of treading a path of confidence-building and cooperation in accordance with the 2002 Declaration on the Conduct of Parties in the South China Sea, China has constructed a large naval base in Sanya and beefed up its facilities in the contested Spratly and Paracel Islands.

Even though Beijing is unlikely to trigger a conflict over these maritime disputes, its recent posture nevertheless raises concerns in countries like Indonesia about China's future intentions and ambitions. Just a few months ago, when Indonesia detained 75 Chinese nationals and their eight fishing boats off the contested and resource-rich Natuna gas fields, the Chinese Foreign Ministry issued a particularly harsh statement, saying it was "strongly dissatisfied" and "demanding" that Jakarta immediately release them in the interest of "maintaining the overall situation of bilateral relations." The rebuke made it clear to Indonesia that China's increasing influence will result in greater leverage to use against Jakarta on key disputes such as this in the future.

Similar questions remain about China's role in the region more generally. Chinese officials may argue that they have already done their part to reassure Southeast Asian nations by inking the Treaty of Amity and Cooperation, engaging in the ASEAN Regional Forum, and frequently restating their intentions to maintain China's "peaceful rise."

But because China's military capabilities so dwarf that of ASEAN nations, and because of the lack of Chinese transparency regarding these capabilities, most members of Indonesia's foreign policy elite remain deeply suspicious of China's future intentions. According to Indonesian scholar Rizal Sukma (.pdf), "any future sign indicating China's intention to be a dominant power in the region would certainly revive Indonesian sensitivity," particularly since Jakarta views itself as the natural leader of and hegemon in ASEAN. For instance, in 2007, Indonesia insisted that a proposed East Asian Summit, initially limited to ASEAN countries, China, South Korea and Japan, be expanded to include Australia, India and New Zealand in order to dilute Chinese dominance in shaping regional architecture. Any further displays of Chinese belligerence, similar to recent incidents in the South China Sea, will further stoke Indonesian fears.

The problem of asymmetric relations, as Womack notes, cannot be solved, it can only be managed. Going forward, Beijing should try to further reassure Jakarta about its intentions by enhancing its military transparency and increasing its participation in confidence-building measures in the region. Indonesia, for its part, must address outstanding concerns about Beijing coolly, instead of resorting to heated rhetoric about the "China threat." Most importantly, both sides must be attentive to each others' perceptions and fears in order to forge a cooperative partnership in the 21st century. Otherwise, the Year of the Golden Tiger, and the years that follow it, may not be as golden as China and Indonesia hope.

Prashanth Parameswaran is research assistant at the Project 2049 Institute, a Washington-based think tank that covers Asian security issues. He is also a research fellow for Asia Chronicle, a daily online journal, and blogs about international affairs at GlobalEye.

Source: http://www.worldpoliticsreview.com/article.aspx?id=5232

Mail from: Ms. Wahyuningrum (Yuyun)

By: Prashanth Parameswaran
When: 7/2/2014

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