China Test Looms for Widodo as Indonesia Faces Xi’s Campaign

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Joko Widodo, Indonesia's president-elect. Close

Joko Widodo, Indonesia's president-elect.

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Photographer: Dimas Ardian/Bloomberg

Joko Widodo, Indonesia's president-elect.

Chinese President Xi Jinping last month congratulated Joko Widodo for winning an Indonesian presidential election whose results have yet to be endorsed by the supreme court. Their next interaction may not be so warm.

Widodo will face a China that’s pushing its claims in the neighboring South China Sea with an aggressiveness unprecedented since Indonesia’s independence. For Jokowi, as the Jakarta governor is known and whose election win awaits validation later this month, ties with Xi loom as one of his biggest foreign-policy challenges.

With the largest economy in Southeast Asia and the world’s fourth-largest population, Indonesia has the potential to take a leadership role in forging the region’s ties with China. That may risk an early challenge, such as Japanese Prime Minister Shinzo Abe found when he took office in December 2012, a month when Chinese ship incursions doubled in what Japan regards as its territorial waters.

“They’ll push hard early and see if they are able to force people to give something,” said Scott Harold, an analyst in Washington with Santa Monica-based Rand Corp, referring to the Chinese leadership’s stance toward the incoming Indonesian administration. “The Chinese tend to do this with most new leaderships from whom they want something,” said Harold, whose doctorate from Columbia University focused on China’s foreign policy.

Photographer: SeongJoon Cho/Bloomberg

Xi Jinping, China's president. Close

Xi Jinping, China's president.

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Photographer: SeongJoon Cho/Bloomberg

Xi Jinping, China's president.

The economic imperative for Jokowi to balance the relationship is high, as China overtook the U.S., Singapore and Japan in the past decade to become Indonesia’s largest trading partner with $50.9 billion of non-oil transactions last year, up from just $5 billion in 2003, official data show.

Natuna Islands

China has sparked tensions with nations such as Vietnam and the Philippines in laying claim to about 90 percent of the South China Sea based on a nine-dash-line map first published in the 1940s. In May, Vietnamese and Chinese coast guard vessels clashed around an oil rig that China placed in disputed waters near the Paracel Islands.

In passports issued in 2012, China’s line encroaches on the exclusive economic zone that Indonesia derives from the Natuna Islands. The area is particularly sensitive. Indonesia’s state energy company PT Pertamina, along with partners that include units of Exxon Mobil Corp. and Total SA, wants to develop the East Natuna gas block with potential resources of 57 trillion cubic feet of gas, according to energy ministry data.

Photographer: Ng Han Guan/AP Photo

A Chinese man holds up a Chinese passport with details on a page that shows dashes which include the South China Sea as part of the Chinese territory outside a passport office in Beijing. Close

A Chinese man holds up a Chinese passport with details on a page that shows dashes... Read More

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Photographer: Ng Han Guan/AP Photo

A Chinese man holds up a Chinese passport with details on a page that shows dashes which include the South China Sea as part of the Chinese territory outside a passport office in Beijing.

Treading Carefully

As leader of the biggest country in the Association of Southeast Asian Nations, Jokowi may be under pressure from China to recognize the claim outlined in the map, which would give legitimacy to its other assertions.

“It would set up a situation where Asean members like Vietnam, Brunei, Malaysia, the Philippines would look at Jakarta and say: ‘We can’t rely on you to engage in the defense of our interests because you conceded something to the Chinese,’” said Harold.

Until now Indonesia has been careful not to recognize the claim. In 2010 it made a statement to the same United Nations body to which China had submitted its nine-dash map, saying China’s claim “clearly lacks international legal basis.” Foreign Minister Marty Natalegawa said in an interview in April that he wanted an explanation of China’s map and asked the United Nations to help obtain clarity.

“What you see is practically only Indonesia and Singapore who are not involved directly in the problem of the South China Sea,” said Umar Juoro, a member of Indonesia’s National Economic Council, which advises the president on economic policy. “That is the asset that Indonesia has more than other countries in this part of the world. Jokowi knows that.”

Asean Way

Though Asean doesn’t take an official view on the various disputes, it has pushed since 2002 for the adoption of a set of rules to avoid tensions between the bloc’s members and China. Last July China agreed to talks on a code of conduct, although there has been little progress. At a summit in Myanmar in May, Asean leaders called for self-restraint on territorial matters without mentioning China by name.

China has “a problem not with Indonesia, but with some of the Asean members,” Jokowi said in a July 21 interview. He will probably name his foreign minister, along with the rest of his cabinet, around Oct. 20 when he is inaugurated.

During the election campaign, Jokowi, a self-made businessman from the Central Java city of Solo, was painted as inexperienced by rival Prabowo Subianto, a former army general. Prabowo has contested the election outcome with the Constitutional Court, which is expected to rule by Aug. 24. The hearings start tomorrow.

In a debate with Prabowo in late June, Jokowi said he would protect Indonesia’s sovereignty, telling Prabowo “don’t think I cannot be firm.”

‘Own Man’

“Jokowi wants to show that he’s his own man, he wants to show nationalism, and he wants to show I have stood up to the Chinese,” said Bilveer Singh, an associate professor of political science at the National University of Singapore.

Jokowi will probably continue policies pursued by outgoing President Susilo Bambang Yudhoyono and Natalegawa, who positioned Indonesia as a mediator on the South China Sea, pushing for an agreement between Asean and China for the code of conduct.

Jokowi may be “more active in order to try to unify Asean around a strategy to balance China’s ambitions” in the South China Sea, said Jean-Pierre Cabestan, director of government and international studies at Hong Kong Baptist University.

“We have Asean, and I think if Asean says that we must participate in that problem, then we can participate,” Jokowi said in the July 21 interview.

Infrastructure Needs

While there is potential for tensions with China, Jokowi will also be mindful of opportunities for cooperation.

In a speech to Indonesia’s parliament in October, Xi set out his plans to establish an Asian infrastructure investment bank to fund projects in the region. During his campaign Jokowi highlighted Indonesia’s need to invest in infrastructure to attract overseas investment and boost growth.

Xi also unveiled plans to build a new maritime silk road, which would entail investment in Asean countries and which may fit with Jokowi’s plans to turn Indonesia into a global maritime axis by beefing up sea-transport links and ports and increasing maritime cooperation.

For now details of both projects are short and may be fleshed out when Jokowi attends the Asia-Pacific Economic Cooperation meeting in Beijing in November.

To contact the reporter on this story: David Tweed in Hong Kong at dtweed@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net Tony Jordan

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