China and Indonesia agreed on Friday to strengthen military cooperation and expand collaboration in minerals, energy and technology, as Jakarta seeks to maintain close relations with both Beijing and Washington amid intensifying economic and geopolitical competition in the Indo-Pacific.
The agreement was reached during high-level talks in Jakarta involving Chinese Foreign Minister Wang Yi and Defence Minister Dong Jun and their Indonesian counterparts. The discussions highlighted the breadth of the relationship between the two Asian powers, spanning defence and strategic affairs as well as trade, natural resources, artificial intelligence, green energy, transport, satellites and fisheries.
Wang, who is visiting Jakarta with Dong, said China and Indonesia should take advantage of the current moment to raise bilateral cooperation to a higher level.
“Both sides should seize the moment,” Wang said in introductory remarks, pointing to what he described as an increasingly complicated international environment.
“The current international situation is intertwined and complex. Unilateralism and hegemonic acts bring serious impact on global cooperation and stability,” he said.
Wang added that China was seeking to build cooperation with Indonesia “at a high level”, reflecting Beijing’s interest in strengthening relations with one of Southeast Asia’s largest economies and most influential diplomatic players.
The discussions come as Indonesia attempts to preserve its traditional “free and active” foreign policy, avoiding formal alignment with major powers while maintaining strategic and economic partnerships with competing countries.
President Prabowo Subianto has repeatedly emphasized Indonesia’s desire to remain friendly with all countries, including China and the United States. Washington remains an important economic and security partner for Jakarta, while China is Indonesia’s largest trading partner and a major source of investment.
The balancing act has become increasingly important as tensions rise across the Indo-Pacific, particularly over the South China Sea and competition between China and the United States.
Defence cooperation was a central component of Friday’s talks.
Chinese Defence Minister Dong Jun received a military honour guard after arriving in Jakarta for discussions with Indonesian Defence Minister Sjafrie Sjamsoeddin. The meeting focused on expanding military-to-military relations, including exercises, officer exchanges and cooperation in the defence industry.
“The prospects for cooperation between the two militaries are broad, and that such cooperation is becoming higher in quality and more effective,” Dong said.
Sjafrie said Indonesia and China would increase defence activities between their armed forces.
The planned cooperation includes joint military exercises, exchanges of officers and greater collaboration between defence industries, he said.
“This is a progressive step taken in the era of building Indonesia’s defence power at this moment and in the future,” Sjafrie said.
The strengthening of military ties reflects Indonesia’s broader effort to modernize its armed forces while maintaining relationships with several major defence powers.
Indonesia has expanded defence engagement with the United States and other countries while simultaneously developing military cooperation with China. Jakarta has also sought defence partnerships with countries such as Japan and European powers, underscoring its preference for a diversified security strategy rather than dependence on a single major power.
That approach was illustrated by a recent naval exercise involving Indonesia and China.
Last week, Taiwan expressed anger over a rare joint military exercise between the Chinese and Indonesian navies that took place east of Taiwan. Beijing claims Taiwan as part of its territory and regards the island as a core national interest.
Indonesia’s navy, however, described the activity as routine and said its vessel had conducted exercises not only with China but also with Japan and the United States.
The episode nevertheless demonstrated the sensitivity surrounding Indonesia’s expanding defence engagement with China.
Defence analyst Curie Maharani said Indonesia viewed the exercise as routine but acknowledged that its location could carry a broader political message for Beijing.
“Indonesia learned a valuable lesson about how great powers use defence diplomacy more as an instrument of influence projection,” she said.
The incident illustrates the increasingly complicated environment Jakarta faces as it expands military cooperation with China while maintaining security relationships with Washington, Japan and other regional powers.
China and Indonesia also face a complicated relationship over the South China Sea.
Beijing claims sovereignty over almost the entire South China Sea, while Indonesia does not consider itself a claimant in the wider territorial disputes involving China and the Philippines, Malaysia and Vietnam.
However, the two countries have overlapping interests and tensions around waters near Indonesia’s Natuna Islands, where Indonesian authorities have previously confronted Chinese fishing and maritime activities.
Jakarta has generally adopted a measured approach in dealing with Beijing over the issue. Indonesia has sought to defend its sovereign rights and maritime interests without becoming part of the broader strategic confrontation between China and other South China Sea claimants.
The balancing strategy allows Jakarta to maintain economic ties with China while avoiding an unnecessary escalation of strategic tensions.
The South China Sea nevertheless remains an important factor in Indonesia’s defence calculations, particularly as Chinese maritime activity and US military engagement in the wider Indo-Pacific continue to increase.
The expansion of China-Indonesia military cooperation therefore carries significance beyond bilateral relations. It could give Beijing greater defence access and diplomatic influence in Southeast Asia, while Indonesia can use military engagement with China as part of its broader strategy of maintaining multiple strategic partnerships.
## Minerals and energy at centre of economic ties
Economic cooperation was another major focus of Friday’s discussions.
Wang said China and Indonesia had agreed to support each other’s core interests and strengthen cooperation in energy and mineral resources.
Indonesia’s resource wealth makes it a particularly important economic partner for China.
The roughly US$1.4 trillion G20 economy possesses large reserves of nickel, tin, copper, gold and bauxite. It is also the world’s largest exporter of palm oil and a major exporter of thermal coal.
China is among Indonesia’s most important buyers of commodities and has become deeply involved in processing the country’s mineral resources.
Nickel has emerged as one of the most strategically significant areas of cooperation.
Indonesia has enormous nickel reserves and has sought to develop domestic processing capacity rather than simply export raw ore. Chinese companies have played a major role in establishing smelters and processing facilities, making China a dominant investor in Indonesia’s nickel-processing industry.
The sector is increasingly important because nickel is a key input for some electric-vehicle batteries and stainless steel production.
However, Indonesia’s changing mining policies have also created tensions with Chinese investors.
Recent changes affecting mineral exports and tighter mining quotas have increased pressure on companies operating in the sector. Some Chinese businesses have reportedly begun exploring alternative locations for investment.
The issue highlights the complexity of the economic relationship. Indonesia wants Chinese capital, technology and industrial expertise to accelerate downstream processing and create higher-value industries at home. At the same time, Jakarta is increasingly seeking tighter control over its natural resources and greater economic benefits from foreign investment.
China remains one of Indonesia’s biggest investors.
Indonesian figures showed that Chinese investment reached about US$3.9 billion in the first half of 2026, demonstrating the continuing importance of Chinese capital to the Indonesian economy.
Among the major Chinese investors are Contemporary Amperex Technology, the world’s largest electric-vehicle battery maker, and Tsingshan Group, a major steel producer with extensive smelting operations in Indonesia.
Yet Chinese companies have expressed concerns over the regulatory environment.
In May, Chinese businesses operating in Indonesia called for policies they considered more supportive of investment. They argued that higher taxes and a new formula for calculating nickel prices were increasing costs and threatening the viability of some investments.
The China Chamber of Commerce in Indonesia raised concerns in a letter seen by Reuters, saying Chinese companies faced what it described as “excessively stringent regulation” and “over-enforcement”.
The chamber also alleged corruption and extortion by authorities.
Such complaints illustrate the tension between Indonesia’s ambitions to attract foreign investment and its increasingly assertive approach to managing strategic industries.
Jakarta has encouraged foreign companies to invest in downstream industries but is also imposing policies designed to ensure that more economic value from Indonesia’s natural resources remains inside the country.
For Beijing, maintaining a favourable investment environment is important not only for individual companies but also for the broader economic relationship with Indonesia.
## Cooperation broadens beyond traditional sectors
Friday’s agreements indicate that China-Indonesia relations are increasingly extending beyond commodities and infrastructure.
The two countries pledged cooperation in artificial intelligence, defence, rail transport, green energy, satellites and fisheries.
Technology is becoming a particularly important area.
Indonesia is seeking to accelerate digital transformation and build technological capabilities, while China has developed globally competitive industries in artificial intelligence, telecommunications, electric vehicles, renewable energy and advanced manufacturing.
Cooperation in these areas could provide Indonesia with access to Chinese technology and investment while supporting Jakarta’s industrial-development goals.
Green energy is another potential area for expansion as Indonesia attempts to reduce its dependence on fossil fuels and develop renewable-energy capacity.
Rail transport, meanwhile, remains a visible component of China’s economic engagement in Indonesia. Chinese companies have participated in major infrastructure projects, strengthening the physical and economic links between the two countries.
The expansion of cooperation into satellites and fisheries also demonstrates the increasingly comprehensive nature of bilateral ties.
For Indonesia, deeper cooperation with China does not necessarily represent a strategic shift away from the United States.
Instead, Jakarta appears determined to preserve room for manoeuvre by maintaining partnerships with competing major powers.
Prabowo’s foreign policy emphasizes non-alignment and Indonesia’s longstanding “free and active” diplomatic tradition. The government has sought to strengthen relations with China while also expanding defence cooperation with Washington and other Indo-Pacific countries.
This approach reflects Indonesia’s geographic and economic position.
As the largest economy and most populous country in Southeast Asia, Indonesia has substantial influence within the Association of Southeast Asian Nations. Its strategic location near key maritime routes also gives it importance in the wider Indo-Pacific competition.
Jakarta therefore has strong incentives to avoid being drawn into an exclusive alliance with either Beijing or Washington.
The latest agreements with China allow Indonesia to deepen economic and military cooperation while continuing to pursue an independent foreign policy.
For Beijing, stronger ties with Jakarta provide an opportunity to reinforce its influence in Southeast Asia at a time when the United States is strengthening alliances and partnerships across the Indo-Pacific.
For Indonesia, meanwhile, Chinese investment, technology and trade remain valuable tools for economic development, even as the government seeks to protect national interests and maintain strategic autonomy.
The challenge for Jakarta will be managing the growing relationship without allowing economic dependence or military cooperation to undermine its carefully maintained neutrality.
The recent naval exercise and the continuing South China Sea sensitivities demonstrate how quickly bilateral defence cooperation can acquire wider geopolitical implications.
As China and Indonesia expand cooperation across defence, minerals, energy and technology, their relationship is becoming increasingly important to the strategic balance of Southeast Asia. The success of Jakarta’s approach will depend on whether it can continue working closely with Beijing while preserving equally important partnerships with Washington, Japan and other regional powers.
For now, Friday’s agreements signal that Indonesia sees value in deepening ties with China — but on terms consistent with its broader strategy of maintaining strategic autonomy and keeping its options open in an increasingly contested Indo-Pacific.
