Since Indonesia first established diplomatic ties with the People’s Republic of China in 1950, relations have been complicated – and more than those with any other country, continue to impinge on domestic affairs to different degrees. Indonesia’s ethnic Chinese community asserts significant influence over the national economy and because domestic dynamics tend to serve as the primary drivers of the country’s foreign policy, public opinion – and that of the elite – is divided over the rise of China, which is seen as both a threat and an opportunity. Increasingly close economic ties between the two countries, particularly under current President Joko “Jokowi” Widodo, have come in for growing domestic criticism, which is becoming more politicised in the run-up to the presidential election on April 17. STATE OF TIES Jakarta and Beijing established diplomatic relations on April 13, 1950, but these were frozen on October 30, 1967 by Indonesia’s military-dominated New Order government led by General Suharto , largely over suspicions that China was backing the Communist Party of Indonesia. The Chinese in Indonesia were viewed with distrust and jealousy by indigenous communities, which was not helped by the efforts of successive governments in Beijing to mobilise support from Overseas Chinese . Suharto’s administration forced people of ethnic Chinese descent to assimilate completely into the local culture, and they were forbidden from publicly expressing their Chinese heritage. But at the same time, a few major ethnic Chinese conglomerates were granted special economic privileges. Thus, the monopolistic practices and crony capitalism of the increasingly corrupt and repressive New Order regime again led to rising anti-Chinese sentiment. Anti-Suharto demonstrations in the midst of the Asian financial crisis in 1998 were marked by anti-Chinese racial riots in many parts of the country. Suharto’s administration decided to resume diplomatic relations with Beijing on August 8, 1990, as it could not ignore China’s rise and growing influence in regional affairs. It remained cautious, however – paranoia about the possible rise of communism had not completely disappeared. This was especially true among the intelligence community. But China’s subsequent actions – it’s help towards Asean countries during the 1997-1998 Asian financial crisis; its muted official reaction to the anti-Chinese riots, regarding them as domestic matters; and its assistance to the country in the aftermath of the 2004 Boxing Day tsunami – helped strengthen ties. Indonesian Chinese still face discrimination. Can one Muslim make a difference this election? As two-way trade and tourism increased, both countries signed a comprehensive strategic partnership agreement in 2013. Today, China has replaced Japan as Indonesia’s largest trading partner and is the third-largest foreign investor after Singapore and Japan. Yet Jakarta still harbours reservations about Beijing’s intentions. China’s increasingly assertive policy in the South China Sea since 2009 has reinforced concerns about whether the country’s rise will continue to be peaceful, especially in light of Beijing’s perceived role in undermining Asean unity. Asean’s failure to issue a joint communique at its summit in Phnom Penh in 2012 for the first time in its history – over a disagreement about a statement regarding the South China Sea – was widely seen as being caused by Beijing’s influence on Cambodia . While the government is more concerned about the implications of China’s rise on regional security, the wider population has tended to focus on the impact of China’s economic intrusion on their livelihoods. They have felt increasingly threatened by the flood of cheap, often illegal, goods from China. Before the full implementation of the Asean-China Free Trade Area Agreement in January 2010, pressure was applied by both the business community and civil society on the Indonesian government to pull out of the deal or renegotiate its terms with Beijing, on the back of Indonesia’s consistently widening trade deficit with China, as well as concerns about deindustrialisation and the loss of jobs. Despite these periods of tension, Indonesia’s economic relations with China did not become a divisive political issue between 2004 and 2014, when former president Susilo Bambang Yudhoyono was in power. CONTESTED RELATIONS A marked change seems to have occurred in public attitudes towards Indonesia’s ever-closer economic relations with China since Widodo took office in October 2014. Growing criticism of the various negative affects of China’s economic roles in Indonesia are now often accompanied by charges against Widodo himself. While most of the criticism from foreign policy observers has focused on the wider security implications of Indonesia’s increasing dependence on Chinese investment – particularly on the constraints faced by Indonesia in responding to developments in the South China Sea – the general public has raised concerns about the extent and nature of China’s penetration of the Indonesian economy . In Indonesia’s presidential race, identity politics is testing both democracy and diversity Widodo made infrastructure development one of his top priorities during his presidential campaign, which he has pursued in earnest since taking office. Insufficient infrastructure has long been a problem in Indonesia, reducing its economic competitiveness and widening the socioeconomic gap between the more-developed western and less-developed eastern parts of the country. China has become a favoured source of funding for the Widodo government’s ambitious infrastructure programmes. Indonesia has joined the China-led Asian Infrastructure Investment Bank and designated a number of areas to be part of Beijing’s “ Belt and Road Initiative ”. Projects funded by loans from China are usually built by Chinese firms employing large numbers of workers brought from mainland China. This has become fodder for negative campaigns against the government in general and Widodo in particular. In the run up to the elections in 2017 to choose a governor for Jakarta, hoaxes spread on social media about an influx of up to 10 million Chinese illegally entering the country to vote for the ethnic Chinese incumbent governor, Basuki Tjahaja Purnama , who had served as vice-governor under Widodo and was thus closely identified with him. While such rumours could easily be exposed as fabricated, concerns about the large numbers of blue-collar Chinese workers employed by Chinese companies, both registered and unregistered, have also been raised by the mainstream media. On November 15, 2017, for example The Jakarta Post published a series of reports about the development of an industrial estate in Morowali, Central Sulawesi, which was managed by a Chinese joint venture called PT Indonesia Morowali Industrial Park. Headlines that included “Morowali: a tale of China’s grip on rich region” and “Anti-Chinese spectre raises head in C. Sulawesi regency” spoke for themselves. Periodic media reports about the presence of both legal and illegal workers from China have kept these issues alive. IDENTITY POLITICS What these developments show is that relations between Indonesia and China are becoming increasingly contested. Widodo has been criticised for not sufficiently protecting Indonesia’s wider national interests in his drive to attract foreign investment from China . The rise in identity politics – which gathered momentum in late 2016 during the Jakarta gubernatorial campaign when Purnama was the target of large-scale demonstrations by Islamic groups who accused him of blasphemy – has again conflated Indonesia-China relations with domestic political competitions for power, to a certain extent. In the run-up to the presidential election in April, Widodo has become the target of massive social media campaigns accusing him of being a handmaid of both China’s and the local Chinese community’s interests. Although so far Widodo’s popularity has not been too badly affected by the various allegations made against him, including the patently false rumours that his family were members of the Communist Party of Indonesia and of Chinese descent, there are real concerns that in the increasingly charged political climate, the rise in anti-Chinese sentiments may again be manipulated for political purposes. Great care must, therefore, be taken to address all the issues that have arisen in Indonesia-China bilateral relations, for if left unattended they may jeopardise all the gains that have been made, including Indonesia’s hard-won and still fragile inter-racial harmony. Dewi Fortuna Anwar is Research Professor at the Research Centre for Politics, Indonesian Institute of Sciences and Vice-Chairman of the Board of Directors, The Habibie Centre in Jakarta. This article is an extract from a longer version in ISEAS Perspective Issue 2019, No. 19.