The establishment of a high-level dialogue between Indonesia and China will bring the two countries closer together, but the South China Sea will remain a stumbling block in their relationship, foreign policy experts have said. China’s foreign minister, Wang Yi, and the Indonesian minister for maritime affairs and investment, Luhut Pandjaitan, last week signed a memorandum of understanding (MoU) to create “a platform for closer dialogue” between their governments. The development was immediately hailed as a “great event” in bilateral relations by the Chinese foreign ministry, which said the move was “an important measure to implement the consensus reached by the heads of state”. The dialogue aims to boost cooperation on five points: Covid-19 vaccines and health care; Belt and Road Initiative projects; maritime issues; cultural and people-to-people exchanges; and “building a community with a shared future”. Ple Priatna, a former Indonesian diplomat who served in Beijing and Brussels, said that the dialogue could speed up Chinese investment in the country and that President Joko Widodo’s top envoy, Luhut, would play a coordinating role for the various Indonesian ministries. “There will be investment commitments, deals, and minutes of meetings from the high-level dialogue, which will be relayed by Luhut to Indonesian ministries [such as trade, industry, investment and foreign]. The ministries will then handle all the technicalities to help investors realise [their commitments]. For example, if a deal is about trade, the trade ministry will oversee it,” Ple said. “Coordinating those deals is an art. Luhut is a really credible figure who has the scope and the skills to connect with the Chinese side at a high level.” Emirza Adi Syailendra, associate research fellow of the Indonesia programme at S Rajaratnam School of International Studies at Nanyang Technological University in Singapore, said the dialogue would “showcase the close, personal contact between political elites in Indonesia and China”. “It’s a classic feature of the Widodo administration when it comes to dealing with China ,” Emirza added. An important partner Beijing’s move to boost ties with Indonesia underlined the importance of Southeast Asia’s biggest economy to China as it sought support for its regional ambitions, Emirza said. Countries that have diplomatic ties with China can be separated into different tiers depending on their partnership arrangements. These range from cooperative partnerships, to comprehensive cooperative partnerships, to strategic partnerships to (the second highest level) comprehensive strategic partnerships, which is the type of partnership that Indonesia has had with China since 2013. The highest tier of bilateral relations with Beijing is comprehensive strategic co-operative partnership. Last year China was the second biggest foreign investor (after Singapore) in Indonesia, with US$4.8 billion in realised investments in over 3,000 projects, according to Indonesia’s investment ministry. In the first quarter of this year it was again the second biggest investor, pumping in more than US$1 billion. China woos Asean with diplomatic upgrade in its relationship status Meanwhile, China was Indonesia’s largest trade partner last year, with US$71.4 billion in total trade volume. In comparison, Indonesia’s trade volume with the US over the same period was about US$27.2 billion. One of China’s biggest projects in Indonesia is the US$6.07 billion Jakarta-Bandung high-speed rail project, which is expected to be finished by the end of next year. Widodo has reportedly invited Chinese President Xi Jinping to attend the first test drive next year. The coronavirus pandemic has also brought the countries closer together. The pandemic has infected more than 1.8 million people and killed over 52,000 in Indonesia, which has turned to China to secure its supply of Covid-19 vaccines . In January, Widodo became the most prominent regional leader to be inoculated with China’s Sinovac vaccine, receiving the jab live on television. Indonesia has received more than 92 million vaccines so far, most of them from Sinovac, and some from AstraZeneca and Sinopharm. Such ties would be further cemented by the dialogue, said Ple. “Indonesia is inching closer to China with this high-level dialogue, which I hope can deliver more concrete results,” Ple said, adding that China would use the forum to “build up trust among Indonesians”. However, Ple warned there were “things that can blow up the relationship at any moment, such as anti-China sentiment and the South China Sea issue”. Sticking Points While Indonesian Foreign Minister Retno Marsudi welcomed the dialogue, she said the South China Sea would be “a test” for relations between China and the Association of Southeast Asian Nations ( Asean ). She called for more talks between the 10-nation bloc and China on a code of conduct for actions in the sea. Indonesia was ready to host negotiations on the code in Jakarta “in the near future”, she said on Monday. She also conveyed the importance of starting negotiations on such a code during a bilateral meeting with Wang Yi. Indonesia maintains that it is not a claimant in the South China Sea territorial dispute, which largely revolves around a nine-dash line that China uses to stake its claim to more than 90 per cent of the waterway and overlaps with conflicting claims by Brunei, the Philippines, Malaysia, and Vietnam. However, a section of Indonesia’s exclusive economic zone around the Natuna Islands lies within the nine-dash line and Vietnam’s exclusive economic zone, resulting in regular disputes with Chinese and Vietnamese fishing vessels and the Chinese coastguard. Retno’s remarks underlined “just how wary many Asean countries are of China’s assertiveness in the region, including Indonesia”, Emirza said. By pressing China to restart the discussion on a code of conduct, Indonesia was trying to include China in a binding commitment, without “compromising Indonesia’s status as a non-claimant state”, Emirza added. China’s actions in its restive western province of Xinjiang also have the potential to be a sticking point. According to human rights groups and a United Nations committee, as many as 1 million Uygur Muslims – the region’s largest ethnic group – have been detained in “re-education centres” in Xinjiang and subjected to indoctrination, torture and forced labour. While the United States and Canada have accused China of “genocide” in the region, Beijing has defended its policies by saying the camps are vocational training centres and that it is trying to manage ethnic tensions, fight extremism and reduce poverty by developing the resource-rich region into a trade route to Central Asia. In the meeting with Wang Yi, Luhut said Indonesia adhered “to the principle of non-interference in other countries’ internal affairs” and was “ready to strengthen religious exchanges with China to help the Indonesian people and the international community have a better understanding of the development and progress of China’s Xinjiang ”, according to a news release by China’s foreign ministry. ‘All Chinese are the same’: Indonesia’s ‘nationalism’ test for graft-busters Emirza said China’s mention of Xinjiang in its statement regarding the meeting with Luhut meant Beijing had taken it in “good faith that Indonesia will not criticise [China] on the matter”. As the world’s most populous Muslim majority nation, Indonesia is typically quick to condemn actions seen as anti-Muslim. For instance, it has been vocal against the problems faced by Palestinians. However, it has remained largely silent on Xinjiang. Some Islamic groups in Indonesia see the reports of religious persecution in Xinjiang as Western propaganda aimed at denigrating China while it is locked in a trade dispute with the US. According to a 2019 report by Jakarta-based think tank the Institute for Policy Analysis of Conflict, the Indonesian government fears taking a more vocal stance could embolden Islamic fundamentalists in the country.