Posted by: mel | October 2, 2009

RI, China relations take a new turn

Jakarta Post | Ary Hermawan and Veeramalla Anjaiah, Jakarta | World | 1 October 2009

When Jakarta decided to break relations with Beijing in 1967 over the latter’s alleged involvement in a coup attempt by the Indonesian Communist Party (PKI), China was a poor communist country.

Indonesia was then set to embark on a market-driven development run, and saw the communist China as an ideological threat to its fledgling economy. That suspicion brought immense misery for Chinese-Indonesians for decades, further complicating the already troubled relations.

In 1990, the frozen ties were not only restored, but also witnessed the exchange of visits by then president Soeharto to Beijing and then Chinese premier Li Peng to Jakarta. But it lasted for a brief moment, before an economic catastrophe hit the Southeast Asian nation in 1997, during which thousands of Chinese-Indonesians — again, made the scapegoat — fled from angry mobs let loose on Jakarta.

It was not until 2005 when President Susilo Bambang Yudhoyono and Chinese President Hu Jintao sealed a strategic partnership in Jakarta did relations begin to take a new turn. China had lifted most of its citizens from the gutter of poverty and had gotten a new tag: the world’s fastest-growing major economy.

China’s massive economic transformation has had an impact with a global magnitude, ringing a wake-up call for the crisis-hit United States as the world’s lone superpower.

Within a few years after the pact was signed, it became the third-largest trading partner for Indonesia, which has fully recovered from the Asian financial crisis that had undermined the thawing relations.

Data from the Central Statistics Agency shows the bilateral trade volume rose by 30 percent last year, from US$18.23 billion to $26.88 billion. The global downturn, however, hampered growth, with trade volume in the first half of this year falling by 17 percent compared to the corresponding period last year.

But according to China’s Ministry of Commerce, the bilateral trade value in 2008 was $31.52 billion, a remarkable achievement in both countries’ history.

The mood remains buoyant between the two nations.

“I think the present state of relations is excellent,” Chinese Ambassador to Indonesia Zhang Qiyue told The Jakarta Post at her office recently in connection with the 60th anniversary of China.

Currently, Ambassador Zhang said, there are 700 Chinese companies operating in Indonesia.

“Last year alone, 180 Chinese companies came to Indonesia,” Zhang said.

She added she was upbeat bilateral trade would pick up once the Sino-ASEAN Free Trade Area had been implemented, playing down Jakarta’s apprehension the multilateral deal would favor only Beijing and bring more harm to its domestic industry, especially in the textile sector.

“I think you must see this from the overall picture, in a comprehensive way,” said Zhang, who presented her credentials to President Susilo Bambang Yudhoyono in August last year.

Zhang Qiyue JP/V. Anjaiah

Zhang Qiyue JP/V. Anjaiah

“This is a situation that is good for both sides. I believe that over 93 percent of Indonesian goods will enjoy zero tariffs into China starting next year.”

Indonesia mostly exports natural resources and energy products to China, including palm oil, mineral resources and energy, while importing a wide variety of manufactured products from China, ranging from toys, home appliances, electronic goods and cellular phones, to food and giftware.

Industry Minister Fahmi Idris has voiced the concerns of local businesses, who claim to have already been hurt by the influx of cheap Chinese products.

But the overall economic partnership seems not to have been affected by the minister’s protest.

China, through the Bank of China and China Export Import Bank, recently agreed to lend $1.06 billion to state-owned electricity company PT PLN to finance its 10,000-MW coal-fired power plant projects, which are crucial to the economy.

Earlier, the central banks of both nations signed a multibillion-dollar currency swap agreement, under which Indonesian firms can buy Chinese products worth up to $15 billion using the yuan, while Chinese firms can buy Indonesian products of the same value using the rupiah.

“We need to know each other better; this is what is needed at this stage,” Zhang said, hinting that more could be done to foster relations beyond commerce.

“This is the reason why we want to engage ourselves more and more, and to organize more activities that involve the people.”

A troubled history has long hindered Indonesians and Chinese from knowing each other beyond prejudices and stereotypes. Under the iron-fisted rule of Soeharto, Chinese-Indonesians were banned from publicly displaying their cultural traits, while the former leader was suspicious of any people-to-people contacts between Jakarta and Beijing.

In a new era, the two nations are set to move on.

In concurrence with the implementation of the Sino-ASEAN FTA, both countries will next year celebrate the 60th anniversary of diplomatic relations, which began on April 13, 1950. Dubbed a “friendship year”, the ambassador said a series of cultural events and other activities would be held throughout 
the year.

The ambassador said one of the targets of her diplomatic goals was to enhance cultural understanding between the two nations.

“I think it’s very important to enhance the understanding between the two people; for Indonesians to better understand China and for Chinese people to better understand Indonesia,” she said.

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