Development & Education

The economic cold war in Indonesia

This story is a part of

Human Needs

This story is a part of

Human Needs


Street vendor in Indonesia (Image by Wikimedia user Jonathan McIntosh (cc:by).

This article was originally covered by PRI's The World. For more, listen to the audio above.

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Indonesia has become a battleground in an economic cold war raging between China and the United States. As the two superpowers compete, Indonesia is reaping benefits.

"We are open for business, and if you don't come now, I think you are going to miss the boat," according to Indonesia trade minister Mari Pangestu, who estimates that the country's economy will grow by 6 percent next year. That leaves them with plenty of options for investment. The country recently signed a regional pact with China that lowers trade barriers. Pangestu told PRI's The World:

The answer is not to stop globalization and wait until you're ready, because other countries are not stopping. And if you stop and other countries are progressing, and then when you decide to open up 10 years from now, you will be that much further behind.

Even hard-line Islamists, long opposed to communism's anti-religious views, are warming to the idea of China's investments. Ismail Yusanto of the radical group Hizb ut Tahrir Indonesia, believes that China could offset the US influence. He told The World:

In several cases, China has been independent and chosen not to follow the US. China has grown to a superpower economically. We must reject countries presence in our country, because such nations try hard to prolong their hegemony. This is the reason we look to China as a potential economic partner for Indonesia.

Not everyone is happy with China's new influence in Indonesia. Some of the country's some 7.7 million Chinese immigrants, for example, are wary of the country's investments and the effect it may have on Indonesia. Chad Bouchard reports that many Indonesians view Chinese as economic interlopers, getting rich while Indonesians remain poor. In fact, in 1998, ethnic violence broke out against Chinese. Some fear that similar tensions could rise again with more investment.

Others worry what affect the anti-democratic government could have on the country.

"China is the girl we hang out with, America is the woman we hope someday to marry," Political analyst Weimar Wetolar told The World. "China is for pragmatic purposes, and America is for more idealistic purposes." He says that most intelligent people in the country would rather align themselves with democratic countries, rather than dictatorships.

In the end, as with most economic competitions, the policies may have less influences than the prices. And whichever country can offer better products for lower prices may end up winning this cold war.
