China, Indonesia sovereign wealth funds boost investment ties

CHINA and Indonesia agreed to step up ties between their economies during Premier Li Qiang’s visit to Jakarta, including one on investment involving their sovereign wealth funds.

Both their central banks signed a memorandum of understanding (MOU) on a framework for bilateral transactions in local currencies during a ceremony witnessed by Li and President Prabowo Subianto on Sunday (May 25). The two countries will boost cooperation on tourism and agricultural exports, while wealth funds China Investment Corporation and Danantara Indonesia entered an investment agreement. No details were provided.

Li’s visit to Jakarta comes as China seeks to strengthen relations with South-east Asia amid intensifying trade tensions with Washington. It follows an inaugural 2+2 dialogue last month between Chinese and Indonesian foreign and defence ministers, talks that were widely seen as part of Beijing’s strategy to court the wider regional bloc. Li is headed to a South-east Asian leaders summit in Malaysia this week. 

Trade and investment from Chinese companies and other multinationals into Asean have soared in recent years as US tariffs on China drove a relocation in manufacturing. 

Chinese and Indonesian officials also signed MOUs on economic, industry and supply chain development policies and agreed to further work on health and media sectors. 

Prabowo has visited China twice since winning the presidency – in April and November last year – with one of those trips resulting in more than US$10 billion in business deals. China is Indonesia’s largest trading partner and a key investor in the country’s commodity and infrastructure sectors, including the Jakarta-Bandung high-speed rail and nickel processing.