China, Indonesia agree to boost military ties, work closer on minerals, energy and tech

By Stanley Widianto and Stefanno Sulaiman

JAKARTA, Aug 21 (Reuters) – China and Indonesia agreed on Friday to boost military ties and work closely on minerals, energy and technology, as Jakarta seeks to balance ties with both Beijing and Washington amid economic and geopolitical tensions, including in the South China Sea.

Both countries should “seize the moment,” China’s Foreign Minister Wang Yi said in remarks made at the start of his visit to Jakarta. He was travelling with Defence Minister Dong Jun to meet their Indonesian counterparts.

“The current international situation is intertwined and complex. Unilateralism and hegemonic acts bring serious impact on global cooperation and stability,” he said. 

“China actively aims to build China-Indonesia cooperation at a high level,” Wang added. 

The two countries pledged to cooperate across multiple areas from artificial intelligence, defence and rail transport to green energy, satellites and fisheries.

Indonesian President Prabowo Subianto has advocated maintaining Indonesia’s “free and active” foreign policy of non-alignment, vowing to befriend all countries including China and the United States, an important trade partner with which Jakarta’s defence ties are expanding. 

Wang said both sides agreed to support each other’s core interests and will cooperate more in energy and mineral resources.  

Resource-rich Indonesia, a $1.4 trillion G20 economy, has vast deposits of nickel, tin, copper, gold and bauxite and is the world’s largest exporter of palm oil and of thermal coal, with China among its top buyers.

China dominates investment in Indonesia’s nickel processing sector, but recent policy changes, including on exports and tighter mining quotas, have pushed some companies to seek alternative supplies elsewhere.  

HIGHER-QUALITY COOPERATION

Chinese Defence Minister Dong was greeted on Friday by a military guard of honour as he arrived for talks with his Indonesian counterpart Sjafrie Sjamsoeddin.

“The prospects for cooperation between the two militaries are broad, and that such cooperation is becoming higher in quality and more effective,” Dong said.

Sjafrie said there would be increased defence activities between their militaries, including joint exercises and officer exchanges.

Later, after a meeting between the defence and foreign ministers of both countries, Sjafrie told reporters that they also discussed a joint munitions factory in Indonesia, producing ammunition, missiles and rockets and including a possible transfer of technology from China. The factory is expected to start operation by 2027.

“This is a progressive step taken in the era of building Indonesia’s defence power at this moment and in the future,” he said.

Last week, Taiwan, which China claims as its own territory, was angered by a rare joint military exercise between the Chinese and Indonesian navies that took place east of Taiwan. Indonesia’s navy said a vessel conducted routine exercises, not only with China, but also with Japan and the United States.

Defence analyst Curie Maharani said that while Indonesia saw the exercise as routine, the location enabled China to signal a different political message.

“Indonesia learned a valuable lesson about how great powers use defence diplomacy more as an instrument of influence projection,” she said.

Indonesia also has its own disagreements with China over developments in the South China Sea, which Beijing claims almost in its entirety. Jakarta has been measured in its remarks, however, and sees itself as not being party to wider territorial disputes involving China and the Philippines, Malaysia and Vietnam.    

TRADE AND INVESTMENT

China is a major investor in Indonesia, contributing $3.9 billion of foreign direct investment in the first half of 2026, according to Indonesian figures. But regulations around some of that investment have been a source of friction.

In May, Chinese companies operating in Indonesia urged the government to adopt more business-friendly policies, complaining about higher taxes and a new nickel pricing formula.

In a letter seen by Reuters, the China Chamber ​of Commerce in Indonesia said Chinese firms faced “excessively stringent regulation, over-enforcement”, and ⁠alleged corruption and extortion by authorities.

Key investors include the world’s biggest EV battery maker, Contemporary Amperex Technology, and steelmaker Tsingshan Group, which has smelters in Indonesia. 

(Reporting by Stanley Widianto and Stefanno Sulaiman; Additional reporting by Xiuhao Chen in Beijing; Editing by Josh Smith, Martin Petty, Lincoln Feast and Edwina Gibbs)