In 2011, the governments of Indonesia and China signed the Bilateral Economic and Trade Cooperation treaty (the Treaty). As a result, both countries have become major exporters/importers of each other’s commodities. In 2020 Indonesia was the 14th largest exporter to China. Conversely, in 2020 China exported approximately US$78.37 billion worth of commodities to Indonesia.

On 2 April, both countries executed a Trade and Investment Framework Agreement, which will replace the Treaty (the Agreement). On the same day, both countries committed to investments worth US 1.38 billion, which include China’s establishment of a major business presence in West Borneo. Under the Agreement, Indonesia plans to increase annual trading to China from US$31 billion in 2020 to become US$100 billion by 2024.

In addition to the Treaty, on 8 April, Indonesia’s and China’s Ministers for Trade announced their intention to execute a Terms of Reference to establish a Working Group On the Promotion of Smooth Trading between both parties.

Optimists hope that this new trade cooperation with China will gradually heal Indonesia’s economy, which has been damaged by the pandemic.