How Indonesia Balances Its Relationships With the US and China

Indonesia sits astride the sea lanes between the Indian and Pacific Oceans, the largest economy in Southeast Asia and the anchor of ASEAN, and it has spent the era of intensifying US-China rivalry doing something that looks simple and is in fact a deliberate, difficult act of strategy: refusing to choose. It takes Chinese trade and infrastructure investment, accepts American security cooperation, and aligns fully with neither, a hedging strategy rooted in a foreign-policy tradition older than the current rivalry and calibrated to extract benefit from both giants while preserving Indonesia's independence. Understanding how Indonesia manages this balance illuminates both the country's own strategy and the broader pattern of how the middle powers of Southeast Asia navigate a competition they did not choose and do not want to be forced into.

The doctrine of independence

Indonesia's balancing act rests on a foreign-policy principle that dates to the country's founding: bebas aktif, usually translated as "free and active," meaning independent of great-power alignment and actively engaged in international affairs rather than passively neutral. The principle emerged from Indonesia's independence struggle and its determination, in the Cold War, to avoid being drawn into either the American or Soviet bloc, a stance that made Indonesia a leader of the Non-Aligned Movement, and it has guided Indonesian foreign policy ever since, through changes of government and into the present rivalry between the US and China. Bebas aktif is not strict neutrality or evenhandedness but the pursuit of Indonesia's own interests free of external control, which in the current context means engaging both the US and China, taking what benefits Indonesia from each, and avoiding the entangling alignment with either that would compromise its independence and risk making Indonesia a pawn in a rivalry it wants no part of. This is a genuinely strategic stance rather than mere fence-sitting, since it requires constant, deliberate management to maintain the balance, extract the benefits, and avoid the pressures and entanglements that alignment with either power would bring, and it reflects a considered judgment that Indonesia's interests are best served by independence and engagement with all rather than by choosing a side.

Economic ties pull toward China, security ties toward the US

The balance Indonesia maintains is visible in the different character of its economic and security relationships, which pull in somewhat different directions. Economically, China is dominant, Indonesia's largest trading partner and a major source of investment, financing and building infrastructure across the archipelago, with the Chinese-built Jakarta-Bandung high-speed rail as the flagship of the relationship, and investing heavily in Indonesian mining and manufacturing, particularly the nickel industry that has grown enormously as Indonesia leverages its vast nickel reserves, essential for electric-vehicle batteries, into a processing industry that draws Chinese and other investment. This deep economic engagement with China brings real benefits, the trade, investment, and infrastructure that Indonesia's development needs, but it also brings concerns, about overdependence on China, about the terms and debt of Chinese-financed projects, and about the leverage that economic dependence gives Beijing, concerns that temper Indonesia's economic embrace of China and that feed a public wariness of Chinese influence. The United States and its economic engagement are important too, a significant market for Indonesian exports and a source of investment in technology and other sectors, but the economic relationship with the US is less dominant than with China, so economically Indonesia leans toward China while managing the risks of that dependence.

Security tilts the other way. Indonesia's defense cooperation with the United States has deepened, through joint exercises like the Garuda Shield program that has grown into a large multinational exercise, through maritime cooperation, and through the training and equipment relationships that strengthen Indonesia's military, cooperation that aligns with the American vision of a free and open Indo-Pacific and that helps Indonesia build the capability to secure its vast maritime domain. But Indonesia manages this security cooperation carefully to avoid appearing to align against China, welcoming American support for its own defense capabilities while resisting any framing that would make it part of an anti-China coalition, and it maintains its own defense engagement with China too, through military exchanges and dialogue, a dual-track approach that lets Indonesia strengthen its security without being drawn into the American alignment against China that bebas aktif forbids. So Indonesia leans somewhat toward the US on security while keeping its distance from alignment, just as it leans toward China economically while managing dependence, a balancing of the two relationships that extracts benefit from each while avoiding entanglement with either.

The Natuna line and the ASEAN platform

The balance is tested most directly in the South China Sea, where China's expansive maritime claims, the so-called nine-dash line, overlap with the waters around Indonesia's Natuna Islands, bringing Chinese fishing fleets and coast guard vessels into Indonesia's exclusive economic zone and creating a genuine point of friction. Indonesia does not consider itself a claimant in the broader South China Sea disputes, since it does not claim the contested islands, but it firmly rejects China's claim to the waters around the Natunas as part of Indonesia's exclusive economic zone under international law, and it has backed that position with action, increasing patrols, detaining Chinese fishing vessels, and building up its military and coast guard presence around the Natunas to assert its sovereignty. Indonesia manages this friction carefully, asserting its rights firmly while avoiding the escalation or the bilateral confrontation with China that would upset the broader balance, framing its position in terms of respect for international law rather than direct challenge to China, and seeking to de-escalate while quietly strengthening its presence, a calibrated defense of its interests that maintains the balance even under the pressure of the maritime dispute.

Throughout, ASEAN is central to Indonesia's strategy, the platform through which it seeks to manage the great-power rivalry and preserve the region's independence. Indonesia has long been the informal leader of ASEAN, and it uses the organization to promote a regional approach to the US-China competition, one of dialogue, inclusion, and the preservation of ASEAN's centrality and unity against the pressure to divide into competing blocs, working to keep ASEAN from being forced to choose sides and to maintain the region's collective independence and agency in the face of the rivalry. Indonesia's diplomacy within ASEAN, its promotion of dialogue and consensus, its efforts to keep the organization united and central, and its advancement of frameworks like the ASEAN Outlook on the Indo-Pacific, all serve the goal of managing the great-power competition on the region's terms rather than the great powers', extending Indonesia's own balancing strategy to the regional level and seeking to preserve for Southeast Asia the independence and freedom from great-power domination that bebas aktif seeks for Indonesia. This makes Indonesia's balancing act not just a national strategy but a regional one, using ASEAN to pursue for the whole region the hedging between the US and China that Indonesia pursues for itself, an effort to keep Southeast Asia independent and undivided as the rivalry between the giants intensifies around it, and to preserve the space for the middle powers of the region to chart their own course rather than being forced into the alignment that neither Indonesia nor its neighbors want.