Challenges and Opportunities for Indonesia in Facing a Rising China

The 24th Asean Summit in Myanmar this weekend took place in the aftermath of the ramming of Vietnamese ships by the Chinese near the Paracel Islands in the South China Sea. The summit undoubtedly also saw the issue of regional power balance take center stage as China has shown itself reasserting its traditional role as the central power of Asia.

For Indonesia, Beijing’s active preponderance has become a doubly important issue as our own waters around the Natuna Islands are now included in the infamous nine-dash line to indicate Chinese sovereignty in the South China Sea.

To best formulate an effective policy at the national level, and at the regional level through the Association of Southeast Asian Nations, we need to consider a few points that underline Beijing’s desire and possible plans for the South China Sea.

China’s insistence on its hegemony in the East, South China and Yellow Seas may seem intransigent and unreasonable to the neighboring state. Yet from China’s strategic point of view it is paramount to the defense of its own coastline, not against its smaller neighbors, but against US military forces.

In Beijing’s eyes, China’s coastline has been and is surrounded by US military bases stationed throughout Asia: in Singapore, the Philippines’ Subic Bay and Clark, Guam, Pearl Harbor and various bases in Japan and South Korea. All these bases fall outside the perimeter of the three seas, and China may simply see the seas as its buffer against possible military action by the US aided by its allies in Asia.

In the event of war between China and the US, Chinese supremacy on the three seas would ensure maximum difficulties for the US Navy’s Virginia-class nuclear submarines to launch attacks close to the Chinese coastline. The fact that the US Navy just ordered ten more of these submarines for the next ten years may be proof enough for Beijing that these submarines carrying nuclear warheads may be central to the American military strategy in the future.

From a historical perspective, Beijing’s desire to secure the three seas is understandable. After all, as the US emerged a global power early in the 20th century, it soon established its own hegemony in the Gulf of Mexico and the Caribbean Sea. The Soviet Union, and Russian Federation today, has also sought to ensure supremacy in the Baltic, Black and Caspian Seas.

But if it is indeed hegemony that Beijing seeks in the Asian theater, Chinese leaders may want to effect more persuasive policies that can indeed assure their neighbors that Chinese hegemony is preferable to its US version. Perhaps Chinese hegemony in Asia is inevitable in the future and in this respect there is not much Indonesia can do to prevent it from happening. However, Indonesia as a leading force and the biggest state in Asean and in Southeast Asia can certainly play a crucial role to balance and moderate Chinese supremacy in the region.

To achieve this, Indonesia would have to maximize cohesion within Asean while ensuring that all Asean member states seek to upgrade their own defense capabilities, especially around the disputed areas such as Natuna. Indonesia must also adhere to its “free and active” foreign policy directive more stringently so as not to give the impression it favors the United States over China.

The South China Sea is even more valuable to China as it may contain sizeable oil and gas deposits, which explains China’s construction of a drilling rig in the waters of Paracel Islands, which the Vietnamese ships tried to prevent last week.

Indonesia’s own Natuna Seas possess the promising Natuna gas field with reserves estimated to be around 1.3 trillion cubic meters, most of which remain untapped as production has not started. It would be naive to believe hat Beijing’s interests in the Natuna Seas is unrelated to gas, especially as China is fast relying on natural gas its source of energy.

As China’s former dependence on coal as its main energy source proves destructive to its environment and air quality, the Chinese government has proclaimed a moratorium on the construction of coal-based power plants and is replacing them with gas-powered alternatives. China’s consumption of natural gas accordingly is expected to account for one-fifth of the global total in the foreseeable future.

So it is no wonder that Beijing has been moving fast to secure its own future energy sources. Spurning Russia’s offer, China has been steadily working out its gas import deals with Central Asian states such as Kazakhstan and Turkmenistan.

Indonesia also supplies China with natural gas through the 2002 Tangguh gas deal, which recently became contentious as Indonesia seeks to renegotiate the gas price, deemed too low by today’s standards. It will fall to the next government to renegotiate the Tangguh gas deal with China, which presents an opportunity for Indonesia to become a respected and valuable partner. In supplying Beijing with the much-sought-after natural gas, Indonesia’s position is of special importance to Chinese interests.

While it is also reasonable that we expect market prices for our gas, it is crucial to our own future interests that China continues to be supplied with our gas. Involving Chinese companies in the consortium that will develop the Natuna gas field may also be a good initiative to bind Chinese interests to ours as well as diversify the composition of foreign companies that take part in our oil and gas industry.

Johannes Nugroho is a writer and businessman from Surabaya