As neighbouring countries, Indonesia and Australia are bound to share the same security concerns, and this is true of the way they see the rise of China. But, while both countries agree that China poses a potential threat to regional peace, security and order, they differ in strategy. One is for containment, the other is for cooperation.

In recent years, relations between Indonesia and Australia have significantly improved thanks to the work of successive leaders in managing differences. Gone are the ups and downs that coloured their ties in the past over issues such as East Timor, the boycott of Australian beef imports, the trial and execution of Australian drug traffickers, and the discovery of Australia’s espionage operation against Indonesian leaders.

In June, Anthony Albanese continued the tradition of previous Australian leaders in making Indonesia his first bilateral overseas visit as prime minister, reaffirming the dictum that “no country is more important to Australia than Indonesia”. He and President Joko “Jokowi” Widodo hit it off in that first encounter and have further cemented ties.

On the economic front, the Comprehensive Economic Partnership Agreement, in place since 2020, is providing the foundation for stronger links. People-to-people contacts are growing, including in the education sector with more and more Indonesians choosing Australia as a place to study, and in tourism, now that the COVID-19 pandemic restrictions have been removed to allow Australians to return to Bali and other parts of Indonesia.

On diplomacy, Jokowi owes it to Albanese for reaffirming his attendance at the G20 summit next week in Bali at a time when other Western leaders considered boycotting if Russian president Vladimir Putin was invited, because of the Russian invasion of Ukraine. Following Albanese, other Western leaders confirmed their attendance, even after Jokowi sent out an invitation to Putin. The G20 presidency is an opportunity for Indonesia to showcase its ambition as a middle power ready to play its part in regional and global diplomacy. At the current trajectory, Indonesia is predicted to become the fifth-largest economy in the world by 2045, from its current seventeenth place in gross domestic product (GDP) terms.

On security, given their geographical proximity, not surprisingly Indonesia and Australia see eye to eye on many issues, including in their perception of threats to the wider Indo-Pacific region. The two have collaborated on counterterrorism and stopping human trafficking primarily from South Asia. The annual 2 + 2 meeting involving defence and foreign ministers allows them to discuss issues of common interest and those that divide them.

Yet the one issue that profoundly separates Indonesia and Australia is their different approaches to China as a rising power. With the growing rivalry between China and the United States, this difference is becoming increasingly stark. After the Labor Party took charge in May, Indonesia had hoped Canberra would take a less confrontational position against China.  

While Australia has formed alliances such as the Quadrilateral Security Dialogue (Quad) and the security pact with the United Kingdom and United States (AUKUS) as part of its China containment policy, Indonesia is trying its best to remain non-aligned in the emerging hegemonic contest.

China is Indonesia’s largest trading partner, and increasingly an important source of investment and development aid. It is inconceivable for Indonesia to turn its back on Beijing, even as tensions simmer over repeated incursions of Chinese fishing boats, escorted by fully armed coastguards, near the Natuna Islands in the South China Sea.

Rather than joining military alliances, Indonesia is hedging its security by forging defence cooperation with big and middle powers in the region. That Jakarta is taking the China threat seriously is indicated by this year’s Garuda Shield military drill with the United States, which was expanded to include the navies and air forces – not just the army – and involved fourteen countries, including Australia, Japan, South Korea and the United Kingdom, instead of just the two. China did not participate.

While Indonesia has refused entreaties to join the Quad, its response to the announcement of AUKUS’s formation in September last year revealed nuances on how the foreign policy and defence communities see the China threat. The Foreign Ministry criticised Canberra’s decision to acquire nuclear-powered submarines as part of the deal but defence minister Prabowo Subianto, in a speech at the International Institute for Strategic Studies conference in Bahrain, said “we understand … and we respect” Australia’s decision.

Indonesia accepts China’s status as an economic, political and military power in Asia, and is seeking to ensure that it becomes a benign and responsible power, primarily through diplomacy. As the fourth most populous nation in the world and the largest South-East Asian country controlling strategic international sea lanes vital to China’s international trade, it believes it has some leverage to play against Beijing. 

With the escalating tension between the United States and China over Taiwan, countries in the Indo-Pacific will have to constantly adjust their position according to their national interests. Whether this will lead to convergence or further divergence between Indonesia and Australia in approaching China is unclear.

But given the history of how a single issue in the past could undermine their entire relations, the gap in their China policy is something that Indonesia and Australia will need to understand, and manage.