Navigating US-China Technology Competition: An Indonesian Perspective
Picture: Center for Strategic & International Studies (CSIS)
In an article by Center for Strategic & International Studies (CSIS), M. Habib Abiyan Dzakwan and Gatra Priyandita examine the negative implications of Sino-American tech rivalry on Indonesia, highlighting potential disruptions to trade relationships, foreign investments, and national security, while noting Indonesia's current lack of strategic measures to mitigate these risks.
The long-term future of Sino-American tech competition is uncertain, but it remains very unlikely that we will see a return to a fully integrated economic and technological relationship. In the US, Donald Trump has expressed interest in continuing to impose economic restrictions on trade with Chinese firms.13 In China, domestic conditions are equally pivotal. Economic slowdowns could create a political environment less inclined toward accommodating US interests, potentially hardening Beijing’s stance on technology policy. Similarly, it seems very unlikely that we would see full decoupling, where economic and technological relations are almost entirely driven by security considerations, given that the “de-risking” of economic sectors remains very costly. What is likely to occur in the medium-to-long term is a continued movement towards “de-risking” of more advanced technology sectors between the two states, particularly on technologies and resources that the two sides perceive will provide a military advantage. While much of the restricted products currently centre on minerals, chemicals, electronics, and equipment parts, we are also seeing the competition spillover into data, software, and connected devices. 14 Geopolitical and security considerations will increasingly guide trade, investment, and industrial policy decisions.
Indonesia sees the US and China as key economic partners, with both states among Indonesia’s largest trade partners and sources of foreign direct investment. Even if Indonesia is not directly pressured to diversify away from either the US or China, US-China tech competition continues to have ramifications on the Indonesian economy.
The key to addressing the strategic implications of US-China technological competition lies in understanding the dynamics and mitigating these risks, including through domestic legislation and regulation. Unfortunately, Indonesia has yet to make significant progress in either area. Despite having numerous technology-related regulations, Indonesia still separates security and economic considerations from its technological development strategies. As stated in the ASEAN Agreement on Electronic Commerce, which Indonesia has ratified, the country upholds the principle of technological neutrality—largely due to its position as a technology consumer rather than a producer.
