China and Indonesia agreed on Friday to deepen military cooperation and work more closely on minerals, energy and technology, Reuters reported, as Jakarta continues to balance its ties with Beijing and Washington amid mounting economic and geopolitical tensions in the region. The agreement was struck during a visit to Jakarta by China's foreign minister, Wang Yi, who travelled alongside defence minister Dong Jun to meet their Indonesian counterparts, Reuters said. Wang told reporters that both countries should "seize the moment" to build cooperation at a high level, according to Reuters, warning that unilateralism and hegemonic behaviour posed a serious threat to global stability. The two sides pledged cooperation spanning artificial intelligence, defence, rail transport, green energy, satellites and fisheries, Reuters reported, while Indonesia's defence minister, Sjafrie Sjamsoeddin, said the countries would increase joint military exercises and officer exchanges and discussed a joint munitions factory expected to begin operating by 2027.
The Jakarta meeting is best understood as the latest expression of a strategy China has been refining across Southeast Asia for more than a decade, one in which trade, resource access and defence cooperation are pursued together rather than separately.
The nickel template
Nowhere is that strategy clearer than in Indonesia's nickel industry, which has become, in the words of analysts at the Australian Strategic Policy Institute, something close to a template for how Beijing intends to secure dominance over critical minerals more broadly. Chinese companies, backed by state banks, moved early into Indonesia's nickel sector and adapted quickly when Jakarta banned the export of unprocessed ore, embedding themselves in industrial parks and building an integrated supply chain that runs from mining to battery recycling. According to the International Energy Agency's Global Critical Minerals Outlook for 2026, Indonesia now accounts for roughly half of global mined nickel production and has driven most of the growth in global refining capacity since 2014, a position built substantially on Chinese capital and technology. Research from the Climate Energy Finance think tank estimates that China already controls around 90% of global rare earth refining capacity and more than 70% of cobalt refining, and describes its approach to nickel in Indonesia as a demonstration of the same statecraft applied to a new resource.
Reuters reported that Chinese firms operating in Indonesia have complained about high taxes and a new nickel pricing formula, with the China Chamber of Commerce in Indonesia telling the government in a letter, seen by Reuters, that its members faced excessive regulation and alleged corruption by local authorities. Research from the China-Global South Project has documented a similar pattern, describing how Jakarta's push for tighter quotas and greater domestic processing, part of a broader strategy some Indonesian officials have described as an attempt to become an "OPEC of nickel," has squeezed Chinese producers including Tsingshan and Huayou Cobalt into output cuts. A separate report from Asia Times found that a new royalty rate introduced in April forced major Chinese-backed producers to scale back operations, contributing to a wider slowdown across Indonesia's smelting industry.
A minerals rivalry with Washington
Indonesia's resource nationalism has also become entangled with its balancing act between Beijing and Washington. Research from the Geopolitical Monitor notes that a trade agreement signed between Indonesia and the United States in February expanded American access to Indonesia's critical minerals sector for the first time, introducing a new variable into a supply chain long dominated by Chinese capital, and that Beijing's public response has been measured rather than confrontational even as it works to protect its position. The National Bureau of Asian Research has described the resulting three-way contest between Indonesian resource nationalism, Chinese processing dominance and a comparatively weak American industrial base as a microcosm of the broader global competition over strategic materials.
Since taking office, President Prabowo Subianto has pursued what analysts at the Lowy Institute and the Diplomat have called a hedging or omnidirectional foreign policy, one that keeps Indonesia's traditional doctrine of being "free and active" while engaging Beijing, Washington and other powers simultaneously. Indonesia joined BRICS in 2025 and has deepened defence cooperation with China even as it maintains security ties with the United States and other partners, a pattern the Diplomatic Insight has described as an attempt to avoid dependence on any single power. Reuters noted that Prabowo has repeatedly pledged to befriend all countries, including both Beijing and Washington, even as Jakarta's defence ties with the United States continue to expand.
The South China Sea backdrop
Friday's agreement also follows a rare joint naval exercise between China and Indonesia held east of Taiwan last week, which Reuters reported had angered Taipei, though Indonesia's navy described the exercise as routine and said it had also involved Japan and the United States. The episode illustrates a pattern regional analysts have flagged repeatedly this year: even as Wang Yi has pressed ASEAN states, including Indonesia, to conclude a long-delayed code of conduct for the South China Sea and to resist what Beijing calls external interference, China continues to use joint exercises and defence diplomacy as tools of political signalling. Jakarta, for its part, has kept a notably measured position on the wider South China Sea dispute, maintaining that it is not a party to overlapping claims involving China, the Philippines, Malaysia and Vietnam, even as it holds its own disagreements with Beijing over waters near the Natuna Islands.
Taken together, Friday's pledges on military, minerals and technology cooperation reflect an Indonesia that continues to deepen its economic and strategic dependence on China even as it works to diversify, and a China that has learned, through a decade of investment in Indonesian nickel, that economic entanglement can be as durable a source of influence as any formal alliance.
Sources: Reuters, the Australian Strategic Policy Institute, the International Energy Agency, the Climate Energy Finance think tank, the China-Global South Project, Asia Times, the Geopolitical Monitor
