China, Indonesia Expand Local Currency Settlement Cooperation

During Chinese Premier Li Qiang’s visit to Jakarta, China and Indonesia signed multiple agreements to deepen economic cooperation, including a memorandum of understanding (MoU) between their central banks to promote bilateral transactions in local currencies, aiming to reduce reliance on the US dollar. This new MoU broadens previous agreements by including capital and financial account transactions, fostering closer monetary and financial market cooperation. Alongside currency agreements, the countries committed to expanding ties in tourism, agriculture, and investment, highlighted by an investment pact between their sovereign wealth funds, China Investment Corporation and Danantara Indonesia. Trade between the two nations reached $147.8 billion in 2023, with China remaining Indonesia’s largest trading partner for nine consecutive years. Premier Li emphasized the need for unity among Global South countries amid rising protectionism and global economic uncertainties, while President Prabowo acknowledged China’s significant role in Indonesia’s economic development. These developments reflect a strategic shift toward stronger bilateral ties amid shifting global alliances and ongoing economic challenges.