The China-Indonesia Naval Exercise East of Taiwan and Its Implications for ASEAN: The Spread of Hedging and South Korea's Diplomatic Response

Executive Summary

The decision by the Indonesian Navy to conduct a joint exercise with China’s People’s Liberation Army (PLA) in waters east of Taiwan during the Han Kuang exercises, and the subsequent agreement between the two countries to expand military cooperation and launch a five-year action plan, can be attributed to Indonesia's structural dependence on China for its nickel downstreaming policy. The Prabowo administration is pursuing a dual strategy of maximizing practical benefits while maintaining non-aligned rhetoric; this should be seen as conditioned hedging rather than an ideological shift. It is unlikely that this pattern will spread uniformly to other ASEAN member states that are party to the South China Sea disputes, such as the Philippines and Vietnam. Instead, any diffusion is more likely to occur in a fragmented manner, with each country moving at a different pace. South Korea should treat Indonesia's tilt toward China not as an obstacle to be countered but as a given condition, decoupling its response on security and industrial issues. It should also diversify its engagement with ASEAN, approaching it through bilateral channels with individual member states rather than as a single bloc. Specifically, Seoul needs to secure a position in the battery material supply chain that complements rather than replaces China, while simultaneously establishing a system to manage its semiconductor supply chain separately in preparation for the normalization of gray-zone pressure in the Taiwan Strait.

I. Situational Analysis

The China-Indonesia Naval Exercise East of Taiwan and Its Implications for ASEAN: A Situational Analysis

1. Background and Developments

The constitutional basis of Indonesia's foreign policy is the principle of "free and active" (bebas dan aktif) non-alignment [2]. President Prabowo Subianto has repeatedly emphasized this principle since taking office. He has pledged to maintain friendly relations with all countries, including China and the United States [2][11].

This principle was put to a practical test on August 19. The Indonesian Navy frigate KRI I Gusti Ngurah Rai conducted a joint passage exercise with a naval vessel from China's People's Liberation Army (PLA) in the waters east of Taiwan [2]. The timing coincided with Taiwan's annual Han Kuang exercises [14]. Taiwanese defense and foreign affairs authorities immediately protested, demanding a clear explanation from Jakarta regarding the nature and circumstances of the exercise [4].

The Indonesian government defined the drill as a routine "passing exercise" (PASSEX) involving its vessel and drew a line, stating it had no combat elements [4][16]. However, regional security experts pointed out that the timing and location of the exercise were a combination bound to provoke concern from Taiwan [4].

This exercise was not an isolated incident but an extension of accumulating military alignment. In early August, the training ship Qi Jiguang and the amphibious dock landing ship Kunlun Shan, part of the PLA Navy's 83rd flotilla, docked at the Port of Tanjung Perak in Surabaya, Indonesia, following visits to Russia, Vietnam, and Brunei [13]. The Global Times reported that this long-range training mission was successfully completed [13]. The pattern of combining military ties with ASEAN countries and routine entries into the waters east of Taiwan was thus repeated during this Han Kuang exercise period [8].

2. Current Situation

Immediately after the exercise, on August 21 (a Friday, local time), a meeting of Chinese and Indonesian foreign and defense ministers was held in Jakarta [1][11]. In a bilateral meeting with Chinese Minister of National Defense Dong Jun, Indonesian Minister of Defense Sjafrie Sjamsoeddin went further, requesting an expansion and enhancement of joint military exercises between the two countries [7]. This shows that Jakarta is using the exercise not as a one-off event but as a signal of deepening relations.

In the subsequent China-Indonesia Strategic Dialogue, the two countries agreed to uphold strategic autonomy and mutually support each other's core interests [9][11]. Chinese Foreign Minister Wang Yi remarked that the two nations should "seize the moment" [11]. The two sides also agreed to begin work on establishing a "China-Indonesia Five-Year Action Plan" for the period 2027–2031 [9]. In addition to military cooperation, they also agreed to expand collaboration in the mineral, energy, and technology sectors [11].

The Global Times described the exercise as a "joint naval passage exercise between the two countries in the waters east of China's Taiwan Island" and presented it as part of regular cooperation [9]. In contrast, Taiwan and Western media outlets characterized it as a dangerous attempt by Beijing to strengthen its jurisdictional claims [14]. The South China Morning Post quoted an observer who noted that the exercise could "lower the political threshold" for neighboring countries, adding that whether other ASEAN members follow Indonesia's precedent will be a key point to watch [1].

3. Key Actors and Positions

Indonesiais making the structural choice to fill the capital and technology gap for its nickel downstreaming policy with China [2]. The Prabowo administration maintains its non-aligned rhetoric while managing its tilt toward China not as an ideological shift but as a means to maximize practical benefits [2]. The elevation of the defense and foreign ministers' dialogue to a strategic dialogue mechanism and the joint exercise near Taiwan are examples of Jakarta's active hedging strategy [2].

Chinadownplayed the exercise as a "passage exercise" but sought to secure Indonesia's political support on the Taiwan issue in the subsequent strategic dialogue by using the phrase "mutual support for core interests" [9]. Foreign Minister Wang Yi's remarks reveal Beijing's urgency to consolidate relations with key ASEAN countries amid the U.S.-China competition [11]. At the same time, the PLA Navy's long-range training and port-call diplomacy are intertwined with a long-term strategy to secure routine access to the waters east of Taiwan [13][8].

Taiwancharacterized the exercise as an attempt to strengthen jurisdictional claims and strongly protested [14][4]. The prevailing view is that its timing, which coincided with the Han Kuang exercises conducted near its own territorial waters, suggests an intent of political provocation [14]. However, China's response differed from its previous pattern of large-scale counter-exercises; it remained silent throughout the Han Kuang exercises and issued only a brief, disparaging comment at their conclusion [5]. This suggests that Beijing has begun to employ its own ambiguity tactic, making the timing and intensity of its reactions unpredictable [5].

Other ASEAN Member Statesshow a difference in temperature between the parties to the South China Sea conflict with China (such as Vietnam and the Philippines) and Indonesia's strategic approach to Beijing. The Philippines continues to experience friction with China in the South China Sea, with its aircraft being tracked and warned by the Chinese military over Huangyan Dao (Scarborough Shoal) [18]. In this context, how Indonesia's move toward closer ties with China will be perceived by other ASEAN countries is a key point of observation in the region [1].

United Statesappeared to have a relatively diminished presence in this situation. The Spanish newspaper El Mundo pointed out that China was flexing its military muscle while the United States had no aircraft carriers deployed in the Pacific [16]. The U.S. Council on Foreign Relations (CFR) has also assessed that ASEAN is losing confidence in the United States [3].

4. Key Issues

The first issue is whether this exercise was a "one-off passage" or a "precedent." Indonesia defines it as the former, but the fact that Jakarta itself requested an expansion of joint exercises in a subsequent meeting supports the view that this drill was the starting point for deepening relations [7][11].

The second issue is the possibility that ASEAN's response will diverge among member states. The difference in position is already clear between the Philippines and Vietnam, which are directly involved in the South China Sea conflict, and Indonesia, which is pursuing practical hedging [18][2]. This incident could further solidify the trend of ASEAN fragmenting into individual hedging by member states instead of a unified response [2].

The third issue is the change in China's method of pressuring the Taiwan Strait. The combination of silence followed by a brief comment instead of large-scale counter-exercises, along with indirect jurisdictional claims through joint drills with a third country, constitutes a form of gray-zone pressure that is difficult to detect with existing early-warning indicators [5][8].

II. In-Depth Analysis

The China-Indonesia Naval Exercise East of Taiwan and Its Implications for ASEAN: An In-Depth Analysis

1. Background Analysis

The background to this exercise includes the structure of dependence on China created by Indonesia's nickel downstreaming policy. The Prabowo administration needs to secure the capital and technology necessary to upgrade its nickel smelting and battery industries [2]. The most realistic partner to fill this gap is China [2]. The elevation of the defense and foreign ministers' dialogue and the joint exercise near Taiwan can be seen as being linked to this structure of dependence born from economic necessity [2].

At the same time, this is a case of active hedging by Jakarta, not an ideological shift [2]. Even after the exercise, President Prabowo repeated his non-aligned rhetoric about maintaining friendly relations with both the United States and China [11]. Indonesia's characterization of the drill as a "routine passing exercise with no combat elements" is also an extension of this hedging logic [4][16]. In other words, it is a dual strategy aimed at minimizing signals of security alignment while maximizing economic gains.

China's fundamental motives are different. Beijing seeks to substantiate its jurisdictional claims by expanding its regular presence in the waters east of Taiwan [8][14]. The long-range training exercise in early August, where the PLA Navy's 83rd flotilla visited Russia, Vietnam, and Brunei before docking in Indonesia, shows that this expansion of presence is not an event limited to Indonesia but part of a pattern targeting all of Southeast Asia [13]. The overlap with the Han Kuang exercises was likely not a coincidence but a calculated choice to highlight Taiwan's international isolation by showcasing unity with an external power precisely when Taiwan was assessing its defense posture [14].

2. Structural Context

In the political structure, ASEAN lacks a unified response mechanism. Amid wavering confidence in the United States, ASEAN member states are individually adjusting their relations with China [3]. The fact that the Philippines finds its aircraft tracked and warned by the PLA over Huangyan Dao (Scarborough Shoal) [18] at the same time Indonesia is requesting expanded military cooperation with China [7] demonstrates that approaches toward Beijing within ASEAN are completely fragmented along national lines. The differing interests between claimant and non-claimant states in the South China Sea give structure to this fissure.

In the economic structure, cooperation in minerals, energy, and technology is coupled with security cooperation, serving as both a justification and an incentive. The China-Indonesia Strategic Dialogue resulted in an agreement to simultaneously expand military cooperation and strengthen collaboration in the mineral, energy, and technology sectors [11]. The launch of work on a Five-Year Action Plan (2027–2031) is a step toward institutionalizing this coupled structure [9]. This approach, where security and economics are bundled together as a single package, represents an incentive structure that could be equally applied to other resource-rich ASEAN nations.

In the security structure, the U.S. power vacuum in the Western Pacific serves as a backdrop. The fact that China conducted a joint exercise with Indonesia at a time when U.S. aircraft carrier forces were absent from the Pacific has been noted by Spanish media [16]. Ahead of the Pacific Islands Forum, experts on the region warned that increased activity by the Chinese navy, coast guard, and survey vessels in the waters east of Taiwan could affect Western Pacific sea lanes, supply chains, and even the security of the Micronesian region [15]. This suggests that the exercise is not confined to the Taiwan Strait issue but is intertwined with broader structural changes in the maritime order of the Western Pacific.

3. Historical Precedents and Comparative Cases

In the history of East Asian maritime disputes, there are repeated precedents of one country's decision to cooperate with China lowering the political threshold for its neighbors. The case of the Senkaku/Diaoyu Islands dispute in the East China Sea around 2012, which escalated from a bilateral Sino-Japanese conflict into a source of regional tension, showed how a single bilateral issue can shake perceptions of the regional balance of power [10]. Similarly, the 2011 incident in the South China Sea where a Chinese patrol vessel cut the cables of a Vietnamese oil and gas exploration ship is a precedent for a single clash being elevated to the agenda of a regional security forum [10]. Whether the recent China-Indonesia exercise will have the effect of "lowering the political threshold" for other ASEAN members, as the South China Morning Post suggested, depends on whether this past pattern repeats itself [1].

There are also precedents for the PLA's use of long-range training visits as a form of diplomacy. The recent tour of the 83rd flotilla, which sequentially visited Russia, Vietnam, Brunei, and Indonesia [13], is a typical method by which China accumulates bilateral exercises with individual countries to establish them as regional norms. This is consistent with its previous approach of managing relations with the Philippines and Vietnam amid friction over South China Sea sovereignty claims by emphasizing cooperation on Huawei and infrastructure.

Precedents can also be seen in Taiwan's response. China's decision to remain silent during the Han Kuang exercises and then issue only a brief, disparaging comment [5] is a different tactic from its past pattern of responding with large-scale counter-drills. This is a new approach that intentionally makes the timing and intensity of its reaction uncertain instead of predictable, and the use of the Indonesia exercise can be seen as another branch of this uncertainty tactic [5][14].

4. Key Variables Shaping Future Developments

The first variable is whether other resource-rich ASEAN countries will follow suit. If countries like Malaysia and Thailand, which are not parties to the South China Sea disputes or have relatively low stakes, adopt an Indonesian-style hedging strategy, the fragmentation of ASEAN's approach to China will accelerate [1]. Conversely, countries that are direct parties to the disputes, such as the Philippines and Vietnam, are likely to diverge from this trend [18].

The second variable is the level of U.S. re-engagement. As long as the power vacuum in the Pacific persists [16], the incentive for ASEAN member states to expand military cooperation with China to fill the security gap will grow. If the United States fails to take measures to restore confidence among ASEAN members [3], this structure could become entrenched.

The third variable is China's calibration of the intensity of its gray-zone tactics. If routine entry into the waters east of Taiwan becomes permanent, moving beyond the form of exercises [8], it could heighten the vigilance of regional countries, including the Pacific Island nations [15], and alter the hedging calculations of individual ASEAN states. Conversely, if China maintains a restrained frequency at the level of "passing exercises," the Indonesian model is likely to become established as a low-risk option.