China's Industrial Capacity Cooperation: Concepts and Paths

Sun Haiyong

Xue Song & Xu Liping

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China's Industrial Capacity Cooperation: Concepts and Paths

Sun Haiyong

China is advancing mutually beneficial cooperation in industrial capacity with the countries along the routes of the Silk Road Economic Belt and the 21st Maritime Silk Road， and beyond. Having raised innovative concepts and multiple support paths， it will certainly make steady headway despite challenges.

Innovative Concepts

In the face of the profound and complex changes at home and abroad，especially the increasing pressures from its economic downturn， the Chinese government has taken into consideration the domestic and international situations and is actively guiding the new normal of China's economic development， of which industrial capacity cooperation is a critical part. China adheres to four principles during its pursuit of international cooperation: attaching equal importance to justice and interests， win-win cooperation， openness and inclusiveness， and market-based operations. These principles are embodied in China's cooperation efforts， and are compatible with China's other foreign policy ideas， such as building a“community of shared destiny，” upholding the principle of “amity， sincerity，mutual benefits and inclusiveness” in its diplomacy toward neighboring countries， sticking to “honesty， commitment， amity and sincerity” in China-Africa relations， and adhering to the “correct concept of justice andinterests.”

First， the efforts to promote mutual benefits and common development with other countries through industrial capacity cooperation incarnate China's appeal for win-win cooperation. In the context of lackluster global economic performance since the international financial crisis， mid- and high-end manufacturing industries and capital have flown back to developed countries which are promoting “re-industrialization，” with many developing countries encountering a bleaker situation as a result. Taking advantage of its huge foreign exchange reserves accumulated since the launch of its reform and opening-up policy in 1978， China has pioneered a new development path based on large-scale traditional manufacturing and strong infrastructure construction capability and through strengthening outward investment and foreign economic cooperation. The Chinese government has been vigorously promoting international industrial capacity cooperation by combining China's industrial and capital advantages with foreign demand so as to enhance domestic industrial upgrading and initiate a new phase of openingup. Currently， a basic pattern of “one axis with two wings” has formed， with major neighboring countries as the “axis，” major African， Middle East and Central and Eastern European countries as the “western wing，” and major Latin American countries as the “eastern wing.” For China， such a pattern marks its shift from “passive reaction” to “active shaping and planning” of the international labor division system， which will reactivate the global industrial chain. With industrial capacity cooperation as a bond， China will also synergize the industrialization and infrastructure development strategies of different countries to build a closer and more extensive relationships of industrial cooperation.

China aims to provide Asian， African and Latin American countries with much-needed funds and high-quality industrial equipment for their infrastructure projects and locally-based industrial parks. For developing countries， such kind of assistance from China can facilitate their efforts to break their development bottlenecks， achieve the effect of “teaching a person to fish rather giving him or her fish” and materialize the conceptof win-win cooperation. For developed countries， China's technological development and infrastructure construction capabilities， such as for high-speed railways， offer cost-effective options for their infrastructure upgrading. The combination of industrial capacity cooperation with the introduction of high-end foreign industrial capacity， the effort to deepen industrial and technical cooperation in high-end manufacturing， and the pursuit of capacity cooperation with third parties can benefit partner countries while favoring the transformation and upgrading of China's domestic industries and expanding its win-win cooperation with developed countries.

Second， while industrial capacity cooperation is enterprise-led market behavior， the Chinese government adheres to the correct concept of justice and interests and attaches equal importance to the two aspects to promote common development with partner countries. As a responsible power devoted to maintaining world peace and international justice， China undertakes an obligation to do what it can for late-starting countries.

1. The correct concept of justice and interests acts as the principle for industrial capacity cooperation mapped out in the guideline documents issued by the Chinese government and the remarks of leaders and senior officials. At a meeting aimed at promoting the “go global” strategy and capacity cooperation for Chinese manufacturers on April 3， 2015， Premier Li Keqiang highlighted the formation of a new economic pattern through the transition of China's foreign trade from “extensive imports and exports” to“intensive imports and exports.” In the Guidance on Advancing International Capacity and Equipment Manufacturing Cooperation （hereinafter referred to as the Guidance）， the State Council proposed to “generate good economic and social effects and achieve mutual benefits and win-win development by sticking to the correct concept of justice and interests， fully considering local conditions and actual demands， and emphasizing mutually beneficial cooperation with local governments and enterprises.” Be it “intensive imports” or “intensive exports，” the concept of mutual benefits and attaching equal importance to justice and interests are both embodied in the Guidancedocument. As indicated by the policy documents and announcements of the Chinese government， the correct concept of justice and interests has become an important element of China's push for industrial capacity cooperation with other countries.

Chinese President Xi Jiping and Saudi King Salman jointly inaugurated a joint-venture refinery in Riyadh，Jan.20， 2016.

2. In contrast to the West-dominated industrial transfer campaigns，China's industrial capacity cooperation highlights the concept of “attaching equal importance to justice and interests.” International transfer or capacity cooperation is the product of economic interactions between one country and the rest of the world. The United States， Japan， Germany and other Western developed countries exported industries during the three largescale industrial transfer campaigns that occurred after World War II. These developed countries tended to transfer their less-advantaged industries （or energy-consuming and heavily polluting industries） to other countries to consolidate their high-end status in the global industrial chain， puttingdeveloping countries in a subordinate position in the global industrial division， and forming an international labor division pattern that comprises the “core” and the “periphery.” Such kind of international labor division is also one of the important reasons why many developing countries are trapped in a development dilemma. By contrast， in addition to such traditional industries as steel， non-ferrous metals and construction materials，China's capacity cooperation also involves such high-end manufacturing industries as aerospace， marine engineering and nuclear power. In equipment manufacturing， engineering construction and operations management，China has also basically achieved a high and even an internationally advanced level. What China transfers to developing countries is its advantaged industries and high-quality industrial capacity， especially green and costeffective industrial equipment.

3. The correct concept of justice and interests is incorporated into China's concrete capacity cooperation. During its exploration for methods of such kind of cooperation， China is committed to coming to the aid of partner countries in their industrialization and also pays attention to the economic effects and market prospects of these cooperative projects. It not only focuses on the government's role， but also emphasizes market principles. During a visit to Brazil in May 2015， Premier Li Keqiang put forward the “3×3” model for China-Latin America industrial capacity cooperation， namely making joint efforts to build logistical， electricity and information channels to meet the demands of Latin American countries，forming a market-based cooperative model featuring positive interactions between enterprises， society and government， and expanding funds， credit and insurance financing channels. In this cooperative model， the Chinese government not only provides strong financial support and stresses the role of both sides' governments， but also emphasizes the need to respect market rules and focus on the building of a “soft environment，” which will not only elevate the industrialization level of partner countries and improve bilateral trade structure， but will also provide a brand-new and operable way for mutually beneficial cooperation between China and Latin America andbeyond. From a practical perspective， this model is also an interpretation of the correct concept of justice and interests.

Finally， industrial capacity cooperation with other countries reflects the principles of openness and inclusiveness， which provides an important opportunity for global development， especially for developing countries at a time when global economic growth has slowed， Western powers are committed to building a self-dominated regional economic cooperation framework， and geopolitical factors exert a greater influence on the international situation.

1. China has provided a broad cooperation space for existing and potential partners in various flexible and diversified forms. The first is the bilateral path， which aims at reaching bilateral cooperation agreements by strengthening synergy with the development blueprints of partner countries. The second is third-party cooperation， which means reaching agreements with developed countries to implement capacity-building projects in a third market. With this path， the capacity advantages of China and the technological advantages of developed countries become complementary to each other. The third path is multilateral， where industrial capacity cooperation is enhanced on multilateral diplomatic platforms. Characterized by a great degree of openness， the above-mentioned cooperative paths welcome the participation of other countries or enterprises outside the region.

2. China serves as a bridge during its push for industrial capacity cooperation， providing partner countries with cost-effective projects and reliable and reasonable financial supports by combining high-end technologies from developed countries with mid-end equipment from China. China's role will help lead the regional and global economic system in an open and inclusive direction.

3. China sets no thresholds for the economic or political systems of partner countries， which goes beyond traditional geopolitical considerations and fully reflects the open and inclusive characteristics of China's industrial capacity cooperation.

Multiple Support Paths

In its push for industrial capacity cooperation， the Chinese government has set up a solid support system with regard to policy. More importantly，national leaders have devoted themselves to the top-level design， and active interactions between central and local governments have also helped promote the building of transnational cooperation zones and multiple support paths.

Summit diplomacy and top-level design. Since the launch of the Belt and Road Initiative， industrial capacity cooperation has become a name card of China's summit diplomacy， where political consensus can be effectively reached to strengthen the synergy of bilateral policies and a positive atmosphere can be fostered to advance such kind of cooperation.

The Chinese government has introduced multiple documents in the form of national strategies to guide industrial capacity cooperation. The above-mentioned State Council's Guidance prioritizes the tasks in 12 key areas and comprehensively designs policies in 18 aspects. Made in China 2025， issued by the State Council in May 2015， is a top-level design to build China into a high-end manufacturing power. The Action Plan for Implementation of Reform Scheme for Deepening Standardization （2015-2016）， issued in September the same year， points out that China should study and formulate the “go global” scheme for China's standards regarding industrial capacity and equipment manufacturing cooperation. The Guidance on Promoting the Healthy Development of Financial Leasing Industry published in the same month supports financial leasing companies to explore international markets and provide complementary services for capacity and equipment manufacturing cooperation. The Central Economic Work Conference， convened in December 2015， also states the necessity to strengthen capacity and equipment manufacturing cooperation. The above notions provide important guidance for ideas， partners and industrial selections in industrial capacity cooperation.

Inter-ministerial coordination and ministerial-provincial interactions.In China's industrial capacity cooperation， departments involved in the country's foreign economic affairs， such as the National Development and Reform Commission （NDRC）， the Ministry of Commerce （MOFCOM），the Ministry of Industry and Information Technology and the Ministry of Foreign Affairs have worked together on planning and implementation of related projects. The measures taken by NDRC and MOFCOM to support the participation of some provinces through building bilateral and multilateral cooperative mechanisms， designing plans for cooperation with major countries， setting up equity funds， establishing ministerial-provincial coordination mechanisms， creating international platforms such as the exp with the Association of Southeast Asian Nations （ASEAN） and holding specific seminars. Revolving around the key areas， relevant provinces have also introduced the “go global” strategy for local advantaged industries and high-quality capacity to actively mobilize local enterprises in international capacity cooperation. Priorities are given to those countries that fit well with local industries， have a solid foundation for cooperation and show a strong desire for cooperation.

Combination of existing and new financing platforms. With the largest foreign exchange reserves in the world and huge domestic deposits， China possesses strong investment capability. The accelerated internationalization of the renminbi offers China a reliable guarantee for its industrial capacity cooperation.

China has made the best use of existing development funds to support its capacity cooperation campaign. Some financing platforms such as the China-ASEAN Investment Cooperation Fund and China-Arab Industrial Investment Fund have become supports for capacity cooperation. In May 2014， a Memorandum of Understanding was signed between the China-ASEAN Investment Cooperation Fund and Jidong Development Group，one of the top five cement producers in the world， planning to transfer 10 million tons of cement capacity to the members of the ASEAN within three years and facilitate the construction of projects with 2-billion-yuan investment. The MOU's signing marked the formal implementation of theIndo-China Peninsula Cement Capacity Transfer Initiative. In addition， new financing platforms on capacity cooperation aimed at specific countries are being vigorously established by China. On December 14， 2015， a framework agreement was signed between the Silk Road Fund and Kazakhstan Export Investment Bureau on a special $2-billion fund for China-Kazakhstan capacity cooperation， the first set up by the Silk Road Fund since its founding. China has also launched similar funds at the regional level. In September 2015， China set up the China-Latin America fund on capacity cooperation， with its initial capital reaching $10 billion. In December of the same year， the establishment of the China-Africa fund on capacity cooperation was announced， with an initial capital of $10 billion. On January 21， 2016， President Xi Jinping announced in Cairo that China will carry out capacity cooperation with Arab countries， including setting up a special loan of $15 billion for industrialization in the Middle East， and offering Arab countries a commercial loan of $10 billion to support bilateral capacity cooperation.

Building industrial cooperation parks. According to the Fifth Plenary Session of the CPC's 18th Central Committee， China should improve its strategic layout and advance opening-up， supporting coastal areas to fully participate in global economic cooperation and competition， fostering advanced manufacturing bases and economic zones with global influences，and elevating the development of border-area and cross-border economic cooperation zones. The construction and development of industrial cooperation parks provides important supporting platforms.

Targeting specific countries and considering their trends of industrial transfer and investment preferences， industrial cooperation parks realize labor division cooperation and the clustering of high-end projects through cooperation at the governmental， industrial park and enterprise levels. Such parks are usually initiated by one or several Chinese enterprises which establish economic and trade cooperation zones outside China. Once the dominant industry takes root， related industries up and down the chain can also go global. Currently， the “two countries， two parks” model betweenChina and Malaysia has become a model of capacity cooperation. Since 2012， the China-Malaysia Qinzhou Industrial Park and Malaysia-China Kuantan Industrial Park have opened in succession. Competitive industries from both countries have clustered in the parks through accelerated building of cross-border industrial and service chains， encouraging China's technologies and industries to go global and attracting traditionally competitive industries from ASEAN countries. The Ethiopian government has listed the construction of the Oriental Industrial Park invested in by China's private enterprises as part of its sustainable development and poverty alleviation plan. So far， some Chinese enterprises have entered the park. In Belarus， Zoomlion entered the China-Belarus Industrial Park，which is a flagship project of Silk Road Economic Belt in May 2015. The first mounting equipment jointly produced by Zoomlion and Belarus' MAZ Group come off the assembly line on December 30 the same year. These industrial parks constructed by Chinese enterprises in different areas have laid a solid foundation for China's industrial capacity cooperation.

Prospects

Propelled by its foreign investment and economic cooperation projects，China's campaign of industrial capacity cooperation will proceed steadily. In 2015， a total of $7.04 billion of China's foreign direct investment flowed to the equipment manufacturing industry， a year-on-year growth of 154.2 percent， testifying to the speed and actual effects of China's push for capacity cooperation. China's foreign investment in manufacturing， especially equipment manufacturing， continues to rise， which will accumulate more momentum for cooperation. In the long run， with a continuous increase in the number of cooperative projects and ever-closer economic ties with partner countries， the integration of interests between China and neighboring countries， developing countries and even many developed countries will inevitably deepen. Industrial capacity cooperation and its achievements will strengthen the symbiotic relationship between China andrelated countries， and consolidate the basis for China's global partnership network.

Apart from some non-commercial risks with regard to other countries' politics， security and laws， industrial capacity cooperation is also subject to negative opinions in Western countries and constrained by the bottleneck brought about by the structural upgrading of China's domestic capacity.

First， some countries have criticized China for exporting excess and backward capacity to developing countries. Despite the current overcapacity in China's manufacturing industry and the huge pressure faced by some Chinese enterprises to resolve this issue， China is by no means exporting backward capacity to developing countries. In an open global trade system，if manufacturing powers' overcapacity cannot be solved through foreign trade， and other countries also lack comparative advantages in this industry，this industry can be considered to have worldwide overcapacity and thus cannot be exported. Nowadays， with green development becoming a global consensus， stricter environmental standards in developing countries，stronger awareness of environmental protection among the people， extensive supervision from environmental groups， and increasing attention from Western media， the transfer and construction of polluting projects is under huge constraints. It is false to assume that China is exporting high-polluting industries during its capacity cooperation. Given that exporting domestic overcapacity inevitably involves huge costs， from dismantling equipment，transporting it， assembling it and then operating it， the economic efficiency of this process itself is dubious. The core of capacity cooperation is to transform China's exports of products into exports of industries and capacity，providing partner countries with capacity in which China enjoys advantages，and so boosting the industrialization of developing countries and offering developed countries cost-effective infrastructure projects， thus realizing mutual benefits， reciprocity and common development.

Second， some developed countries have regarded China as a rival since the capacity cooperation campaign launched by China has helped increase its share in the international market and raised its status in the internationaleconomic system. For example， in their pursuit of third-party cooperation，Chinese enterprises hope to utilize France's business resources and networks in third-party countries， and intend to set up a cooperation fund with the European Union， Belgium and France to support relevant investment projects. However， there are some in the European Union that view China's rising share in the international market as direct competition for EU enterprises， which may restrict the effects of capacity cooperation in some markets.

Third， China's bottlenecks during the upgrading of its capacity structure have necessitated the introduction of high-end capacity to fill the vacuum in its high-end manufacturing while going global. Some developed countries have taken measures to revive and upgrade their manufacturing industries， such as “re-industrialization” in the US and “Industry 4.0” in Germany， while some developing countries are also vigorously promoting the development and upgrading of their own manufacturing sector， thus confronting China with a double challenge. Given this， China should not only effectively export its high-quality capacity， but should also actively introduce domestically demanded high-end capacity to consolidate and improve its overall competitiveness in manufacturing.

Generally， China needs to further clarify its stance on and goals for industrial capacity cooperation and advocate the principle of win-win development especially between developed and developing countries. Domestically， China should deepen the reform of its overseas investment management， strengthen independent innovations to enhance its own capability for cooperation and elevate both the scale and quality of the highend capacity introduced， thus facilitating the steady development of capacity cooperation and domestic industrial upgrading.

Indonesia's ‘Sea Power' Strategy and Maritime Cooperation with China

Xue Song & Xu Liping

Indonesian President Joko Widodo initiated a comprehensive development strategy with a maritime focus under calls for accelerating reforms， attracting considerable attention from political and academic circles at home and abroad. The existing body of research in China mainly focuses on the interpretation of Indonesia's maritime strategy from multiple perspectives， while this paper seeks to elaborate on the path toward strengthened maritime cooperation between China and Indonesia as well as the development prospects from Indonesia's domestic background and its concrete implementation measures.

Indonesia's “Sea Power” Strategy

During his presidential campaign in May 2014， Joko put forward the concept of “building Indonesia into a fulcrum of global oceans.” The concept originally only covered maritime security， foreign affairs， and defense， but a few months later extended to trade， fishing， tourism， transportation， and other fields. After a year of refinement， the concept gradually evolved into a national strategy aimed at promoting Indonesia's integrated development through boosting its ocean potentials. In fact， Indonesia's maritime strategy and its articulation are closely related to the following factors.

Xue Song is PhD candidate at the Department of International Relations， College of Social Sciences，Qsinghua University. Xu Liping is Research Fellow at the National Institute of International Strategy at the Chinese Academy of Social Sciences （CASS）.

Huge potential for the development of marine resources but restricted capabilities

As the world's largest archipelagic country， Indonesia's sea area accounts for two-thirds of its total territory， with a 97，000-kilometer-long coastline. It is estimated that the economic potential of the Indonesian sea is up to $1.2 trillion per year， within which its fishery output ranks the third in the world，only after India and China， and if this sector's potential is fully developed， the annual output could amount to 60 million tons.1Hendra Manurung， “Joko Widodo National Leaderships on Indonesia's World Maritime Policy， ” SSRN，October 16， 2014.70 percent of the energy reserves in Indonesian waters have yet to be exploited，among which petroleum reserves under the seabed are estimated at 7.4 billion barrels， and proven natural gas reserves are 149 trillion cubic feet. 60 percent of Indonesian people live in coastal areas and such a demographic distribution can not only provide sufficient human resources for Indonesia's marine development， but can also directly benefit from maritime development and thus help promote the integrated development of Indonesia's economy.

Maritime resources are quite abundant in Indonesia， but less than 10 percent has been exploited； the maritime sector only contributes 11.8 percent to the gross domestic product （GDP）， while marine development has encountered bottlenecks in numerous areas. In terms of fisheries， Indonesia now faces three major challenges: namely illegal fishing， over-fishing， and shortage of funds. The country suffers a loss of $24.2 billion from illegal fishing every year， with over 5，400 foreign fishing boats currently fishing illegally in Indonesian waters， as well as a loss of about 5 million tons of fish resources from over-fishing. Due to significant debt defaults， Indonesia's local banks are reluctant to offer loans to domestic fishing companies or choose to raise conditions for loan application and interest rates， resulting in most of its fishery investment coming from abroad and thus creating a funding shortagefor its own fishery development. In terms of logistics， Indonesia lacks large and high-grade harbors and only 11 out of more than 1，700 ports have a container capacity， which makes logistics and transportation among its different islands rather inconvenient and costly， leaving 90 percent of its logistics to rely on expensive land transportation. At the same time， many of Indonesia's eastern islands are still in a semi-isolated state and fail to be included into the national production and distribution chain.

The low-level of marine development in Indonesia is also a result of its political culture and history. The country's political culture is centered on Java's agricultural culture， since the demographic and political advantages of Javanese people who have developed their cultivation culture have failed to promote maritime culture since the founding of the Indonesian nation. Out of considerations for national security， Indonesia has turned to a relatively closed maritime policy after its founding. The Indonesian government was plagued by several separatist movements from its independence in 1945 to the early 1960s and it was also on high alert against the influences of Communism from 1965 to the end of the 1980s. In order to control personnel， information， and material exchanges with foreign countries，Indonesia successively shut down some of its small international ports after its independence. The aforementioned political culture and closed policies have restricted maritime development consciousness in Indonesia and its capacity building in this area.2Vibhanshu Shekhar and Joseph Chinyong Liow， “Indonesia as a Maritime Power: Jokowi's Vision，Strategies， and Obstacles Ahead， ” The Brookings， November 2014.

Bottlenecks of domestic reforms

As a core program of the Joko administration， the “sea power” strategy takes account of how to cater to domestic public opinion. During the late period of his administration， former Indonesian President Susilo Bambang Yudhoyono faced resistance in his push for reform and thus stopped short of concrete action in terms of infrastructure development， grain self-sufficiency，and slashing fuel subsidies.3Hal Hill， “The Indonesian Economy During Yudhoyono Dacade，” in Edward Aspinall， Marcus Mietzner，and Dirk Tomsa， The Yudhoyono Presidency: Indonesia's Decade of Stability and Stagnation， Singapore: Institute of Southeast Asian Studies， 2015， p.283.Considering Indonesians aspire to have a“strongman” as their president to push forward reforms， Joko thus needs to put forward a set of practical and feasible reforms and development strategies that can be expected to produce immediate effects to obtain support from voters.

For Joko， choosing maritime strategy is believed to help consolidate his source of votes and to also enjoy a certain degree of flexibility in practice. Votes in favor of Joko are mainly from the bottom of society and the emerging urban middle class. Given that the “sea power” strategy will directly benefit about 56 million people working in relation to the fisheries， or coastal residents who account for around 60 percent of Indonesia's total population， it will help win support from outer islands and the grassroots. At the same time， the strategy's characteristics， such as its flexibility of implementation， will also enable Joko to achieve better performance in some areas and more easily overcome obstacles to reform.

A “medium power” diplomatic ambition

Joko has inherited Susilo's diplomatic ambition to make Indonesia an important player in regional and international politics. The “sea power”strategy places emphasis on four diplomatic areas， namely highlighting Indonesia's “ocean” identity in its foreign affairs and international cooperation，enhancing Indonesia's international image through imple-menting the“medium power” diplomacy， expanding Indonesia's presence in the Indian and Pacific Oceans， and strengthening Indonesia's public diplomacy. Different from Susilo's diplomatic strategy， the “sea power” strategy is based upon national development and aims to integrate domestic development and foreign policy targets in its bid to build Indonesia into a medium power. Joko has pointed

out several times that diplomacy ought to serve economic development and the efficiency of diplomatic activities should be enhanced. Given that Indonesia's current economic and military strength cannot support its “medium power”ambitions， to combine its foreign policies and domestic development goals thus remains an objective requirement to realize the “medium power” target. In short， the foreign policy target of Indonesia's “sea power” strategy not only takes into account its diplomatic practical basis and policy continuity， but also makes appropriate adjustments based on its actual domestic situation and the objective requirements of its strategic goals.

Implementation of the “Sea Power” Strategy

At the 2014 Association of Southeast Asian Nations （ASEAN） summit， Joko elaborated on the five fulcrums of Indonesia's “sea power” strategy， namely reviving its marine culture， protecting and managing its marine resources，improving its maritime infrastructure， activating its maritime diplomacy， and enhancing its maritime defense capability. Since Joko took office， Indonesia has achieved substantial progress in the implementation of its maritime strategy.

Reviving marine culture

Reviving marine culture is the foundation of Indonesia's “sea power”strategy. In his inaugural speech， Joko called for the resumption of the Indonesian spirit of “sea captain and navigator” and the replacement of its conservative and introverted spirit of Javanese farmers with the innovative spirit of the maritime nation. First of all， the government and social organizations are demanded to promote the “sea power” ideology through organizing exhibitions， seminars， and other activities. For example， Indonesia built an ocean-themed pavilion at the 2015 Milan World Expo and held an historical expedition activity， in which 3，000 youth took 88 ships to visit 540 eastern ports and conduct research on the status of Indonesia's marine logistics and potential. A maritime exhibition and some university debates themed on “sea power” were also organized. The Indonesian Federation of Islamic Clerics alsoheld a seminar on Zheng He's voyages to the Western Seas.

Second， the Indonesian government and research institutions have been pushing for research on oceanic history and projects related to marine science and technologic innovation. One of the executed projects is the establishment of the second national maritime scientific research center in Kalimantan Timur，which will be equipped with 12 advanced vessels for oceanographic research to monitor and study the distribution of resources of 11 fisheries zones and provide research support for the development of fishery policy. The Indonesian government and Leiden University in the Netherlands have signed a cooperation agreement on the study of Indonesian marine history and culture， and cooperative research on marine culture has also been conducted between Indonesia's navy and the University of Indonesia. At the same time，the University of Indonesia and the Swiss Business Promotion Center have also carried out cooperation on the transfer of shipbuilding technology.

Furthermore， the Indonesian government will popularize the history of marine exploration in the country's elementary education and strengthen maritime professional teaching in its vocational education. Joko points out that the development of human resources and marine culture is an important part of Indonesia's plan to build itself into a sea power. The current history textbooks in Indonesia only involve the history of ancient oceanic exploration，but navigation in the Indonesian waters was already included into the history of Western navigation from the beginning of Dutch colonialism. Hence， Indonesia's textbooks used in primary and secondary schools will use some new materials to make up for this educational vacuum.4Wasino， “Maritime Culture in Indonesian History Curriculum and Textbooks， The Development and Alternative Solution，” The Journal of Social Studies Education， 4.1 （2015）.At the same time， vocational schools will increase teachers in the major of navigation and enhance their professional quality. The Indonesian government will also set up a tourism vocational school in the West Nusa Tengara Province adjacent to Bali Island to provide high-quality professionals for the further development of tourism in surrounding islands.

Protection and operation of marine resources

The Indonesian government has paved the way for the development of marine resources through administrative adjustment， legislation， and cooperation with local governments. First， it has made pertinent adjustments to administrative institutions， in which the functions of maritime security agencies have been boosted and their cooperation with the navy， police，customs authorities， the fishery department， and the immigration office has been conducted more tightly. The position of the minister of maritime affairs has been restored to coordinate subordinate maritime affairs among the departments of fishery， transportation， energy and mineral resources， and tourism. A new department of maritime affairs is also to be established to unify the management of maritime affairs involving multiple departments. Second，Indonesia has pushed for the implementation of the law of the sea. The first law of the sea passed in September 2014 has become the legal basis for the development of its marine resources. Third， efforts have been made to promote cooperation among provincial and county governments. In order to coordinate projects of national marine development， Joko once held a meeting with 102 county magistrates from Java and Maluku to promote communication and interconnectivity among the islands， especially when addressing illegal fishing and the protection of fishermen. The central bank of Indonesia and other agencies have also communicated directly with the local governments about the sources of funds for the development of marine industry.

The development of fishery resources， the most important part of the protection and management of marine resources， is also the core of Indonesia's“sea power” strategy at the initial stage. Over the past year， the Indonesian government has set out to rectify the fishery sector from two aspects， with one being conducting effective supervision of the fishery sector and cracking down on illegal fishing and overfishing. Since 2014， Indonesia's Ministry of Oceans and Fisheries has begun to intensify inspection and supervision of illegal fishing vessels and has sunk 174 foreign fishing vessels as of early April 2016. The ministry has also promulgated a series of laws and decrees to limit overfishing. In January 2015， for example， a regulation was promulgated stipulating thatfishing activities could only be conducted in offshore waters four nautical miles away or further， and fishermen were encouraged to fish in the area between 4 to 12 nautical miles offshore， where it was planned that only ships under 200 tons would be allowed to operate， the trans-shipment of aquatic products was banned， and large trawlers were forbidden to fish. In early 2015， an order was released to ban the fishing of small lobsters， crabs， and sea crabs as well as to ban the exploitation of mineral resources in the fishing area offshore to protect the interests of fishermen. In the whole year of 2015， the ministry formulated a total of 77 laws and regulations， far more than laws and regulations promulgated altogether in previous years.

The second is to enhance the competitiveness of Indonesia's fishery sector， including improving living conditions of fishermen and protecting their rights and interests while attracting fishery investment from the private sector and so on. At the Asia-Pacific Economic Cooperation （APEC） summit in 2014， Joko declared that the budget saved from fuel subsidy reductions would be transferred from consumer spending to production spending，including providing engines and cold storages for fishing boats as a way of increasing fishermen's income.5“We Are Waiting for You to Invest in Indonesia， Jokowi Tells APEC in Speech，” Jakarta Globe，November 11， 2014.In May 2015， Indonesian Vice-President Carla announced the implementation of JARING， a network plan aimed to accelerate the development of fisheries through the provision of loans to fishermen and small and medium-sized enterprises via eight banks. The Ministry of Fisheries chose Malang County in eastern Java as a “demonstration area，” and provided 5.23 billion Indonesian rupiah （2.57million yuan） to the community in aid for the purchase of fish processing equipment and technical training.

Improving maritime traffic infrastructure

The focus of maritime infrastructure construction of Indonesia's “sea power” strategy is to promote interconnectivity among its main islands and offshore infrastructure construction. Port construction is the first steptoward promoting interconnectivity. In the next five years， Indonesia's stateowned port companies plan to build three （deep） harbors， expand 21 （deep）harbors， including two global hub ports located in Kuala Tanjung and Bitung respectively， 6 main ports and feeder ports which can ensure the passage of ships with a capacity from 3，000 to 10，000 TEU. It is expected that 35 ports will be built one after another in 2016. The Patimban deep-water harbor cooperation with Japan is also due to be launched in 2019 and is expected to become the largest port in Indonesia. Joko has proposed to create and promote an“integrated harbor system” to integrate and share the data of ships entry and departure and lift management efficiency.6Satria Sambijantoro， “Jokowi Presses ahead with Integrated Port System，” The Jakarta Post， May 6，2015.

Joko has also proposed a plan to build a “sea highway” to connect all of Indonesia's islands， especially its remote eastern regions， in order to reduce the time and cost of logistics. According to the national medium-term development plan （RPJMN） enacted in January 2015， the ratio of logistical costs to GDP is expected to decline from the current 24 percent to 19 percent in 2019， and the cargo retention in ports will be reduced from 5-6 days to 4 days. In 2015， the department of transportation had 86 navigation routes open to ships， which will increase to 96， 65 percent of which will be located in the eastern region， and it will further rise to 106 in 2017. At the same time， the navigation of regular transport ships to Indonesia's eastern region has also resumed.

Activating maritime diplomacy

Under the framework of Joko's pragmatic diplomacy， to ensure sovereign integrity and territorial security while conducting economic diplomacy， has become a key point of Indonesia's maritime efforts. To this end， Indonesia has restarted negotiations on the demarcation of disputed sea areas. Indonesiashares a maritime border with 10 countries， but 35 percent of its maritime boundaries have not been demarcated. Indonesia is plagued by maritime territorial disputes with Malaysia， the Philippines， and East Timor， and also has an exclusive economic zone dispute with Palau and other countries. In his meeting with Malaysian Prime Minister Najib Razak on February 6， 2015，Joko proposed the establishment of a new negotiation mechanism to solve the problem of maritime delimitation and sent a special envoy in August 2015 to Malaysia for exploratory negotiations. In May 2014，Indonesia succeeded in confirming the demarcation of its exclusive economic zone with the Philippines， and thus hoped to take this opportunity to settle the remaining maritime demarcation with Manila. During his visit to the Philippines in February 2015， Joko suggested settling the delimitation of the continental shelf and confirmed a patrol area for the two countries. Indonesia has also restarted bilateral talks with Palau on the delimitation of their exclusive economic zones.

Economic diplomacy is another important part of the accelerated implementation of Indonesia's maritime diplomacy. Due to the lack of funds for infrastructure construction， technologies， and professionals， Indonesia has to make use of economic diplomacy to introduce foreign resources to help advance its “sea power” strategy. At the 2014 APEC summit and at the commemoration of the 60th anniversary of the Asian-African Conference in 2015， Joko briefed other participants on Indonesia's “sea power” strategy and all of its departments also actively used APEC conferences and other platforms to attract foreign investment in such industries as port construction and logistics. At the bilateral level， the Indonesian president and his cabinet ministers have also made use of visits with foreign counterparts to sell Indonesia's maritime strategy and clinched cooperative agreements with the United States on maritime defense， management of marine resources， waterway safety， and maritime technology. Indonesia has also set up a maritime forum with Japan，negotiated with Russia about interconnectivity and infrastructure construction，negotiated with the Netherlands on cooperation on shipbuilding and port construction， and started talks with East Timor on combating illegal fishing and the development of hydrocarbon fuels. It has also sought technical support from Belgium on shipbuilding， negotiated with Britain about the export of marine products and gaining marine technical support， and it strengthened cooperation with Denmark on tourism and aquaculture. At the same time， Indonesia has pursued cooperation with France on marine energy exploitation and conducted joint research with the Republic of Korea on ocean development and advanced cooperation with Seoul on naval weaponry and equipment.

Enhancing maritime defense capabilities

During the Susilo administration， Indonesia's absolute defense spending rose rapidly， but due to its low base figure， the proportion of its national defense budget to GDP was still less than 1 percent until 2013. Joko significantly raised Indonesia's military budget in 2015， leading to its department of defense actually receiving $8.2 billion that year， an increase of 16 percent from 2014. The Indonesian government plans to raise the proportion of military spending to at least 1.5 percent of GDP， or to $20 billion， by 2020.7“Military Spending in South-East Asia: Shopping Spree，” The Economist， May 24， 2012.The increased national defense budget would be mainly used for equipment purchases and reducing Indonesia's financial dependence on export credit， loans， and foreign military assistance.

Indonesia has also taken practical steps towards lifting the level of its naval equipment and diversifying the sources of weapons. The focus of Indonesia's weapons procurement in the future lies in communication， surveillance， and network technologies8Iis Gindarsah and Adhi Priamarizki， “Indonesia's Maritime Doctrine and Security Concerns，” RSIS Policy Report， April 9， 2015.and the resulting cooperation agreements include an integrated information technology system offered by the Netherlands to monitor construction activities in its territorial sea and the defense data integration system built with the assistance of Sweden's SAAB. Currently，Indonesia's weapons and equipment are mainly from the US， Russia， and France， and given that it has suffered from an arms embargo by the European Union and the US， Jakarta now plans to increasingly diversify its weapons procurement in the future.

The Joko administration has put the revitalization of the national defense industry in a strategic position， with the aim of realizing the “independence”of its defence industry by 2025 to deal with any possible arms embargo and foreign armed interventions as well as to reduce spending on weapons purchases. To facilitate these goals， specific guidelines adopted include purchasing foreign equipment in the form of countering or offsetting trade，increasing the orders of domestic military industry， accelerating technological transfer， introducing the production line of weapons， and improving the integration capabilities of its weapon systems. Under the effort of the Joko government， Russia and Turkey have expressed their interest in helping Indonesia build ships and manufacture weapons.

Challenges to the Implementation of the “Sea Power” Strategy

Indonesia's “sea power” strategy involves a wide range of fields and with it Jakarta attempts to rely on the development of its ocean potentials to drive the integrated domestic development of national defense， trade， and infrastructure construction， and other such areas， as well as to find a comprehensive approach to solving such problems as food security， territorial and sovereign disputes，backward infrastructure， and weak national defense. However， Indonesia is in its stage of accelerated industrialization and modernization， and the existence of some obstacles and challenges is expected to impede the implementation of its ambitious “sea power” strategy.

Rising nationalism

Indonesia's nationalism originated from the currents of anti-colonialism that was popular before its founding and it is now mainly reflected by the pursuit of economic independence， opposition to the exploitation of itsresources by foreign countries， and the maintenance of the sovereignty of its islands and maritime rights. Since Joko took office， nationalistic activities have been mainly initiated by the government and thus enjoy an extensive social foundation. In May 2015， the Indonesian government sunk 41 foreign fishing ships illegally fishing in its waters on the “National Awakening Day.”9Ani Nursalikah， “41 Kapal Ditenggelamkan Serentak Di Hari Kebangkitan Nasional，” Republika， May 20， 2015.In August of the same year， its fishery authorities sank 37 foreign fishing vessels as a tribute to the 70th anniversary of its national independence. Such ironfisted actions as the fight against foreign illegal fishing and the protection of its territorial sea have successfully catered to the public. For example， the minister of Indonesia's fishery authorities， who is known for a tough stance in defending national sovereignty， has gained an approval rating of 63.79 percent in a recent poll， which is much higher than that of other ministers. His high approval rating indicates that a nationalistic approach in Indonesia works well. Certain senior diplomats and officials of the Democratic Struggle Party harbor strong feelings towards nationalism. Therefore， when a conflict does occur between the maintenance of sovereignty and foreign cooperation， cooperation with other countries would be subject to its maintenance of sovereignty.10Aaron L. Connelly， “Sovereignty and the Sea: President Joko Widodo's Foreign Policy Challenges，”Contemporary Southeast Asia， 37.1 （2015）， pp.1-28.

The adoption of nationalistic policies is the easiest way to boost the rate of support， but it may arouse suspicions among surrounding countries and foreign investors. For instance， a new regulation promulgated by Indonesia's marine affairs and fishery department to ban fishing by large foreign ships is exactly aimed to safeguard sovereignty through sacrificing foreign cooperation. As a result， only 6.065 million tons of fish were caught in Indonesian waters in 2015， only an increase of 0.4 percent from 2014， and the fish-catching volume is expected to even decline by 60，000 tons in 2016. “Economic nationalism has reduced import competition， raised foreign labor barriers， and caused declining stability of national policies， which has confused investors.”11Adam Schwarz， “Investors Nervous Ahead of Cabinet Reshuffle，” The Jakarta Post， April 25， 2016，http://www.thejakartapost.com/academia/2016/04/25/investors-nervous-ahead-of-cabinet-reshuffle.html.The investmentvolume promised by foreign countries in the first quarter of 2016 decreased from the fourth quarter of 2015， the first time since 2012. Obviously，nationalism is a good card for Joko to play to strengthen his power， but once it prevails， the entry of foreign capital and cooperation with other countries would be negatively affected.

Surrounding maritime disputes

The influence of surrounding maritime disputes on the implementation of Indonesia's maritime strategy is mainly reflected in two aspects. The first is that Indonesia's failure to finalize the demarcation of territorial waters or exclusive economic zones with such surrounding countries as the Philippines，Thailand， Vietnam， Malaysia， and Palau may become obstacles to its future marine development. The second is that Indonesia， who has long taken a neutral stance in the South China Sea dispute， now faces constant pressure from other claimants of the Association of Southeast Asian Nations （ASEAN）and the United States to “take sides.” The Philippines， Vietnam， and other claimants require ASEAN to speak with one voice on the South China Sea dispute， in an attempt to “hijack” Indonesia and other ASEAN countries. At the same time， the US hopes Indonesia plays a role in leading ASEAN to confront China on the South China Sea issue. After Joko's visit to the US in October 2015， the US extended to Indonesia $20 million as military aid，hoping Jakarta would play a bigger role on the South China Sea issue. Strategic difficulties Indonesia will face in the future in surrounding maritime situations lie in how to use bilateral approaches to resolve the problem of the delimitation of disputed waters， how to use multilateral platforms to push all the parties in the South China Sea issue to exercise restraint， and how to withstand pressure from the US and domestic pro-US factions， while at the same time adhering to its “independent and active” diplomatic tradition and avoiding the loss of trust among neighboring countries.

Low efficiency of administration

Indonesia's low efficiency of maritime administration is mainly reflec-ted in its failure to form medium and long-term planning， the sluggish advancement of the project， and the lack of criteria for verifying project completion. The “sea power” strategy has been implemented for more than one year， but some departments have not put forward medium and longterm construction plans. Indonesia has 13 departments related to its maritime strategy， but only four subordinate departments under the maritime and resource planning authorities have actively responded to the strategy， while other departments have remained indifferent. Indonesia's domestic analysts believe that maritime affairs are still like an “adopted son” of its development policy. Some government agencies are superficially poised for the “maritime strategy，” but actually lack concrete policies and programs to advance the strategy. Even for the four fastest-moving subordinate departments under the maritime and resource planning authorities， differences still exist in terms of their implementation of the “maritime strategy.” The projects of port construction and fishery have advanced relatively fast， with specific items and medium and long-term planning conducted simultaneously. The department of tourism has focused on specific projects in the past year while not making any medium or long-term plan. Until a cabinet shuffle，Rizal， the new chief of Indonesia's maritime and resource planning department，put forward the overall plan to build 10 tourist attractions in Indonesia. Philips J. Vermonte， executive director of Indonesian Center for Strategic and International Studies， has urged the government to make maritime policies as soon as possible and complete institutional reforms.

The low administrative efficiency of local governments in Indonesia has led to slow progress on relevant projects. Joko and Carla were once businessmen and thus pay much attention to efficiency and results. President Joko is devoted to pushing electronic administration and simplifying administrative procedures， which has shortened procedures for establishing a company to 3 hours at the fastest， compared with several months or a yearin the past. The Indonesian central government has been making great efforts to improve efficiency， but local governments' administrative reforms fail to catch up， especially in the reform of their inefficient approval and permission of land acquisition and mineral mining processes. Under the system of local decentralization， the disputes among counties on property ownership， which remain particularly prominent in the fishing and mining industries， have also increased the risk of investment.

The Indonesian central government lacks quantitative standards and data to check project results. One year ago， the Joko government decided to conduct quantitative assessments of the implementation of Indonesia's maritime strategy， but so far no quantitative assessment standards of such kind have been formulated except for national defense， fishery， and port construction. On the one hand， the low administrative efficiency is due to the frequent cabinet shuffles of the Joko government. Joko also admits that external voices for cabinet shuffles have interfered with the normal operation of all departments. On the other hand， local decentralization has also shown its institutional defects. Given the weak central control over local governments，those same local governments usually lack motivation to support large projects led by the central government if these projects cannot offer them considerable material support， do not produce immediate effects， or are believed to be unbeneficial to the re-election of local leaders.

Insufficiency of funds

The building of a “sea power” means a huge capital demand， but for Indonesia， its funding insufficiency is quite serious in terms of the construction of major projects. In 2015 alone， Indonesia's financing gap in infrastructure construction reached 8.57 trillion rupiahs （$610 million）， and at least $20.7 billion still needs to be raised before 2018.12Ian Satchwell， “The ideal partnership: making the most of the complementarities between Indonesia and Australia in the mining sector，” The Australian Trade Commission， April 2012.The construction of 24 new ports in the following five years also requires $58.3 billion to $66.7 billion. The delayed budget allocation as a result of adjustments of administrativeinstitutions has influenced the advancement of planned projects. At the same time， existing funds have not been effectively utilized. An intensified anticorruption campaign launched since Joko took office has also caused local governments to hold a cautious attitude about the implementation of new projects， resulting in the idleness of about $1.96 billion in the local budget fund.

Maritime Cooperation between China and Indonesia

Since the beginning of the new century， China and Indonesia have actively explored maritime cooperation and achieved fruitful results. The coincidence of China's “21st Century Maritime Silk Road” and Indonesia's “sea power”strategy will provide a broader space for maritime cooperation between the two countries in the future.

Fruits of maritime cooperation between China and Indonesia

Maritime cooperation between China and Indonesia， starting from 2005，has involved a variety of fields and borne remarkable progress.

Policy communication. Communication between China and Indonesia on policies is the basis for bilateral maritime cooperation. In a joint declaration issued for the establishment of the strategic partnership in 2005， both countries vowed to “further boost bilateral maritime cooperation， enhance the building of maritime capacity， and set up a consultative and cooperative mechanism for maritime issues.” China's State Oceanic Administration and Indonesia's Ministry of Marine Affairs and Fisheries signed the memorandum of understanding on maritime cooperation respectively in 2007 and 2011，and also signed a five-year plan for maritime cooperation （2013-2017） and a memorandum of understanding on maritime cooperation in 2012， all of which mark important achievements of policy communication between the two countries. A document signed in 2013 on the establishment of a comprehensive strategic partnership states that the two countries should strengthen pragmatic cooperation in navigation safety， maritime security，naval cooperation， marine scientific research and environmental protection，maritime search and rescue， and fishery and the blue economy. Subsequently，related agreements and cooperative projects have been quickly launched， such as a memorandum of understanding on fishery cooperation signed between China's Ministry of Agriculture and Indonesia's Ministry of Marine Affairs and Fisheries in 2013， as well as a memorandum of understanding on tourism cooperation signed between the two governments in the same year.

Connectivity of facilities. China and Indonesia have achieved impressive cooperation in the construction of maritime traffic facilities， including the Suramadu Bridge， which was opened to traffic in 2009， and bilateral cooperation on the construction of the ports of Tanjung Perak in East Java province and Socah in Madurai signed in 2010. In the recent year， the two countries have accelerated cooperation in seaport construction， with a memorandum of understanding signed to jointly push for the development of Bitung， Sulang， and Indonesia's other eastern seaports. The China Communications Construction Company is finalizing a $2.5 billion deal with Indonesia to upgrade 30 ports in eastern Indonesia. The expansion project of Tandjungpriok port in Jakarta has also drawn attention from China Ocean Shipping Company， China Shipping Group， and China Merchants Group.

Fishery cooperation. China and Indonesia signed an agreement on fishery cooperation in 2012， resuming bilateral cooperation in fishery that had been interrupted since 2007. In the agreement， China also provided $1.4 billion of special aid to Indonesia to boost its ocean monitoring and research and support its fishery development. Since the signing of the agreement， cooperation between the two countries in fisheries has been booming. In 2011， Indonesia exported 242，000 tons of fishery products to China， and the volume increased to 336，000 tons in 2013. So far， China is Indonesia's fourth largest destination of fish exports， while Indonesia is China's seventh largest source of fish imports. As of October 2014， 17 Chinese companies and about 400 Chinese fishing boats had been engaged in fishing in the Indonesian exclusive economic zone， and the total investment in fishery facilities on Indonesia's land amounted to about $80 million. China is also planning to invest in the construction of fishing ports in Indonesia's Poincare URI， Lombok， Aceh， West Papua， and other places.

Cooperation in science， technology and education. China's State Oceanic Administration and Indonesia's Ministry of Maritime Affairs and Fisheries have taken the lead in launching bilateral cooperative research. Since 2005， a maritime technology committee co-founded by the two countries has continuously held seminars and classes to improve the professional quality and ability of employees in both countries， and the center for joint research on maritime affairs and climate change set up by the two countries has become a regular exchange mechanism for bilateral officials and experts. In 2008， the State Oceanic Administration for the first time carried out a joint expedition in Indonesian waters. In 2009， the two departments signed an agreement on the establishment of a joint working group and China-Indonesia center for ocean and climate research. The research center was formally established and put into use in 2010，which marks the first joint marine research base China has set up overseas.

Cooperation in maritime security. Starting from the defense security consultation mechanism both countries established in 2006， China and Indonesia have continuously deepened bilateral maritime cooperation in traditional and non-traditional fields. From 2009 to 2014， Indonesia's navy and China signed three contracts on the purchase of C705 anti-ship missiles from China and planned to move their production to Indonesia through technological transfer. Indonesia has also chosen the Type-730 Close-In Weapon System （CIWS） developed by China to modify its KCR-60M missile boat. China has also invited the Indonesian navy to China for technical training on several occasions. The exchange of visits between the navies of both countries has continued almost without interruption since 2006. In 2013，the two countries' navies reached an agreement on strengthening cooperation in regional maritime security in a bid to jointly maintain the security of their trade channels. In March 2015， the two countries signed a memorandum of understanding on cooperation in maritime search and rescue， and they held their first joint game-board exercise of maritime search and rescue in November of the same year to enhance their coordination ability in maritime rescue. The two countries have also carried out non-traditional security cooperation under the multilateral framework. In 2014 and 2016， a formationof China's vessels participated in a joint exercise on multilateral humanitarian relief， held in Indonesia. In March 2016， the Chinese navy was invited to participate in the seventh maritime safety exercise sponsored by Indonesia's Maritime Safety Administration themed on the protection of marine resources.

Challenges to China-Indonesia maritime cooperation

In 2013， Chinese President Xi Jinping put forward the proposal of the“21st Century Maritime Silk Road” in Indonesia， which dovetails with the five fulcrums of Indonesia's “sea power” strategy and will create new opportunities for China and Indonesia to further strengthen maritime cooperation. A joint press communiqué issued in April 2015 reiterated a plan to coordinate China's“21st Century Maritime Silk Road” with Indonesia's “sea power” strategy to forge a maritime development partnership that can promote common development and prosperity. In a telephone conversation with his Indonesian counterpart Joko on June 23， 2015， President Xi Jinping once again stressed this point. Megawati， chairman of Indonesia's Democratic Party， claims that the two countries' maritime development blueprint offers a great chance for Indonesia's development， especially in its eastern region.

Rizal， a diplomatic adviser to the Indonesian President， holds that the two countries' strategies have much in common in terms of their interconnectivity and their security and diplomatic goals.13Basten Gokkon， “China and Indonesia's Maritime Agendas Closely Aligned，” Jakarta Globe， December 3， 2014， http://jakartaglobe.beritasatu.com/news/china-and-indonesias-maritime-agendas-closely-aligned.Both China and Indonesia have extended active support to the development of their maritime development strategies， but due to their different strategic priorities and national interests，as well as disruptive influence from domestic and foreign factors， maritime cooperation between the two countries still faces multiple challenges.

First， there is an apparent lack of policy communications in their strategic cooperation. On the one hand， the existing mechanisms between the two countries to this end have not been fully utilized. Since its establishment in 2012， the China-Indonesia maritime cooperation committee has only held two sessions. The technology committee for maritime cooperation was originallyplanned to meet annually， but it failed to hold a meeting in 2014 and the 10th meeting scheduled to be held in 2015 was canceled. On the other hand，only few marine sectors have held regular communications. Except for the State Oceanic Administration and the above-mentioned two governmentlevel committees， almost no other relevant government departments and nongovernmental organizations in China have set up a conventional mechanism for maritime cooperation with Indonesia. The lack of necessary communication mechanisms or their lack of vitality and the participation of only a limited number of departments from both countries lead their maritime strategies to fail to dovetail with each other， complicating maritime cooperation.

Second， the “Natuna issue” has influenced the environment for bilateral cooperation. China and Indonesia have no territorial dispute in the South China Sea but do lay different claims to maritime rights in the Natuna waters. In disregard of such a fact， Indonesia， however， conducts its law enforcement in the waters within 200 nautical miles of the baseline of the Natuna islands，and often detains Chinese fishing boats， thus sparking bilateral disputes. Some Indonesian officials mistakenly believe that China asserts its territorial sovereignty over Natuna and Joko's advisers once privately vowed to “take back”the island.14Jonathan Chen， Andrea Gleason， Dr Greta Nabbs-Keller， Natalie Sambhi， and Kyle Springer， New Perspectives on Indonesia: Understanding Australia's Closest Asian Neighbor， Perth USAsia Center， 2014.In November 2015， Panjaitan， Indonesia's minister of politics， law and security coordination， proposed that， if the territorial sovereignty issue could not be solved with China through dialogue， it would be possible to sue China in the International Court of Justice. Such improper remarks have undermined mutual political trust between the two countries and done no good but harm to bilateral maritime cooperation.

Third， Indonesia's nationalism will undermine its maritime cooperation with China. Indonesia's unilateral abolition of the agreement with China on fishery cooperation and the controversies triggered by the influx of Chinese workers in Indonesia are two examples of the negative impacts caused by Indonesia's nationalism. The two countries reached an agreement on Chinese fishing boats in the waters of Natuna in October 2014. However，in January 2015， Indonesia not only unilaterally abolished this fishery cooperation agreement， but also detained Chinese fishing boats. China actively communicated with Indonesia to pursue the dispute's settlement， but no negotiation has been held. The abolition of fishery cooperation with China is part of a series of nationalistic policies adopted by Indonesia's Ministry of Marine Affairs and Fisheries， which has caused huge economic losses to Chinese enterprises. Symbolized by the publication of a report on the influx of Chinese workers to Indonesia by its Time magazine in August 2015 and with the beginning of the construction of the Yawan High-Speed Railway and the arrest of five Chinese workers in April 2016， the dispute concerning Chinese laborers continues to ferment， the focus of which is China's alleged export of low-quality workers to Indonesia to grab jobs from local residents. The Indonesian media has exaggerated the threat of Chinese laborers and its labor unions have exerted pressure on the Indonesian government， urging it to prohibit Chinese workers without professional skills from entering Indonesia. In response to xenophobic nationalism， Indonesia's immigration authorities have strengthened identity checks of inflowing Chinese people and the labor authorities have issued stricter regulations on the introduction of foreign workers. If Indonesia's nationalism continues to spread， the overall situation of maritime cooperation with China will inevitably be affected.

Fourth， competition interferences from the US， Japan， and other countries will affect China-Indonesia maritime cooperation. The US attaches great importance to Indonesia's status as a strategic fulcrum in Southeast Asia and spares no effort to win over and support Jakarta. In May 2015， the US，through the World Bank， provided $11 billion in loans to Indonesia for its infrastructure. In the talks on deepening their comprehensive partnership in October of the same year， the US and Indonesia decided to expand bilateral maritime cooperation and particularly strengthen interconnectivity， the fight against illegal fishing， and the capacity of Indonesia's maritime police.15The White House， “Joint Statement by the United States of America and the Republic of Indonesia，”O(jiān)ctober 26， 2015， https://www.whitehouse.gov/the-press-office/2015/10/26/joint-statement-united-statesamerica-and-republic-indonesia.Maritime cooperation between the US and Indonesia has obviously took into account the factor of competition with China.

The competition between Japan and China in Indonesia is mainly reflected in the economic and trade area. Japan harbors a wish to cooperate with Indonesia in shipbuilding and port construction in Indonesia's east region and so provides financial support to Indonesia. In 2015， the Japanese government promised to lend about $1.3 billion to Indonesia for its infrastructure and the Japan-led Asian Development Bank will offer a loan of $2 billion to Indonesia for infrastructure development in 2016. Japanese investors have also promised an additional investment of $1.7 billion in the Southeast Asian nation. In 2015， Japanese investment in Indonesia totaled $8 billion， an increase of 95% from 2014. The focus and strategy of Japan's maritime cooperation with Indonesia has many intersections with China's， which means Japan and China are in competition. Support from the US and Japan means that， when implementing its maritime strategy， Indonesia has more policy options and thus chooses programs to its advantage.

Direction of China-Indonesia maritime cooperation

China and Indonesia are mutually complementary in terms of maritime cooperation resources， with China enjoying technological and capital advantages， while Indonesia enjoys advantages in natural and human resources. Such mutual complementariness will lay a good foundation for China's “21st Century Maritime Silk Road” to dovetail Indonesia's “sea power” strategy.

Currently， strategic cooperation between China and Indonesia is still at the stage of “dipping one's toe in the water” and confirmed areas for bila-teral cooperation include marine science and technology， tourism，power generation， shipbuilding， and fisheries. The investment sectors andthink tanks from both countries can carry out comprehensive discussions on bilateral strategic cooperation to consolidate the foundation for their maritime cooperation during the next 5 to 10 years.

China should continuously make use of its funding advantage to support the development of Indonesia's maritime sector. According to its medium-term planning for maritime construction and development from 2015 to 2019， Indonesia still needs $424.5 billion for maritime infrastructure construction， including the construction of 24 large ports， 60 ferry terminals，14 industrial parks， 49 reservoirs， and 33 hydropower stations. To make up for its funding gap， Indonesia intends to broaden financing channels through promoting cooperation between foreign enterprises and domestic private enterprises. Aside from such official financing channels as the Maritime Silk Road Fund， the China-ASEAN Investment and Cooperation Fund， and the Asian Infrastructure Investment Bank， China's private capital should also seize opportunities to deeply participate in Indonesia's infrastructure construction.

China and Indonesia can rely on port cooperation to build a modern maritime logistics system and some industrial parks near ports. Chinese ports such as Xiamen and Quanzhou can cooperate with Indonesia's ports like Bitung to accelerate the construction of a platform sharing their port information， promote convenient and efficient exchanges on port and shipping information， strengthen the construction of port infrastructure，and build a convenient customs clearance system. The two countries can also push forward the construction of land transport infrastructure，such as highways and high-speed railways， through building new ports or the extension of existing ports. They can also attempt to establish some industrial parks near ports to promote capacity integration where China enjoys advantages while Indonesia badly needs and pushes for the export of products from both sides to a third market.

In terms of traditional security， China can provide personnel training to the Indonesian navy and carry out joint military exercises. In the field of non-traditional security， such as maritime search and rescue， combating drug trafficking and piracy， there is space for further cooperation between both sides and strengthened security cooperation can enhance mutual political trust.

In terms of marine scientific research and cultural exchanges， the two countries should elevate the level and scale of their cooperation and directly transform relevant achievements into tourism and other industries. China can make use of the advantages of its domestic educational resources and scientific research to help improve Indonesia's human resources and technical level. Soegeng Rahardjo， Indonesian ambassador to China， holds that China is more advanced in maritime affairs and Indonesia can take advantage of China's experts and talents in this area， such as sending students to Chinese schools and maritime centers for studies. Indonesia， for example， still needs at least 10，000 marine investigators， and its fishery authorities' statistical techniques on fishery potentials are also yet to be updated. China's relevant institutions of higher education can help Indonesia train technical personnel in this area.

China and Indonesia share interests in practicing their maritime development strategies while their maritime resources and capabilities are also mutually complementary. The two countries should perfect their strategic cooperation as soon as possible and jointly cope with specific challenges at the practical level. Win-win cooperation should not be confined to reciprocity at the economic level alone because such kinds of reciprocity will not make the two countries intimate despite their geographically adjacency. Rather， efforts should be aimed at expanding their mutual understanding and the exchanges between the two peoples and societies，with a view toward ultimately deepening their comprehensive strategic partnership.

Sun Haiyong is Assistant Research Fellow at the Shanghai Institute of American Studies.