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Indonesia looks askance at China's proffered hand. East Asia's two giants find it hard not to mix business and politics. Indonesia's bitter taste of communism has left it wary of China. But that hasn't stopped trade ties. And Peking hopes trade gains will bring a diplomatic windfall - Jakarta's recognition.

By Clayton JonesStaff writer of The Christian Science Monitor / August 15, 1988


Like giant plates of the earth's crust, China and its southern neighbor, Indonesia, have been slowly creeping up on each other. For over two decades, no formal diplomatic ties have existed between the world's first and fifth most-populated nations, a rather unusual geopolitical estrangement given how most other countries have been wooing Peking. Indonesia severed relations in 1967, two years after an aborted coup that it blames, in part, on China.

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But since early this year, a heated and lively debate has broken out in Jakarta, Indonesia's capital, on possibly restoring relations with Peking.

``We simply cannot ignore each other for too long,'' stated a Jakarta Post editorial in March.

To no small degree, the issue has arisen due to a fast-growing trade of goods. Both nations are in need of greater exports. And in Asia, business rarely knows political bounds.

``Trade can make relations easier for both of us,'' says Boedihardjo Sastrohadiwirjo, head of the China committee for Kadin, the Indonesian Chamber of Commerce and Industry.

Two-way trade has tripled since 1985, Mr. Boedihardjo says, although Indonesia alone keeps four sets of differing statistics. Kadin's figures, culled from its members, indicate Indonesia exported $340 million worth of goods to China last year, and imported $410 million (a deficit for Indonesia). The volume is relatively low, but the growth rate - more than 30 percent - reveals the potential.

Still, the Indonesian government of President Suharto appears a long way from normalizing ties. The trauma of the Oct. 1, 1965 coup attempt, and the bloody backlash in which hundreds of thousands of alleged communists and Chinese-Indonesians were killed, is still a factor in the country's policies. About 3 percent of Indonesia's 175 million people are ethnic Chinese.

That coup attempt, launched when the charismatic President Sukarno was in power, began with the murder of six anticommunist generals. It was led by Army dissidents who, according to the present government, were in league with the Peking-supported Communist Party of Indonesia (PKI). Under Sukarno, the PKI had become a major force in Indonesia and the third-largest communist party after the Chinese and Soviet parties.

The counterattack by anticommunist military forces brought General Suharto to power as president, dealing a major setback to the international communist movement. (Sukarno transferred key powers to Suharto in 1966, and retired from office a year later.)

``Opening relations with China is still an emotional, rather than a rational issue,'' says Mochtar Kusumaatmadja, Indonesia's foreign minister until March.

The coup bid ``left a scar in the heart'' of Suharto, Dr. Mochtar says. ``Many of those generals killed were his buddies.'' And, he adds, China's was the only embassy not to fly its flag at half-mast after the killings.

But in 1985, falling oil prices forced Indonesia to expand non-oil exports. A logical market for those sales was China. As part of the campaign to boost non-oil exports, the government allowed Kadin to sign a pact for direct trade relations with China's Council for the Promotion of International Trade, a semigovernment body. Until 1985, indirect trade existed, mainly through Hong Kong and Singapore. But, with British-run Hong Kong being turned over to Peking in 1997, Jakarta would have to face the issue of direct trade anyway.

Kadin's attempt to overcome small trade hindrances, such as statistics-keeping, customs clearing, and visa approvals, have proved useful for China to gain small ground in its hopes for Jakarta's diplomatic recognition.

``It's difficult not to mix business and politics,'' says R.A.M. Koesoemoadilogo, executive director of Kadin's China Committee.

China, for instance, has pushed for trade offices in Peking and Jakarta. In April, Suharto's state secretary said trade was still small enough not to justify opening such offices. China disagrees on Jakarta's figures, saying it has a trade deficit of $700 million with Indonesia.

China dangled an enticing carrot of even bigger trade before a Kadin trade mission to Peking in June. But whether Jakarta's business community will pressure its government for direct ties is unclear.

The military keeps close tabs on the new trade with China. Indonesian traders, mainly ethnic Chinese, must receive approval from the government intelligence agency, Bakin, which checks traders to see if they are blacklisted for past ties with the PKI.