Indonesia's pivot from the European Union to China in its trade relationships is rooted in the contentious regulatory environment imposed by the EU's Green Deal. The EU's stringent anti-deforestation legislation, aimed at preventing commodities linked to deforestation from entering the European market, has created significant barriers for Indonesian exporters, particularly smallholders in the palm oil industry.
In contrast, China has presented itself as a more flexible and supportive ally. With robust investments in Indonesian infrastructure and industries, including significant projects in the digital economy and renewable energy sectors, China has become Indonesia's largest trading partner. This strategic shift is further solidified through agreements under the Belt and Road Initiative, which have enhanced economic integration and mutual benefits. As a result, Indonesia's trade focus has increasingly turned towards China, reflecting a pragmatic approach to securing economic growth and stability amid global challenges.