The Political Economy of Indonesia’s Development Strategy under China-USA Power Rivalry and Hegemonic Competition: A Middle Power with Its Hedging Strategy

Abstract In the new century, a growing power rivalry and contest between China and USA has significantly impacted the Asia-Pacific region. In turn, Indonesia has tried to avoid being caught in the middle between these two great powers. Among unanswered questions are how to respond to influences affecting politics and security and how to interact concerning economic cooperation and market integration. This article will explore how Indonesia tried to protect its own national interests amid this great-power competition by making strategic and timely policy choices from 2016 to 2022. We offer a new argument and interpretation for how a middle-sized power like Indonesia can flexibly and efficiently operate a hedging strategy toward US and China to promote its own security and development. Neoclassic realism will be applied to interpret a strategic triangle. As such, we explore Indonesia’s state leadership, domestic politics, political culture, and economic entity within the context of US-China power rivalry, closely in related to facing China’s Belt-and-Road initiative (BRI) as well as US’s Indo-Pacific Strategy with Indo-Pacific Economic Framework (IPEF).