China, Indonesia boost economic ties as Xi arrives

Jakarta - Beijing and Jakarta signed a series of economic agreements Wednesday as Chinese President Xi Jinping began a trade-focused trip to Indonesia, his first visit to Southeast Asia since taking power.

Like its Asian peers Japan and South Korea, China is seeking to strengthen its presence in the booming Indonesian economy, which has been a leading destination for foreign investment in recent years.

During his two-day trip, Xi, who took power in March, will Thursday become the first foreign leader to address the Indonesian parliament.

After a red-carpet welcome in the capital Jakarta involving a military parade and brass band, the Chinese leader held talks with President Susilo Bambang Yudhoyono.

"Both countries are very big, both are developing countries, and we have great influence in the region and in the world," Xi told reporters after the meeting.

Chinese and Indonesian ministers signed memoranda of understanding at the presidential palace to enhance cooperation in several industries, including tourism, technology and space research.

The Indonesian and Chinese central banks also agreed to a 100 billion yuan ($16.3 billion) currency swap deal to shore up the ailing rupiah if necessary.

The currency has fallen amid recent economic turmoil in Indonesia.

Trade and investment deals worth $32 billion were also expected to be signed at a later point during the trip, in sectors including mining, infrastructure and transport, said Industry Minister M. S. Hidayat.

Yudhoyono stressed the importance of Xi's visit, saying that "once again we are making history" by taking trade and investment to the next level.

Trade between China and Indonesia has soared from $16.5 billion in 2005 to more than $66.2 billion in 2012 and Xi said he hoped the visit would strengthen ties.(See attached file: xi.jpg) "Indonesia has made remarkable achievement in its development, enjoyed rising international status and is playing an increasingly important role on the global stage," he said.

China already has significant investments in Indonesia in several sectors, including mining.

Regional territorial disputes could also come up during the visit. Indonesia has in the past acted as a mediator between China and other nations during rows over the South China Sea.

Indonesia has no disputes with China over the sea, unlike nations such as the Philippines and Vietnam whose territorial claims overlap with those of Beijing.

Beijing is committed to working with the 10-member Association of Southeast Asian Nations to "safeguard peace and stability in this region, including in the South China Sea", Xi was quoted as saying in the Jakarta Post newspaper Wednesday.

"As for the differences and disputes between countries, China has always stood for proper resolution through friendly negotiations and dialogue."

After his visit to Indonesia, Xi will head to neighbouring Malaysia and then a meeting of the Asia-Pacific Economic Cooperation forum on the Indonesian resort island of Bali.