Indonesia’s New Leader Calls for Collaboration with China before Heading to the US

 Indonesian President Prabowo Subianto gestures as he delivers a speech during the Indonesia-China Business Forum in Beijing, Sunday, Nov. 10, 2024. (AP)
Indonesian President Prabowo Subianto gestures as he delivers a speech during the Indonesia-China Business Forum in Beijing, Sunday, Nov. 10, 2024. (AP)
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Indonesia’s New Leader Calls for Collaboration with China before Heading to the US

 Indonesian President Prabowo Subianto gestures as he delivers a speech during the Indonesia-China Business Forum in Beijing, Sunday, Nov. 10, 2024. (AP)
Indonesian President Prabowo Subianto gestures as he delivers a speech during the Indonesia-China Business Forum in Beijing, Sunday, Nov. 10, 2024. (AP)

Indonesia's new leader called for collaboration rather than confrontation with China after the signing of $10 billion in new deals at a business forum on Sunday in the Chinese capital before heading to the US.

President Prabowo Subianto told the forum that his country wants to be part of China's emergence as not only an economic but also a “civilizational power.”

“We must give an example that in this modern age, collaboration — not confrontation — is the way for peace and prosperity,” he said.

Subianto wrapped up the first stop of his first overseas trip since taking office three weeks ago. He is headed next to Washington — where the US government is confronting China’s rise — and then to Peru and Brazil for the Asia-Pacific Economic Cooperation and Group of 20 summits.

He and Chinese President Xi Jinping agreed Saturday to deepen ties, elevating security to a fifth “pillar” of cooperation in addition to political, economic, maritime and people-to-people exchange. They agreed to hold a first-ever joint meeting of their foreign and defense ministers in 2025, a joint statement said.

“Indonesia is very clear,” Subianto said. “We have always been nonaligned, we have always been respectful of all great powers in the world.”

Indonesia has remained on the periphery of the territorial disputes between China and its Southeast Asian neighbors in the South China Sea. It doesn’t have a formal dispute with Beijing though Indonesia said its patrol ships repeatedly drove a Chinese coast guard vessel away from an Indonesian energy company vessel conducting a seismic survey less than a month ago.

Chinese companies have invested heavily in mining in Indonesia, as they have elsewhere in the world. China also helped build Indonesia's first high-speed railway, a 142-kilometer (88-mile) route between Jakarta and Bandung that opened last year.

But a flood of low-priced Chinese products has hit Indonesia's garment makers hard, shuttering factories and prompting calls for import tariffs. The government has sought to placate domestic producers while not angering the country’s biggest trading partner.



Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

The US dollar charged ahead on Thursday, underpinned by rising Treasury yields, putting the yen, sterling and euro under pressure near multi-month lows amid the shifting threat of tariffs.

The focus for markets in 2025 has been on US President-elect Donald Trump's agenda as he steps back into the White House on Jan. 20, with analysts expecting his policies to both bolster growth and add to price pressures, according to Reuters.

CNN on Wednesday reported that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. On Monday, the Washington Post said Trump was looking at more nuanced tariffs, which he later denied.

Concerns that policies introduced by the Trump administration could reignite inflation has led bond yields higher, with the yield on the benchmark 10-year US Treasury note hitting 4.73% on Wednesday, its highest since April 25. It was at 4.6709% on Thursday.

"Trump's shifting narrative on tariffs has undoubtedly had an effect on USD. It seems this capriciousness is something markets will have to adapt to over the coming four years," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

The bond market selloff has left the dollar standing tall and casting a shadow on the currency market.

Among the most affected was the pound, which was headed for its biggest three-day drop in nearly two years.

Sterling slid to $1.2239 on Thursday, its weakest since November 2023, even as British government bond yields hit multi-year highs.

Ordinarily, higher gilt yields would support the pound, but not in this case.

The sell-off in UK government bond markets resumed on Thursday, with 10-year and 30-year gilt yields jumping again in early trading, as confidence in Britain's fiscal outlook deteriorates.

"Such a simultaneous sell-off in currency and bonds is rather unusual for a G10 country," said Michael Pfister, FX analyst at Commerzbank.

"It seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed."

Sterling was last down about 0.69% at $1.2282.

The euro also eased, albeit less than the pound, to $1.0302, lurking close to the two-year low it hit last week as investors remain worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen hovered near the key 160 per dollar mark that led to Tokyo intervening in the market last July, after it touched a near six-month low of 158.55 on Wednesday.

Though it strengthened a bit on the day and was last at 158.15 per dollar. That all left the dollar index, which measures the US currency against six other units, up 0.15% and at 109.18, just shy of the two-year high it touched last week.

Also in the mix were the Federal Reserve minutes of its December meeting, released on Wednesday, which showed the central bank flagged new inflation concerns and officials saw a rising risk the incoming administration's plans may slow economic growth and raise unemployment.

With US markets closed on Thursday, the spotlight will be on Friday's payrolls report as investors parse through data to gauge when the Fed will next cut rates.